Neoliberalism prescribes small government and unregulated, untrammeled market forces as inherently conducive to prosperity and social progress. Hence the removal of all regulatory and legal safeguards to "free up" the economy. For example, food safety regulations, mine inspectors, building codes, consumer protection legislation and financial market supervision are all slammed as Soviet-style infringements on capitalist freedom.
Neoliberals detest affirmative public action or state intervention to rectify market failure.
Against this background the claim persists that all New Zealanders, particularly superannuitants, would now be vastly better off had the Kirk Government's superannuation fund and compulsory superannuation continued. That claim is totally implausible. Most would have been lost to post 1984 speculative excesses.
Governments can run superannuation schemes far more effectively and efficiently than the private sector.
Sir Robert Muldoon's National Superannuation Scheme, paid out of national income, guarantees every New Zealander lifetime retirement income security, adequacy and certainty, something privatised superannuation simply cannot do. The present Chilean situation is instructive.
There are massive, violent protests in Chile against privatised superannuation as the superior outcomes originally promised from privatisation have not materialised. Sound familiar?
In 1981 Chile replaced its public pension with a privatised, defined contribution superannuation model based on individual retirement accounts managed by private administrators.
Initially, Chile's new privatised pension system appeared highly successful; it increased national savings, economic growth, employment and boosted capital markets. The World Bank, IMF and the OECD applauded.
But the adverse effects of inferior policy choices can often take decades to show up.
Chile's economy, just one third larger than New Zealand's, is shared by 18 million people. Hence, its per capita income and wages are exceedingly low.
The Chilean superannuation model requires all workers to contribute 10 per cent of wages to the scheme. So far, accumulated savings exceed $200 billion or 70 per cent of national income.
Chile's retirees were originally promised a 70 per cent replacement rate of final salary. But Chile's economy has a high share of informal labour not covered by the private pension system. As a result, Chilean workers now receive on average a 38 per cent replacement rate. Women have been hit hard. Their replacement rate is a miserly 28 per cent.
In other words, the average pension in Chile is far lower than the income of the minimum wage of a very low wage nation. And those outside the labour market fare even worse.
The World Bank now concedes the administration costs of Chile's privatised pension system absorb between a quarter to one third of all individual retirement accounts. The end result is that after administration costs, contribution gaps and inflation Chile's pensioners are left with a pittance. Millions now face old age misery. Hence massive unrest and calls for the nationalisation of its once vaunted, privatised pension model.
By contrast, the administration costs of the United States Social Security Administration's public pensions are below 1 per cent of budget; 99 per cent is paid directly to retirees.
The administration of Australia's compulsory superannuation exceeds $20 billion a year, or $700 billion since inception. The Australian pension system is extraordinarily complex, highly segmented, subject to frequent change and has not entirely eliminated poverty among their elderly.
New Zealand's superannuitants, unlike pensioners in Chile and Australia, need not be concerned about longevity risk (outliving savings), excessive fees, inequity, under-performing investments, contribution gaps, inflation or stock and capital markets' volatility. National Superannuation sees to that. Accordingly, the claim that all New Zealanders would now be vastly better off with compulsory superannuation is just nonsense on stilts.
• John Gascoigne is a Cambridge-based economic commentator.
