Social security reform in the US: Lessons from Hungary

The partial privatisation of the US Social Security system was clearly the top economic policy priority for the Bush administration around 2003. While many famous economists, publicists and politicians support, others reject the partial privatisation of the Social Security system. Political opposition has defeated the Bush plan but the basic idea will resurface sooner or later. Until now, international comparisons have been quite infrequent, concentrated on few countries (Chile, Great Britain and Sweden) and left out similar reforms introduced in similar situations, like in Hungary, Poland and other excommunist countries. In an attempt to fill this gap, in this article I outline the lessons learnt from the Hungarian reform, which started in 1998. The conclusion is simple: such a reform is feasible but does not solve the problems of social security (like sustainability and equity).