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8 LBJ J. Pub. Aff. 26 (1996)
When Goals Diverge: Social Security Reform in Mexico

handle is hein.journals/lbjalopua8 and id is 28 raw text is: BY NoRRIs COCHRAN Norris Cochran is a third-year stu- dent in the joint LBI/Latin American Studies program. He received his Bachelor ofArts degree in History of Public Policy from the University of California at Santa Barbara in 1993. His interests include domestic and international health, environmental policy and foreign diplomacy. He served as an intern during the sum- mer of 1995 researching the health sector in Mexico at the U.S. Embassy in Mexico City. WHEN GOALS DIVERGE: SOCIAL SECURITY REFORM IN MEXICO DEMOGRAPHIC CHANGES ARE COMPELLING MEXICO to abandon pay-as-you-go financing for its social security system. As Mexico wrestles with the development of a new and equitable sys- tem, it is confronting problems certain to arise in other countries. What lessons does the Mexican experience teach us? Early in the morning on December 8, 1995, after a long evening of heated debate, the Mexican Chamber of Deputies approved a law to reform the national social security pension system. The issue was politically sensi- tive, and the scale of the proposed changes ensured that the voting was close. The new Social Security Law (Ley del Seguro Social, LSS) was pushed through by the ruling party and passed by a narrow majority along party lines.' As Mexico passes subsequent legislation and begins the arduous pro- cess of implementation, the reform is not going unnoticed. Financial ana- lysts and potential investors are watching closely as a new system of fully funded pensions promises to deepen financial markets in Mexico and create capital for investment in the domestic economy. Policy makers in other Latin American nations and the developing world will be keenly interested in the reform. Old age and retirement pensions are often the only bulwark between a sustainable lifestyle and crushing poverty for millions of people in the developing world. Since the 1980s, nations around the globe have begun to reevaluate their social security systems and have sought to transform them from inefficient drains on the public coffers to streamlined providers of social assistance and generators of domestic savings. The reform in Mexico is likely to succeed, and, conse- quently, is attracting attention. The Mexican Institute of Social Security (Instituto Mexicano del Seguro Social, IMSS), the nation's general social security provider and the focus LBJ JoURNAL OF PUBLIC AFFAIRS