Banker-bashing, hedge-fund bashing, speculator-bashing: one of the legacies of the financial crisis
will surely be a hugely negative perception of financial markets. These are now widely perceived as strongholds of short-termism, irrationality and self-indulgence, inherently unstable and volatility-prone. A casualty might well be political reforms that look to a greater role for markets, whether this is in terms of the pension system
, the NHS
or the social care system
. This is a great pity. As the case of Chile’s pension scheme shows, the mechanism by which something is funded is important and competition has an important part to play. One of the world’s purest examples of a savings-based pension system, Chile
’s scheme shows that these systems can weather a major crisis remarkably well.