One man’s Ponzi scheme is another man’s retirement
Outrage abounds over a $50 billion Ponzi scheme masterminded by Bernard Madoff, a former chairman of the Nasdaq exchange.
What about Social Security? It is simply a Ponzi Scheme with a few differences. Whereas scammers lure in willing, although unsuspecting, marks with too-good-to-be-true promises the government makes the same promises, but uses the threat of force to compel even the most prudent and leery individuals to “give.” And while Ponzi Schemes always come crashing down in dramatic fashion the government holds a trump card. It can merely fabricate money to pay the “investors” even if it means devaluing the very same money.
The American Thinker also compares the venerable program to a Ponzi scheme. Here’s a good satirical piece reporting the appointment of Madoff as Commissioner of the Social Security Administration.
Not surprisingly, the Social Security Administration has had a website that strains to dispel the belief that it is a Ponzi scheme. Let’s just say their defense is a bit lacking. In describing a typical Ponzi scheme it says, “The reason that this is a scheme and not an investment strategy, is that the progression it depends on is unsustainable. You must continually get more and more new people into the system to pay-off the promises to the earlier members.” Hmmm… That sounds a lot like Social Security. The site amusingly calls Social Security a pay as you go system and therefore not a Ponzi scheme – as though it magically pays for itself. That is kind of hard to believe since the government projects that the program will become insolvent in a few decades.
The possible bankruptcy of the Big Three car companies should give us a grim reminder of promising excessive benefits. By all accounts unionized retiree costs have been a massive weight around the necks of the car makers. Although they have negotiated better terms that will take effect in the future, the current crisis illustrates how too-good-to-be-true promises can’t be sustained during difficult times and may well bankrupt the promisers.
