This thread was getting thoroughly hijacked, so:
I don’t know how this bullshit meme got started, but it seems very tenacious. Have at it.
From your cite on Ponzi schemes:
Well, it’s not ‘a fraudulent investment’, but I guess if you look at it the right way several of the other points are comparable. I don’t see what the benefit of discussing what parts are or aren’t similar, since it’s going to be a matter of perspective and viewpoint.
Why debate whether it’s like a ‘ponzi scheme’ or not, since the answer to the question is entirely subjective and depending on ones world view and perspective?? Wouldn’t it be more of a ‘Great Debate’ to, well, debate the merits or drawbacks of Social Security and Medicare, to talk about the long term prospects for both programs, etc etc? Or is this supposed to be just another echo chamber thread where people tell you what you want to hear, or tell you what you don’t and then are dismissed because there definitions and view point are different than yours? (serious question btw)
-XT
It may not have hidden its nature, but let’s be blunt: both fo these sopcial welfare schemes demand a lot of people to bolster the supported classes. It was sold as a way to pay for grandma, but when it comes down to it, it’s a way to bilk mkoney out of taxpayers: up until very recently, it had a positive cash flow, but there’s simply not going to be enough young people with enough high-paying jobs to maintain that indefinitely. Now it’s going to start draining taxes to pay for old folks’ care.
And let’s be honest, the governemnt is not going to bankrupt itself to do that. I won’t see a dime of the money I paid in, thanks to your lefty opposition to individual accounts. In fact, your lovely Congressional Democrats have even floated stealing my IRA money and “generously” paying me an annuity instead.
Basic points:
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Like a Ponzi scheme, it relies on ever-growing numbers of “investors” to pay for the early investors back.
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Like a Ponzi scheme, it can’t work without an infinite population base or a pyramid-shaped payout curve. Without lots of people dying extremely early in life, it must mathematically fail. Increasing life expectancy makes that less likely. Although perhaps you can combine this with Obamacare and just find care for elderly people financially unsustainable and solve two birds with one big, Democrat stone, eh?
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Like a Ponzi scheme, it relies on deceiving people about their likely benefits, or delaying the mass payout until the schemer gets what he wants.
By the very definition of ponzi schemes, they don’t qualify.
That does not necessarily mean, however, that they are sustainable in their current form. Social Security would be sustainable with a little tinkering, but even then, I’d personally prefer a system of mandatory savings rather than transfer payments. People would think more about their retirement if they had more control of their pension accounts (and that doesn’t mean total control–just more control). And Medicare in its current form is, indeed, a ticking bomb.
They are bad for the same reasons Ponzi schemes are bad.
The only ethical way to manage an insurance or retirement fund like this is if you at least break even on each generation of participants. You must not set payments so that each generation is getting paid out more than they paid in plus interest, because this would mean that your fund is not sustainable. The only way to pay participants more than this amount is by cutting into the funds that should be set aside for other participants whose accounts will mature later.
Continuing to incur liabilities while operating in such a state is fraud.
I will pay far more into social security than I will ever get out of it short of living to 250 years of age. I have no objection to that (coming up short). It is not an insurance policy or a retirement fund. You assume without saying so that it is improper for benefits to flow in one direction in excess of the other direction. Minimum wage workers will pay far more in taxes to the government over their lifetime than they will ever get out of it, including social security benefits. But minimum wage workers get no fat government contracts, etc. Insurance, which is somewhat analogous pays in excess of interest plus principle of what a bank could earn. And a mutual company pays part of the profit too.
There are no private accounts. The way to pay benefits to those who live longer is to discourage the wealthy from applying for benefits for as long as possible, and to make the payroll/social security tax not have a regressive cut off for the wealthy. The government runs and has run for decades, much of its operating budget from the social security trust fund. Most of this money has gone to lucrative fat cat contracts and debt service. The government has not set aside the money in separate accounts, but has comingled, yet promised the payors benefits. This means that the full assets and taxing power of the US government should be tapped to pay for any shortfall. If any private person did this to a trust fund, all their assets would be seized.
No, taking the money with no intention of paying is fraud. You imply that the fraud is incurred in the tax and is a generalized fraud against a class of people who object. Without specific injury they have no standing in court. Unless you were one of Bernie Madoff’s “investors” no fraud was committed against you. And as long as the United States is willing to pay benefits, there is no injury. Meaning that any method the US chooses to meet the obligations is legal: raising/eliminating the cap on contributions, borrowing the money, raising other taxes, lowering the benefits (to which I am opposed) and ceasing to waste money on too much military.
When the leaders of the government have no intention of paying future benefits, that is fraud. Conservatives, who have always opposed social security, hint and imply that they will not pay benefits when the IOUs (trillions of dollars of them) run out, even though that is decades away. But they won’t say it outright.
Unless you’re deliberately trolling for laughs, this is just a silly thread.
Social Security transfers money from the working to the retired. Results will depend on details and demographics. This just isn’t complicated or hard to understand.
The dollar I pay at age 40 will obviously not be the same dollar I withdraw at age 70. If nothing else, the paper currency will have worn out by then. 
Now let’s see what a presumably sincere American thinks about it:
:smack:
Which is iit, Mr. Bandit? If the taxpayer isn’t paying enough to fund his Grandma’s SS income, he’s not exactly getting bilked, is he? To use your logic, the less he pays the more he’s being bilked. But then I guess “logic” doesn’t enter into your thinking, does it?
To the extent they are “sold” as something other than they are then I’d say yes.
Can you say government “lock box”?
Well, it would also be sustainable if the level of population, or more specifically, size of economy grew at a rate greater than the increased demands of the number of people on social security.
By the way, how is the personal cap on social security contributions justified? The only way it seems remotely justifiable to me is if they spin it as effectively a personal retirement account. It would be bullshit still and everyone would know it, but if we aren’t working under the fiction that these are in principle effectively a giant retirement account, and it were instead a general government service/entitlement, why would personal contributions be capped? It seems to be played both ways - a fiction that it’s a retirement account but also used for general revenue and spending purposes. If we accept that it’s a retirement account of some sort, then it becomes more obviously fraudulent and makes a better case for being a ponzi scheme.
Let’s leave accusations of trolling out of Great Debates.
[ /Modding ]
Easily – benefits are capped, ergo, cost must be capped. Uncapping one would simply require uncapping the other, and accomplish nothing.
The similarities are disturbing, and will soon come to bite us all in the ass. From your link:
I bolded the relevant similarities. SS requires an ever-increasing pool of young workers to be sustainable at current levels. It’s in the red this year. Politicians in DC have been putting off making decisions about this problem for years. It should be interesting to see what they do next…
- Are benefits capped? If you live to be a certain age, you stop receiving SS?
- Uncapping one doesn’t require uncapping the other. Why would it? You make it sound as if it were a logical necesary consequence and it isn’t.
- “Accomplish nothing”? Are you suggesting that if we entered more money into the SS fund, we’d be required to output exactly the same amount distributed equally across beneficiaries? That’s not how it works now - the SS fund generated a surplus until recently.
Benefits are based on FICA-taxed income (both being capped at a certain amount). This is an essential linkage to preserve the concept that Social Security is an insurance program rather than a welfare-payment program.
By the very technical definition, no, it’s not a ponzi scheme. As Second Stone points out, there is no real damages. SS (I’m not sure of Medicare, but knowing the government, it probably isn’t, either) is not structured as a retirement fund or insurance fund (or reserve, or underwriting pool, or whatever). The only real “fraud” is at campaign time, and everybody knows that statements made at that time do not constitute a real contract (even considering the spirit of the law).
However, let’s be realistic: could any company or organization that wasn’t the federal government actually implement such an idea? Of course not. Even if I could craft a document, by-laws, articles, whathaveyou that could explain what in effect I was actually doing, I would be sued into oblivious by countless entities (not including individual citizens) for some type of fraud (constructive, fraudulent inducement, common law, etc.).
Even in the spirit of the logic of SS, it does seem fraudulent. N
Is it meaningfully an insurance program in any way? Under what situations will it pay off or fail to pay off? What risk are people looking to alleviate or manage by using it?
It doesn’t work like any other sort of insurance.
Except for the part about a pyramid scheme being inherently and unfixably doomed to collapse, and a transfer-payments plan, um, not. That’s kinda relevant too, don’tcha think?
No, it does not. Cash flow can also be balanced by increasing tax rates, increasing income cap, or decreasing payouts. A pyramid scheme cannot be “fixed” by those or any other means.
No disagreement there.
The only interesting part of this discussion, to me, is why so many insist on affixing the name of a prominent fraud scheme to a transfer payments program. Is that just a sideways attempt to discredit the US’ most notable example of government acting to improve or society, born of a visceral attitude that “government is bad and must be strangled in the bathtub”, since a straightforward and honest discrediting is not possible? It’s certainly acceptable to complain that the system is unfair, or bad policy, or to simply begrudge the money, but to call it a Ponzi scheme is worse than ignorant.
By the very technical definition, no, it’s not a ponzi scheme. As Second Stone points out, there is no real damages. SS (I’m not sure of Medicare, but knowing the government, it probably isn’t, either) is not structured as a retirement fund or insurance fund (or reserve, or underwriting pool, or whatever). The only real “fraud” is at campaign time, and everybody knows that statements made at that time do not constitute a real contract (even considering the spirit of the law).
However, let’s be realistic: could any company or organization that wasn’t the federal government actually implement such an idea? Of course not. Even if I could craft a document, by-laws, articles, whathaveyou that could explain what in effect I was actually doing, I would be sued into oblivious by countless entities (not including individual citizens) for some type of fraud (constructive, fraudulent inducement, common law, etc.).
Even in the spirit of the logic of SS, it does seem fraudulent. No matter what I put in, I will get some return back. It makes sense as a wealthy contributor, but makes absolutely no sense as a minimum wage earner. In fact, the more that health care costs and the social safety net increases, the less sense it makes even as a middle income earner.
As it has been pointed out already by smiling bandit, SS has the characteristics of a pyramid scheme. In the other thread, as well as many on this board, have stated that SS can survive if we ratchet down the payout. Again, easy to do if you’re the federal government. But, that argument aside, how much more are we going to ratchet it down until it is meaningless – that benefits are now 50%, 25%, 5% of what the pay out was (well, at least in real terms). Inflation, previous pay out obligations, the rising cost of health care, the increase in societal safety nets, an aging population, and a slowdown in the growth of new workers all contribute to the in-sustainability of SS.
Difficulty reading? I said that there were similarities, not that they were the same thing.
Notice how I said “at current levels”? In case you missed it here it is again:
Of course it can be balanced, if the taxes are raised or the benefits lowered.
To call it a Ponzi scheme is to highlight the similarities, the unsustainability of the program and how it has been mismanaged over the years. Don’t know why you came out with guns-a-blazing. Take a deep breath.
In a sense they are, but not in a bad way.
In a sense, life itself is a Ponzi scheme. Do you want to shut it down?