# Social Security is a Ponzi Scheme **URL:** \ **Category:** Great Debates\ **Created:** [May 12, 2011, 10:58pm UTC](https://boards.straightdope.com/t/social-security-is-a-ponzi-scheme/581719 "2011-05-12T22:58:31Z")\ **Posts on this page:** 5\ **Page:** 5
**Author:** ![ElvisL1ves](https://avatars.discourse-cdn.com/v4/letter/e/5daacb/32.png) [@ElvisL1ves](https://boards.straightdope.com/u/ElvisL1ves)\ **Post date:** [May 15, 2011, 7:11pm UTC](https://boards.straightdope.com/t/social-security-is-a-ponzi-scheme/581719/81 "2011-05-15T19:11:29Z")
Can somebody, anybody, please explain how the fundamental misconception became _so_ widespread that SS is a sort of investment fund which provides a return on one’s “account”, not a transfer-tax system by which today’s workers help support those who can no longer work? Who is primarily responsible for originating and spreading that ridiculous lie, and does it have its origins in \*anything \*other than rank partisanship? This shit gets incredibly tiresome. ---
**Author:** ![fumster](https://avatars.discourse-cdn.com/v4/letter/f/e9c0ed/32.png) [@fumster](https://boards.straightdope.com/u/fumster)\ **Post date:** [May 15, 2011, 7:51pm UTC](https://boards.straightdope.com/t/social-security-is-a-ponzi-scheme/581719/82 "2011-05-15T19:51:58Z")
> [@ElvisL1ves](#): > > Can somebody, anybody, please explain how the fundamental misconception became _so_ widespread that SS is a sort of investment fund which provides a return on one’s “account”, not a transfer-tax system by which today’s workers help support those who can no longer work? Who is primarily responsible for originating and spreading that ridiculous lie, and does it have its origins in \*anything \*other than rank partisanship? This shit gets incredibly tiresome. That drives me nuts. Here’s an idea, we take the money we pay for the military and invest it so that we have more money to spend in the future. No problem with that, right? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [May 16, 2011, 12:49am UTC](https://boards.straightdope.com/t/social-security-is-a-ponzi-scheme/581719/83 "2011-05-16T00:49:51Z")
> [@emacknight](#): > > The people who you were previously taxing. The money is still there. Not when they stop working it isn’t. > [@](#): > > But by retiring they aren’t contributing to S/S any more. And as a person with 45 years of experience they are more valuable to society than the recent grad. My friend who just turned 75 isn’t contributing to his IRA any more either. Should he not be allowed to take his money out? As someone who just became eligible to take money out of my IRA with no penalty (not that I’m going to) I can tell you that not everyone wishes to work until he or she drops over dead. While we do contribute a lot, and are doing fairly well in the recession, a company who doesn’t hire new grads is going to ossify fairly quickly. Experience is great - until things change enough so that experience is no longer a good guide as to how to proceed. Physical jobs even more clearly need youth after a point. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [May 16, 2011, 1:01am UTC](https://boards.straightdope.com/t/social-security-is-a-ponzi-scheme/581719/84 "2011-05-16T01:01:10Z")
> [@Simplicio](#): > > Under normal times, Social Security doesn’t increase demand though. It moves money from one group of people to spend from another group of people. During a Recession, there’s a problem of workers not spending their money, while retirees continue to do so, so during such times its good for GDP to move money from one group to another (though only slightly, its much better to get a bunch of money by borrowing it and then give it to the same old people). I agree. Borrowing money to give to the unemployed, who will have less in savings and will spend more, is a better stimulus. Still, SS payments are stimulative. > [@](#): > > When there’s adequate demand, though, by definition there’s employment enough to go around to fill that demand. Taking old people out of the labor pool might be good for other reasons (it raises everyone elses wages, it keeps the people most likely to be sick/suffering from dementia from trying to still work as air-traffic controllers and the like and crashing planes into each other), but under normal conditions, it removes workers from the economy and thus lowers GDP. I’m not sure that adequate demand is equivalent to full employment. (The demand can be satisfied by goods produced outside the US). If there is not full employment, each job given up by someone retiring can be filled by someone not yet employed, and the GDP should not be changed. In fact, since the retired person almost certainly has more savings, they will probably spend more than the unemployed person. > [@](#): > > Your right we would have to pay for their health issues whether they’re retired or not, but paying to make a sick worker healthy again increases GDP since they will go back to work, paying to make a sick retiree healthy just makes it so they can go back to their bingo game. Well, it is putting money into the pockets of doctors, nurses, and home health care specialists. If everyone died at 70, there is a large segment of the industry which would disappear. But you have a good argument for why health coverage for younger, working people is just as important as Medicare. > [@](#): > > True, but they’re a good investment. If we had zero children, then in 60 years everyone would be dead or retired and the GDP would be zero. Old people are a terrible investment since they’ll never contribute to GDP again. Hey, my 95 year old father-in-law is still writing and selling music. George Burns made some money well into his '90s. So did Picasso. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [May 16, 2011, 1:16am UTC](https://boards.straightdope.com/t/social-security-is-a-ponzi-scheme/581719/85 "2011-05-16T01:16:40Z")
> [@jtgain](#): > > That’s my point. This “dedicated income source” is an entry on the accounting ledger. To me or any other taxpayer, it is money out of your pocket and into the government treasury same as sales tax, property tax, income tax, etc. Just because the government arbitrarily assigns one particular tax to fund a particular program does not link the two in a sort of business relationship and determine whether the program is successful or not. Same with local schools and property tax. They could have just as easily linked it to sales tax; it wouldn’t make the schools any more or less solvent, worthwhile, or financially prudent then they are now. The name that is attached to the particular tax does not make it attributable to the success or failure of any particular program, even if that particular tax was passed at the same time as the program was begun. Around where I live we sometimes pass tax measures for roads and transit, and the law states that this money can only be used for roads and transit. The success of these taxes can be measured by how well it does in meeting its goals, and has nothing to do with the general state of the California deficit. If it got the money early, and invested it in California bonds until it was needed for construction projects, would this change anything? SS income similarly is not just an entry in an accounting ledger, it is dedicated to a specific purpose by law, unlike income and sales taxes. By the way, you trivializing accounting seems to say to me you’ve never had to deal with a budget for a real company. Expense and capital may be just two entries on an accounting ledger, but try to mix them and you are going to get dope-slapped by the powers that be (to keep the Feds from doing it) real fast. [Previous page](https://boards.straightdope.com/t/social-security-is-a-ponzi-scheme/581719.md?page=4)