In the wake of the Madoff disaster, I have read some minor op-eds citing Social Security as the biggest Ponzi scheme ever.
Really?
Honestly, I would think that this kind of talk might not warrant coverage from CNBC, whose article “The Real ‘Mother’ of All Ponzi Schemes” likens our national safety net for seniors and the poor to losing your money in fictitious investments.
I quote:
We feel bad for the people who came late in investing with Bernie Madoff and got burned when his Ponzi scheme fell apart. Now, I don’t begrudge anyone their social security benefits, but I also don’t want my generation to be feeling sorry for itself when our time to collect comes around and the money isn’t there.
Mitchell Zuckoff offers his retort at CNN via Social Security a Ponzi scheme? No way!
P.S. For those following the Madoff scandal — as I am, shamelessly — I would commend the Boston Globe article about the chief whistleblower Harry Markopolos.
Agreed, a social security system is that, a social security network, not an investment mechanism. You can think about it this way to make it really simple. I pay for my folks now and I would hope that when I am old my children pay will for me. That is how this works. Is that a Ponzi scheme? Is God’s last name Maddof? no. The fact that this generation is not going to collect the same benefits that the old generation is collecting now is exactly the analogy of you having less or no kids after taking care of your parents… what will you get? less… or nothing at all. That is what is happening now, so are you “Ponzi-Scheming” yourself if you do not have kids? The answer again is no. With this I am not saying that the way the social security system is working now is good (know as pay-as-you-go), what I am saying is that it worked when the structure of the population was that of a pyramid. Now it is not, and it is no longer sustainable, but that does not imply that is a Ponzi Scheme.
re: Erick Ramos Murillo’s comments—
Erick, the average “white woman” in the U.S. has 1.71 children per lifetime. That’s not enough to even replace the previous generation. Social Security has sucked in enough people to think that someone else’s children will take care of them. And then we (as a nation) have the audacity to dump on illegal aliens, when it is many of them who are both supporting us as well as generating enough more children so we are currently at about exact replacement.
At 2.1 children per woman per lifetime OVERALL, we are static. Our economy can’t grow, without immigrants (legal or illegal – and we don’t allow enough “legals” in to grow enough).
Even at 2.1, our economy will dwindle. This is likely a much larger contributor to the economic depression we are sliding into as a nation than most anyone supposes!