3 ms·

>So what if low birth rates break their system? Birth rates fund our social security system. It keeps the "Ponzi" scheme going. I think I'm having a hard time

>So what if low birth rates break their system? Birth rates fund our social security system. It keeps the "Ponzi" scheme going. I think I'm having a hard time with it being called a Ponzi scheme. Had an individual invested the amount they put into SS into the market, it would not be a Ponzi scheme, and is essentially a 401K. Is SS is only a Ponzi scheme because of the way the government manages it? If I take a step back and government takes money an invests it into the growth of the GDP, is it no longer a Ponzi scheme?

jerf 9y ago
"Ponzi scheme" as a term is generally overused. It identifies a specific fraud, and things that look sorta vaguely like it may have any number of critical differences in those sorta-vague similarities that result in a completely different outcome, including potentially worse ones. It is not a sufficient analysis of the situation to stick the label "Ponzi scheme" on social security and think anyone has obtained any sort of understanding of the situation from it. Resist metaphors.
- Clubber 9y ago
  I can see the similarities, at least with a pyramid scheme (which I think is synonymous). Current "investors" are paid by future "investors." Current investors being people collecting SS, future investors being people paying into the system. When it was first enacted, the "current" investors at the time hadn't put anything in (obviously). I know that's a huge oversimplification. As GDP rises so does the tax revenue (assuming politicians stop cutting taxes) so I understand it's a little more nuanced than a simple scheme. Also, when we had a SS surplus (in the 90s?), the politicians of course spent it all while increasing the debt. I don't think there is anything inherently wrong with the way it works financially, as long as the government manages it properly, which they aren't.

jerf 9y ago

"Ponzi scheme" as a term is generally overused. It identifies a specific fraud, and things that look sorta vaguely like it may have any number of critical differences in those sorta-vague similarities that result in a completely different outcome, including potentially worse ones. It is not a sufficient analysis of the situation to stick the label "Ponzi scheme" on social security and think anyone has obtained any sort of understanding of the situation from it. Resist metaphors.

Clubber 9y ago
I can see the similarities, at least with a pyramid scheme (which I think is synonymous). Current "investors" are paid by future "investors." Current investors being people collecting SS, future investors being people paying into the system. When it was first enacted, the "current" investors at the time hadn't put anything in (obviously). I know that's a huge oversimplification. As GDP rises so does the tax revenue (assuming politicians stop cutting taxes) so I understand it's a little more nuanced than a simple scheme. Also, when we had a SS surplus (in the 90s?), the politicians of course spent it all while increasing the debt. I don't think there is anything inherently wrong with the way it works financially, as long as the government manages it properly, which they aren't.