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If the scheme completely falls down without new investors, and the solution to having fewer investors than expected is to reduce the payout, I don't see how it
by mixedCase 9y ago
If the scheme completely falls down without new investors, and the solution to having fewer investors than expected is to reduce the payout, I don't see how it isn't just a Ponzi scheme with extra steps.
As an anecdote, I've tried to search opinions disagreeing with me, looking for an explanation on how SS isn't a Ponzi scheme; but the all the arguments I've found boil down to "it has worked so far", "it is well-intentioned" and "people investing into it are not being intentionally misled".
Without having most people lose money on their investment (by dying earlier than the projected age when calculating pension), I fail to see how it can work out as anything else than a pyramid scheme.
- scarmig 9y agoPonzi schemes, by definition, collapse at the end: each stage of "investors" have to be exponentially larger than the previous, and there's only so many people that can be involved before it becomes impossible to reproduce the next stage. The majority of participants get nothing, for that reason. State pensions don't work like this. Even in disadvantageous demographic situations, the majority of people get something comparable to what they put in. Even in the most aged populations you don't go from X to 0; you go from X to (1 - c)X, where c is relatively small; that is, much closer to 0 than to 1.