4 ms·

I don't quite get why people keep calling Social Security a ponzi scheme. A ponzi scheme is defrauding investors by saying that there has been growth in the ass

I don't quite get why people keep calling Social Security a ponzi scheme. A ponzi scheme is defrauding investors by saying that there has been growth in the assets and it's paying out dividends, SS doesn't make any claim like that. The real problem people are complaining about is the burden that was shared by many (by having lots of kids) is going to be shared by fewer and fewer people.

runT1ME 16y ago
Social Security's dividends are paid for by the new investors buying in, and THOSE investors will only be paid out if even more investors enter the scheme.
- stretchwithme 16y ago
  and if new "investor" don't live much longer than those who paid in before. which, of course, is where this scheme really breaks down.
shawndrost 16y ago
Wait a second -- to be strictly accurate, Social Security does explicitly state those two things. WRT "growth in assets": they send out letters to all enrollees stating the amount of money that each has coming to them. and the number is higher than the amount the enrollee has paid in (to reflect the interest that "will accumulate"). WRT "paying out dividends": the system is paying out dividends, obviously. I know some of the people getting checks. Not sure what you meant by this. I think it's a bit misleading to call Social Security a ponzi scheme -- mostly because it implies a ringleader, which I observe to be a dangerously appealing falsehood to many -- but your observations seem to be false.
- stretchwithme 16y ago
  there was a guy responsible for starting it if I recall. was he the ringleader? either way, people have the right to the results of their own work and this scheme violates that right.
Yzupnick 16y ago
I think people mean pyramid scheme.
ataggart 16y ago
You're being overly narrow in your definition of a ponzi scheme. It's simply a scheme whereby, for an individual, the amount of money they receive will exceed the money they spend only so long as the ratio of new members to old members exceeds one. It's not a real investment as there is no productivity increase occurring; it's just an accounting game. And that's precisely how Social Security operates, and precisely why it will run into problems.
- jojopotato 16y ago
  You're right, I am probably being to literal in my definition of a ponzi scheme. I definitely agree that Social Security is going to go through growing pains as the population demographics change and benefits won't be the exact same as the previous generation, but I feel like people use the term "ponzi scheme" to smear the whole idea of Social Security rather than articulating why we shouldn't have it.
  - ataggart 16y ago
    Given that the structure of Social Security does conform to a ponzi scheme, it's a smear only insofar as ponzi schemes are "bad".

runT1ME 16y ago

Social Security's dividends are paid for by the new investors buying in, and THOSE investors will only be paid out if even more investors enter the scheme.

stretchwithme 16y ago
and if new "investor" don't live much longer than those who paid in before. which, of course, is where this scheme really breaks down.

shawndrost 16y ago

Wait a second -- to be strictly accurate, Social Security does explicitly state those two things. WRT "growth in assets": they send out letters to all enrollees stating the amount of money that each has coming to them. and the number is higher than the amount the enrollee has paid in (to reflect the interest that "will accumulate"). WRT "paying out dividends": the system is paying out dividends, obviously. I know some of the people getting checks. Not sure what you meant by this. I think it's a bit misleading to call Social Security a ponzi scheme -- mostly because it implies a ringleader, which I observe to be a dangerously appealing falsehood to many -- but your observations seem to be false.

stretchwithme 16y ago
there was a guy responsible for starting it if I recall. was he the ringleader? either way, people have the right to the results of their own work and this scheme violates that right.

Yzupnick 16y ago

I think people mean pyramid scheme.

ataggart 16y ago

You're being overly narrow in your definition of a ponzi scheme. It's simply a scheme whereby, for an individual, the amount of money they receive will exceed the money they spend only so long as the ratio of new members to old members exceeds one. It's not a real investment as there is no productivity increase occurring; it's just an accounting game. And that's precisely how Social Security operates, and precisely why it will run into problems.

jojopotato 16y ago
You're right, I am probably being to literal in my definition of a ponzi scheme. I definitely agree that Social Security is going to go through growing pains as the population demographics change and benefits won't be the exact same as the previous generation, but I feel like people use the term "ponzi scheme" to smear the whole idea of Social Security rather than articulating why we shouldn't have it.
- ataggart 16y ago
  Given that the structure of Social Security does conform to a ponzi scheme, it's a smear only insofar as ponzi schemes are "bad".