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I don’t understand how social security isn’t a pyramid scheme. It seems to me like something we should just do away with.

TbobbyZ 5y ago
Amen. It takes away personal responsibility.
ceejayoz 5y ago
https://www.washingtonpost.com/blogs/ezra-klein/post/is-social-security-a-ponzi-scheme/2011/08/25/gIQA2t0dcL_blog.html https://www.washingtonpost.com/blogs/ezra-klein/post/is-soci... > The superficial similarity to a Ponzi scheme is that different sets of investors are relying on future investors, or at least future growth, to get paid back. But that defines a Ponzi scheme so broadly as to make the term meaningless. In that definition, any intergenerational transfer system is a Ponzi scheme. > What makes a Ponzi scheme a Ponzi scheme is that it’s a giant fraud. People think they’re investing in postal stamps. Their money is actually being invested in nothing. In Social Security, conversely, it’s perfectly clear what is going on. Every year, Social Security’s actuaries release an insanely detailed report on the system’s finances, its balance of payments, the potential problems it could face, and so on. You can read their report here. In a Ponzi scheme, the finances are a secret, and that’s central to the enterprise. In Social Security, they are, as a matter of law, public.
- medvezhenok 5y ago
  > In a Ponzi scheme, the finances are a secret, and that’s central to the enterprise. Reminds me of the Ponzi that explicitly announced it was a ponzi scheme - kind of like a game of hot potato. You can profit as long as you're not the last one in. Or maybe that's just called crypto :)
mywittyname 5y ago
It's not a pyramid scheme because there's no promise of returns. One may pay $1,000,000 in social security and receive $0, but other may pay in only $10,000 and receive $100,000 over their lifetime. People who pay into it will get $X, unless the surplus runs out, in which case they get a reduced amount proportional to the amount of money coming in. A pyramid scheme guarantees returns, and those guarantees can, and will eventually, exceed the amount of money held by the scheme. Social security makes no such guarantee. Social Security is basically a modified tontine. You pay in during your working life, and then receive payments at some age until you die. Like a tontine, the longer you live, the more payout you receive.
- rundmc 5y ago
  Fully agree with the analogy but you disparage tontines! 49/50 US state workers pension will run out of money by 2033 because they are purely run as 'guaranteed' ponzi schemes. The exception is the state of Wisconsin which operates more like a tontine in the sense that the payments you can expect is adjusted based upon on the mortality of other members in the system. I know this because I am making progress convincing governments and supranational organisations that the only sustainable pension system is the one we are enabling through our platform at https://tontine.com https://tontine.com

TbobbyZ 5y ago

Amen. It takes away personal responsibility.

ceejayoz 5y ago

https://www.washingtonpost.com/blogs/ezra-klein/post/is-social-security-a-ponzi-scheme/2011/08/25/gIQA2t0dcL_blog.html https://www.washingtonpost.com/blogs/ezra-klein/post/is-soci... > The superficial similarity to a Ponzi scheme is that different sets of investors are relying on future investors, or at least future growth, to get paid back. But that defines a Ponzi scheme so broadly as to make the term meaningless. In that definition, any intergenerational transfer system is a Ponzi scheme. > What makes a Ponzi scheme a Ponzi scheme is that it’s a giant fraud. People think they’re investing in postal stamps. Their money is actually being invested in nothing. In Social Security, conversely, it’s perfectly clear what is going on. Every year, Social Security’s actuaries release an insanely detailed report on the system’s finances, its balance of payments, the potential problems it could face, and so on. You can read their report here. In a Ponzi scheme, the finances are a secret, and that’s central to the enterprise. In Social Security, they are, as a matter of law, public.

medvezhenok 5y ago
> In a Ponzi scheme, the finances are a secret, and that’s central to the enterprise. Reminds me of the Ponzi that explicitly announced it was a ponzi scheme - kind of like a game of hot potato. You can profit as long as you're not the last one in. Or maybe that's just called crypto :)

mywittyname 5y ago

It's not a pyramid scheme because there's no promise of returns. One may pay $1,000,000 in social security and receive $0, but other may pay in only $10,000 and receive $100,000 over their lifetime. People who pay into it will get $X, unless the surplus runs out, in which case they get a reduced amount proportional to the amount of money coming in. A pyramid scheme guarantees returns, and those guarantees can, and will eventually, exceed the amount of money held by the scheme. Social security makes no such guarantee. Social Security is basically a modified tontine. You pay in during your working life, and then receive payments at some age until you die. Like a tontine, the longer you live, the more payout you receive.

rundmc 5y ago
Fully agree with the analogy but you disparage tontines! 49/50 US state workers pension will run out of money by 2033 because they are purely run as 'guaranteed' ponzi schemes. The exception is the state of Wisconsin which operates more like a tontine in the sense that the payments you can expect is adjusted based upon on the mortality of other members in the system. I know this because I am making progress convincing governments and supranational organisations that the only sustainable pension system is the one we are enabling through our platform at https://tontine.com https://tontine.com