3 ms·

The scheme can just mean "plan". For the first "difference", ~nobody studies the terms of how social security operates before starting to pay into it. Would you

by sershe 2y ago

The scheme can just mean "plan". For the first "difference", ~nobody studies the terms of how social security operates before starting to pay into it. Would you say that if I run a ponzi scheme but put a bit of fine print somewhere the investor will not read when joining, admitting it is in fact a ponzi scheme, it is suddenly not a ponzi scheme? I can even make it audited to warn the investors when it runs out of money decades later, no recourse though! Still a ponzi scheme. For the 2nd one, indeed, that is a material difference. Of course, that makes it worse than just a regular ponzi scheme! In the above example, if I somehow read the disclaimer and refuse to participate, the ponzi scheme operator now points a gun at me and forces me! And of course, this "material difference" only makes a real difference as long as demographics are favorable. So yeah, it's a thinly-disguised ponzi, combined with forced labor.

dns_snek 2y ago
Why stop at social security? All societal benefits derived from taxation can be said to be a ponzi scheme if you're determined enough.
- piva00 2y ago
  I feel that lots of people do actually think that way, either by ideological conviction or ignorance.
- sershe 2y ago
  Not really. Social security (and medicare) specifically makes promises of future returns to current payers, based on the assumption new entrants will provide the money to pay for those returns. To underscore the point, they are even structured separately. Normal social services (from schools to even medicaid) merely transfer money between individuals in the present.
ModernMech 2y ago
> if I run a ponzi scheme but put a bit of fine print somewhere the investor will not read when joining, admitting it is in fact a ponzi scheme No, in the case of "ponzi scheme", it cannot just mean "plan". Yes that is a dictionary meaning of "scheme" but that's not the one referred to in the phrase. Putting a bit of fine print somewhere in hopes people will miss it is not being transparent, it's also deceptive and manipulative. "Scheme - make plans, especially in a devious way or with intent to do something illegal or wrong." A key aspect of the Ponzi scheme is that the person running it does not actually have a legitimate investment opportunity. Lying profusely to everyone involved about the potential outcome is what makes it work. The only outcome is that they will lose their money. This is not true with SSA, as people have been getting social security payments regularly for 90 years. No one is deceived about what SSA is. Can you point to any literal ponzi scheme that is as transparent as SSA, and has consistently paid back investors for 90 years? > ~nobody studies the terms of how social security operates before starting to pay into it. Yes, but upon learning the truth, most people understand its purpose, how it works, and agree with it. And crucially, if they didn't, they could change the law. > indeed, that is a material difference. Of course, that makes it worse than just a regular ponzi scheme! Why? Ponzi schemes collapse because they run out of new entrants to the scheme. If it's a societal-wide forced Ponzi scheme they're not going to run out of new entrants, and the pool of participants is larger than just suckers who are fooled by ponzi schemes. You simply assert, without proof, this is worse. But to me this sounds like so many systems we have like insurance, and capitalism as a whole. Forcing everyone to participate means everyone has incentive for it to not fall over. -- Let's cut to the chase here. There are more difference between SSA and Ponzi schemes than similarities: - Ponzi schemes are lies; SSA is transparent - Ponzi schemes are difficult to maintain for long; SSA has been going 90 years - Ponzi schemes rely on fooling a small group of gullible people; SSA relies on everyone participating - Ponzi scheme is illegal; SSA is the law - Ponzi schemes are the brainchild of conmen; SSA is the brainchild of elected representatives and administered by career civil servants - Ponzi schemes fail when the law catches up and it's dismantled or runs out new people; SSA has yet to fail and predictions that it will fail in the same way Ponzi schemes fail have yet to be proven. At some point, these difference have to matter, and they certainly mean SSA is not "literally, definitionally a Ponzi scheme"
- sershe 2y ago
  1) The only real difference I can concede is about lies. Again, it seems to me like nitpicking, as SS operates instead on vast ignorance, but sure - let's say "SS /operates like/ a literal ponzi scheme". EDIT: based on going from ponzi + lies to ponzi + force, maybe we should call it a "ponzi racket" 2) When I said it's "worse" in the 2nd paragraph I meant morally. It's worse to run a ponzi combined with force than to merely to run a ponzi. "Ponzi schemes are difficult to maintain for long; SSA has been going 90 years" That is just because you can force people in. If Madoff could point a gun at Bill Gates and force him to keep investing for 50 years, it wouldn't make it not a ponzi. "Ponzi schemes rely on fooling a small group of gullible people; SSA relies on everyone participating" Nowhere it says the group has to be small, there were huge ponzies. Also there's an unjustified moral contrast here. To treat both sides equally, you'd say "relies on forcing lots of mostly gullible people to participate" "And crucially, if they didn't, they could change the law" It is specifically structured so that it would be extremely difficult because the previous participants have vested interest, having already paid in but not received benefits. Don't take it from me, FDR himself said “I guess you’re right on the economics. They are politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.” I.e. people specifically "buy in" and it would be a political suicide to take their return back - regardless of the fact of how it's internally run. And in fact, this works with ponzi schemes too - when the giant MMM ponzi collapsed in Russia and the operator was in legal trouble, there were massive protests in his support - because the participants were either gullible enough to assume he would have repaid them if not interrupted, or desperate to let it run a little more so they could get some of the money out. He even had a run in politics iirc. "Ponzi scheme is illegal; SSA is the law" and "brainchild of elected representatives" I don't even know what to say. So was slavery, so is civil forfeiture, war on drugs, war in Iraq. Speaking of FDR, so were internment camps. In 1850, would defenders of SS be saying "it's totally unlike kidnapping and forced labor, cause kidnapping is illegal and slavery is the law" "they are not going to run out of new entrants" ... "predictions that it will fail in the same way Ponzi schemes fail have yet to be proven" you cannot prove a negative. They actually have official (iirc), public models that indicate quite clearly when it will run out of money to make previously-promised payments in full without additional forced labor.

by sershe 2y ago

dns_snek 2y ago

Why stop at social security? All societal benefits derived from taxation can be said to be a ponzi scheme if you're determined enough.

piva00 2y ago
I feel that lots of people do actually think that way, either by ideological conviction or ignorance.
sershe 2y ago
Not really. Social security (and medicare) specifically makes promises of future returns to current payers, based on the assumption new entrants will provide the money to pay for those returns. To underscore the point, they are even structured separately. Normal social services (from schools to even medicaid) merely transfer money between individuals in the present.

ModernMech 2y ago

> if I run a ponzi scheme but put a bit of fine print somewhere the investor will not read when joining, admitting it is in fact a ponzi scheme No, in the case of "ponzi scheme", it cannot just mean "plan". Yes that is a dictionary meaning of "scheme" but that's not the one referred to in the phrase. Putting a bit of fine print somewhere in hopes people will miss it is not being transparent, it's also deceptive and manipulative. "Scheme - make plans, especially in a devious way or with intent to do something illegal or wrong." A key aspect of the Ponzi scheme is that the person running it does not actually have a legitimate investment opportunity. Lying profusely to everyone involved about the potential outcome is what makes it work. The only outcome is that they will lose their money. This is not true with SSA, as people have been getting social security payments regularly for 90 years. No one is deceived about what SSA is. Can you point to any literal ponzi scheme that is as transparent as SSA, and has consistently paid back investors for 90 years? > ~nobody studies the terms of how social security operates before starting to pay into it. Yes, but upon learning the truth, most people understand its purpose, how it works, and agree with it. And crucially, if they didn't, they could change the law. > indeed, that is a material difference. Of course, that makes it worse than just a regular ponzi scheme! Why? Ponzi schemes collapse because they run out of new entrants to the scheme. If it's a societal-wide forced Ponzi scheme they're not going to run out of new entrants, and the pool of participants is larger than just suckers who are fooled by ponzi schemes. You simply assert, without proof, this is worse. But to me this sounds like so many systems we have like insurance, and capitalism as a whole. Forcing everyone to participate means everyone has incentive for it to not fall over. -- Let's cut to the chase here. There are more difference between SSA and Ponzi schemes than similarities: - Ponzi schemes are lies; SSA is transparent - Ponzi schemes are difficult to maintain for long; SSA has been going 90 years - Ponzi schemes rely on fooling a small group of gullible people; SSA relies on everyone participating - Ponzi scheme is illegal; SSA is the law - Ponzi schemes are the brainchild of conmen; SSA is the brainchild of elected representatives and administered by career civil servants - Ponzi schemes fail when the law catches up and it's dismantled or runs out new people; SSA has yet to fail and predictions that it will fail in the same way Ponzi schemes fail have yet to be proven. At some point, these difference have to matter, and they certainly mean SSA is not "literally, definitionally a Ponzi scheme"

sershe 2y ago
1) The only real difference I can concede is about lies. Again, it seems to me like nitpicking, as SS operates instead on vast ignorance, but sure - let's say "SS /operates like/ a literal ponzi scheme". EDIT: based on going from ponzi + lies to ponzi + force, maybe we should call it a "ponzi racket" 2) When I said it's "worse" in the 2nd paragraph I meant morally. It's worse to run a ponzi combined with force than to merely to run a ponzi. "Ponzi schemes are difficult to maintain for long; SSA has been going 90 years" That is just because you can force people in. If Madoff could point a gun at Bill Gates and force him to keep investing for 50 years, it wouldn't make it not a ponzi. "Ponzi schemes rely on fooling a small group of gullible people; SSA relies on everyone participating" Nowhere it says the group has to be small, there were huge ponzies. Also there's an unjustified moral contrast here. To treat both sides equally, you'd say "relies on forcing lots of mostly gullible people to participate" "And crucially, if they didn't, they could change the law" It is specifically structured so that it would be extremely difficult because the previous participants have vested interest, having already paid in but not received benefits. Don't take it from me, FDR himself said “I guess you’re right on the economics. They are politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.” I.e. people specifically "buy in" and it would be a political suicide to take their return back - regardless of the fact of how it's internally run. And in fact, this works with ponzi schemes too - when the giant MMM ponzi collapsed in Russia and the operator was in legal trouble, there were massive protests in his support - because the participants were either gullible enough to assume he would have repaid them if not interrupted, or desperate to let it run a little more so they could get some of the money out. He even had a run in politics iirc. "Ponzi scheme is illegal; SSA is the law" and "brainchild of elected representatives" I don't even know what to say. So was slavery, so is civil forfeiture, war on drugs, war in Iraq. Speaking of FDR, so were internment camps. In 1850, would defenders of SS be saying "it's totally unlike kidnapping and forced labor, cause kidnapping is illegal and slavery is the law" "they are not going to run out of new entrants" ... "predictions that it will fail in the same way Ponzi schemes fail have yet to be proven" you cannot prove a negative. They actually have official (iirc), public models that indicate quite clearly when it will run out of money to make previously-promised payments in full without additional forced labor.