Monday, September 12, 2011

A Ponzi Scheme is Looking Like a Best Case Scenario

Only 1.75 Full-Time Private Sector Workers Per Social Security Recipient
There were only 1.75 full-time private-sector workers in the United States last year for each person receiving benefits from Social Security, according to data from the Bureau of Labor Statistics and the Social Security board of trustees.

That means that for each husband and wife who worked full-time in the private sector last year there was a Social Security recipient somewhere in the country taking benefits from the federal government.
There are only a couple of differences between a Ponzi scheme, and Social Security: 

First, in a Ponzi scheme, the structure of the scheme is hidden; investors believe they are going to be paid out of the earnings of an imaginary investment.  In Social Security, we know where the the money is coming from, and where it is going, at least until it runs out. This is probably not a critical difference, because most people rationalize away the essential weakness of the system, especially the politicians who write the rules.

Second, a true Ponzi scheme relies on the gullibility of the marks. The operator of the Ponzi scheme has no way to force new people to participate. In Social Security, participation in mandated, ultimately with the threat of imprisonment at the point of a gun as the enforcement.  True, many people are still gullible and see no problem with the program as it currently stands.

So maybe it's not so different.

The other day, I was talking with a liberal friend (a guy with long white beard and black dog) who questioned whether I would take Social Security when I was eligible, despite my apparent opposition.

"Of course" I replied.  I paid into it, not necessarily voluntarily, so I would hope to get back as much of what I put into it as possible. 

"So, do you buy products made by private enterprise, despite your apparent opposition to private enterprise?"

He didn't seem to appreciate the analogy.

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