{"id":14141,"date":"2011-09-13T15:50:12","date_gmt":"2011-09-13T22:50:12","guid":{"rendered":"http:\/\/www.amptoons.com\/blog\/?p=14141"},"modified":"2011-09-12T15:57:24","modified_gmt":"2011-09-12T22:57:24","slug":"social-security-not-a-ponzi-scheme","status":"publish","type":"post","link":"https:\/\/amptoons.com\/blog\/?p=14141","title":{"rendered":"Social Security: Not A Ponzi Scheme"},"content":{"rendered":"

[This is adapted from a comment I left at Ethics Alarms<\/a>.]<\/em><\/p>\n

According to the Congressional Budget Office, \u201cunder current law, the resources dedicated to financing [Social Security] over the next 75 years fall short of the benefits that will be owed to beneficiaries by about 0.6 percent of GDP.\u201d (PDF file<\/a>.)<\/p>\n

Here\u2019s a table<\/a>, again from the CBO, of options for meeting the shortfall. You can mix-and-match the options; anything that adds up to 0.6 completely fixes SS.\u00a0That\u2019s not a \u201ccrushing burden\u201d on either taxpayers or the economy.<\/strong><\/p>\n

This is the central issue we should be discussing; is fixing SS a big, crushing burden, requiring the entire program to be completely restructured, or can it be done with small fixes to the current structure? The facts show that it can be fixed with small changes to the current structure.<\/p>\n

I’ve seen some critics of Social Security hedge their claim by saying, not that Social Security is <\/em>a Ponzi scheme, but that it resembles <\/em>a Ponzi scheme. For instance, Jack at Ethics Alarms wrote:<\/p>\n

Even the most positively oriented fans of SS are admitting that the structure resembles a Ponzi scheme. […] It takes multiple current contributers (\u201cinvestors\u201d) to pay for one beneficiary, and the beneficiaries are increasing while the number of those paying into the fund are decreasing.<\/p><\/blockquote>\n

But \u201cthe structure resembles a Ponzi scheme\u201d is not a meaningful statement.<\/p>\n

You could say the structure of my house resembles a prison. In a literal sense, that\u2019s true: Both prisons and my house have walls, plumbing, windows, a roof, and other such common structural elements. Nonetheless, anyone who claims that my house is like a prison is substantively wrong. My house doesn\u2019t have bars on the windows, doesn\u2019t have guards, and the residents can walk in and out freely. If you\u2019re interested in substance, my house can\u2019t reasonably be said to resemble a prison.<\/p>\n

Ponzi schemes, by definition, have no viable funding source, and are based on lying to investors about that. As such, they collapse very quickly. SS, in contrast, has a very viable funding source, publishes its finances in full, and has lasted decades. As the Historian\u2019s Office of the Social Security Administration writes<\/a>:<\/p>\n

The first modern social insurance program began in Germany in 1889 and has been in continuous operation for more than 100 years. The American Social Security system has been in continuous successful operation since 1935. Charles Ponzi\u2019s scheme lasted barely 200 days.<\/p><\/blockquote>\n

If a program is honest about its funding and structure, has a viable funding source, and can last for decades, then it\u2019s not like a Ponzi scheme in any way that matters.<\/p>\n

Correspondingly, if Ponzi schemes worked effectively for many decades, weren\u2019t based on lying, and had viable long-term funding, then there\u2019d be no reason to oppose them.<\/p>\n","protected":false},"excerpt":{"rendered":"

[This is adapted from a comment I left at Ethics Alarms.] According to the Congressional Budget Office, \u201cunder current law, the resources dedicated to financing [Social Security] over the next 75 years fall short of the benefits that will be … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[135,25],"tags":[],"class_list":["post-14141","post","type-post","status-publish","format-standard","hentry","category-crossposted-on-tada","category-economics-and-the-like"],"_links":{"self":[{"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/14141","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14141"}],"version-history":[{"count":2,"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/14141\/revisions"}],"predecessor-version":[{"id":14143,"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/14141\/revisions\/14143"}],"wp:attachment":[{"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14141"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14141"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14141"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}