MONEY: Social Secuirty isn’t a Ponzi; you have no choice

Flash Editorials September 17, 2011
By Russell D. Longcore

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The Nation: At Monday night’s “Tea Party Debates,” EVERONE on stage…including Ron Paul…said Social Security and Medicare should be saved. And apparently, Governor Perry felt fine about writing in his book that SS was a Ponzi scheme, but when faced with voters, he nearly soiled himself trying to get away from those words. SS and Medicare are indeed Ponzi schemes, and ALL the candidates who want to save them are criminals. Deal with it.

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I think that calling “Social Security Insurance” a Ponzi scheme is unfair to old Ponzi. It does quickly communicate and editorial about the value of SSI, but Ponzi could NOT make folks participate. He had to defraud them the old fashion way by deceiving them into voluntarily giving him their wealth. Uncle Sam sam put a gun to your head and says: “Pay me”! It is many things: mislabeling (it ain’t insurance), fraudulent (terms are subject to the whim of Congress), and ineffective (inflation exceeds roi). But, not Ponzi, because you were forced to play along. We know how to unravel it; Herman Cain brought up Chile. We know how bad it is (i.e., a wealth transfer from poor minority men to rich white women). We know the ROI (i.e., estimates are between a negative 2% to as high as negative 6%).

There is an element of good public policy in it. Future taxpayers ought not be burdened with your welfare cost should you fail to provide for your old age. If you disagree with the mean old Libertarians who say “that’s your problem if you starve” knowing full well that there will be sufficient private charity to care for those truly in need. Then, be “liberal”, and say that as a condition of your protection provided by the military, you must provide for your old age to a certain level. Use the Insurance Companies to help individuals meet that minimum obligation through annuities that would be guaranteed by the pool of Insurance Companies selling such coverage. (Ever see Insurance Companies scrutinize each other in a “pool”. Think proctology exam. No one wants to be stuck with the other’s liabilities.)

So, let’s find a better word than “Ponzi”. Unfortunately all the ones that I could come up with were not suitable for polite company.

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