This is the Government that You Want to Run Health-care?

[balrog666]

It's called either a Pozi scheme or pyramid scheme.

Ponzi --> http://en.wikipedia.org/wiki/Ponzi_scheme

 

[Tsukasa Buddha]

Ponzi --> http://en.wikipedia.org/wiki/Ponzi_scheme

SS isn't a Ponzi scheme. From your link:

Retirement programs run by national governments, though they involve the taxes paid in by workers being redistributed to pensioners, nevertheless differ in a number of basic features that are usually found in Ponzi schemes, but are not fundamental to them:
Retirement systems, like Social Security, are openly declared for what they are.[citation needed] In a genuine Ponzi scheme, the perpetrators falsely claim that there is some business that generates the promised revenues. In Social Security, people know where the money comes from, and actuaries supply written predictions of future cash in-flows and out-flows. The exception may be in tax payer's expectations that Social Security tax payments are actually invested within a national retirement system. The taxes received are instead used immediately for general government expenditures, one of which is payments to current retirees.
Retirement systems promise a stipend to the country's retired persons, not the quick and exorbitant profits to current investors that Ponzi schemes invariably offer.
Retirement systems rely on the taxing power of the state to ensure continuous funding, as opposed to voluntary investor contributions. In practice, this taxing power has been used primarily for dedicated revenues (taxes), although in theory general tax revenues could be used to supplement worker payments into the systems. (Historically in the U.S., Social Security has almost always been in surplus, so this has not yet become an issue.) When and if the political process is used to raise required contributions via retirement taxes, or to reduce benefits (including raising the retirement age), there would certainly be opposition from those who would pay more or get less, but politicians have only those two choices (plus borrowing) if revenues are inadequate, aside from gradually ending the New Deal completely.
The idea of making Social Security a "fully funded" system has been discussed several times but always floundered on the cost. The cost has gone up as making any fundamental change has been deferred.
In the long run, retirement systems pay out an approximately equal amount to what was paid in, per contributor, plus interest[citation needed]. In the short run, pension surpluses can be used to cover a government's current general-revenue shortfall, as has been happening in the United States since Social Security contribution rates were increased in 1983.
Retirement systems are in many ways insurance rather than investment systems. A person who dies before retirement gets no money back (regardless of what he/she paid in). Someone who lives to a very old age continues to get payments regardless of the amount of money he/she has paid in. And someone disabled, even at a relatively young age (well before he/she can make significant payments into the system, or have significant private investments), still receives payments until the end of his/her life. Due to this, the typical retiree who does not become disabled early sees a lower rate of return than the risk free rate.
Unlike a Ponzi scheme, government receipts (taxes) and payouts (entitlements) can be calculated quite accurately in the short term (five to ten years), and predicted (with a range of assumptions) for periods beyond that time frame. A sudden collapse is therefore unlikely[citation needed], depending on one's definition of "sudden".
The U.S. Social Security Administration provides the following response[24] to the "Ponzi scheme" accusation as applied to a pay-as-you-go system like Social Security:
There is a superficial analogy between pyramid or Ponzi schemes and pay-as-you-go insurance programs in that in both money from later participants goes to pay the benefits of earlier participants. But that is where the similarity ends. A pay-as-you-go system can be visualized as a simple pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end. So we could [imagine] that at any given time there might be, say, 40 million people receiving benefits at the back end of the pipeline; and as long as we had 40 million people paying taxes in the front end of the pipe, the program could be sustained forever. It does not require a doubling of participants every time a payment is made to a current beneficiary. (There does not have to be precisely the same number of workers and beneficiaries at a given time--there just needs to be a stable relationship between the two.) As long as the amount of money coming in the front end of the pipe maintains a rough balance with the money paid out, the system can continue forever. There is no unsustainable progression driving the mechanism of a pay-as-you-go pension system and so it is not a pyramid or Ponzi scheme.
If the demographics of the population were stable, then a pay-as-you-go system would not have demographically-driven financing ups and downs and no thoughtful person would be tempted to compare it to a Ponzi arrangement. However, since population demographics tend to rise and fall, the balance in pay-as-you-go systems tends to rise and fall as well. During periods when more new participants are entering the system than are receiving benefits there tends to be a surplus in funding (as in the early years of Social Security). During periods when beneficiaries are growing faster than new entrants (as will happen when the baby boomers retire), there tends to be a deficit. This vulnerability to demographic ups and downs is one of the problems with pay-as-you-go financing. But this problem has nothing to do with Ponzi schemes, or any other fraudulent form of financing, it is simply the nature of pay-as-you-go systems.

 

[JEROME DA GNOME]

SS isn't a Ponzi scheme. From your link:

I guess that even if it has all the characteristics of a Ponzi scheme that if Wiki says government Ponzi schemes are not Ponzi schemes then they are not.

 

[JEROME DA GNOME]

SS isn't a Ponzi scheme. From your link:

Did you not read?

There is a superficial analogy between pyramid or Ponzi schemes and pay-as-you-go insurance programs in that in both money from later participants goes to pay the benefits of earlier participants. But that is where the similarity ends. A pay-as-you-go system can be visualized as a simple pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end.

SS says it is not a Ponzi scheme and then describes itself as such.


BTW, the Supreme Court said that SS is NOT a retirement program and NO individual has any right to the money that they contribute.

 

[Tsukasa Buddha]

Did you not read?



SS says it is not a Ponzi scheme and then describes itself as such.


BTW, the Supreme Court said that SS is NOT a retirement program and NO individual has any right to the money that they contribute.

That's not all a Ponzi scheme is:

A Ponzi scheme is a fraudulent investment operation that involves paying abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business.

And by all means, ignore the rest of the list provided.

Retirement systems, like Social Security, are openly declared for what they are.[citation needed] In a genuine Ponzi scheme, the perpetrators falsely claim that there is some business that generates the promised revenues. In Social Security, people know where the money comes from, and actuaries supply written predictions of future cash in-flows and out-flows. The exception may be in tax payer's expectations that Social Security tax payments are actually invested within a national retirement system. The taxes received are instead used immediately for general government expenditures, one of which is payments to current retirees.
Retirement systems promise a stipend to the country's retired persons, not the quick and exorbitant profits to current investors that Ponzi schemes invariably offer.
Retirement systems rely on the taxing power of the state to ensure continuous funding, as opposed to voluntary investor contributions. In practice, this taxing power has been used primarily for dedicated revenues (taxes), although in theory general tax revenues could be used to supplement worker payments into the systems. (Historically in the U.S., Social Security has almost always been in surplus, so this has not yet become an issue.) When and if the political process is used to raise required contributions via retirement taxes, or to reduce benefits (including raising the retirement age), there would certainly be opposition from those who would pay more or get less, but politicians have only those two choices (plus borrowing) if revenues are inadequate, aside from gradually ending the New Deal completely.
The idea of making Social Security a "fully funded" system has been discussed several times but always floundered on the cost. The cost has gone up as making any fundamental change has been deferred.
In the long run, retirement systems pay out an approximately equal amount to what was paid in, per contributor, plus interest[citation needed]. In the short run, pension surpluses can be used to cover a government's current general-revenue shortfall, as has been happening in the United States since Social Security contribution rates were increased in 1983.
Retirement systems are in many ways insurance rather than investment systems. A person who dies before retirement gets no money back (regardless of what he/she paid in). Someone who lives to a very old age continues to get payments regardless of the amount of money he/she has paid in. And someone disabled, even at a relatively young age (well before he/she can make significant payments into the system, or have significant private investments), still receives payments until the end of his/her life. Due to this, the typical retiree who does not become disabled early sees a lower rate of return than the risk free rate.
Unlike a Ponzi scheme, government receipts (taxes) and payouts (entitlements) can be calculated quite accurately in the short term (five to ten years), and predicted (with a range of assumptions) for periods beyond that time frame. A sudden collapse is therefore unlikely[citation needed], depending on one's definition of "sudden".

 

[WildCat]

SS isn't a Ponzi scheme. From your link:

Oh, but it is. This was particularly insightful:

It does not require a doubling of participants every time a payment is made to a current beneficiary. (There does not have to be precisely the same number of workers and beneficiaries at a given time--there just needs to be a stable relationship between the two.) As long as the amount of money coming in the front end of the pipe maintains a rough balance with the money paid out, the system can continue forever.

Problem is, there isn't a "rough balance". People are living longer, and having fewer children. The number of workers supporting each retiree has dropped steadily over the years. They "fix" this by increasing the taxes on workers, while cutting back on the benefits of retirees. TB, by the time you retire you'll be lucky to feed your cat on the proceeds of your SS check.

 

[JEROME DA GNOME]

That's not all a Ponzi scheme is:



And by all means, ignore the rest of the list provided.

I read the entire link, but thank for reposting the same quote again.


The only difference is in the government Ponzi scheme you are required to participate through the force of a gun.

 

[Tsukasa Buddha]

I read the entire link, but thank for reposting the same quote again.

Well you didn't try to rebute any of the points, so I take it you agree with them?

The only difference is in the government Ponzi scheme you are required to participate through the force of a gun.

... You sure you read the quotes? Because it lists the differences. And this is a democracy, not a libertopia.

 

[Tsukasa Buddha]

Oh, but it is. This was particularly insightful:

Problem is, there isn't a "rough balance". People are living longer, and having fewer children. The number of workers supporting each retiree has dropped steadily over the years. They "fix" this by increasing the taxes on workers, while cutting back on the benefits of retirees. TB, by the time you retire you'll be lucky to feed your cat on the proceeds of your SS check.

But this isn't an inherent part of the SS system, it has to do with population shifts which change over time. And even if we have to increase the payments, it still won't be a Ponzi scheme.

 

[JEROME DA GNOME]

But this isn't an inherent part of the SS system, it has to do with population shifts which change over time. And even if we have to increase the payments, it still won't be a Ponzi scheme.

The tax was DOUBLED in the early 80's.

The benefits are taxed as income. You understand that this means one pays income tax on the same money twice. This means that the average taxpayer pays 60% income tax on his SS benefit.

The benefits have been decreased.

 

[KoihimeNakamura]

Jerome and Wildcat: In order to keep it.. viable. Of course, you could stop paying attention to that and just go 'doom and gloom!'

 

[WildCat]

Jerome and Wildcat: In order to keep it.. viable.

Not gloom and doom, just ditching a system that is unworkable in the long run.

"Keeping it viable" just for the sake of "keeping it viable", when it is no longer capable of serving its original purpose (retirement income one could live off) seems foolish to me.

 

[Rolfe]

Utterly wrong - they refuse government insured patients because of the roadblocks that bureaucrats throw up to impede lawfull payment for services rendered. Cash is *ALWAYS* readily accepted.


Try again.

Sunshine, I don't know what you think you're talking about, but you're not even on the right page.

I'm talking about a vet in England who declared that he would only treat animals which were covered by pet health insurance policies. The only other alternative method of payment is cash. He was refusing to take any clients who would have paid cash.

The reason, apparently, was that the insurance companies would not query what he chose to do and how much he chose to charge. While people paying cash might have asked awkward little questions like "why is this blood test needed?"

Rolfe.

 

[WildCat]

And even if we have to increase the payments, it still won't be a Ponzi scheme.

The only thing keeping it from being a true Ponzi scheme is that it won't ultimately collapse completely, since participation is mandated by law.

A forced 401(k) type plan would be a much better way to go if mandatory government retirement plans are desired by the population.

 

[JEROME DA GNOME]

The only thing keeping it from being a true Ponzi scheme is that it won't ultimately collapse completely, since participation is mandated by law.

A forced 401(k) type plan would be a much better way to go if mandatory government retirement plans are desired by the population.

What makes you think that the laws concerning 401(k) plans will not change to the detriment of the individual in the manner that SS laws have?

 

[Tsukasa Buddha]

The only thing keeping it from being a true Ponzi scheme is that it won't ultimately collapse completely, since participation is mandated by law.

A forced 401(k) type plan would be a much better way to go if mandatory government retirement plans are desired by the population.

But Social Security covers other things as well, like disabilities.

And in a Ponzi scheme, you "invest" in a company and get really high returns, which is generated from the "investments" of other people who want to get the really high returns as well. However, you don't know that that is what the company is really doing. This can continue as long as the number of investors is consistently increasing at an exponential rate. Once it can't keep the rate up, it breaks down.

It is only similar to SS in that the investments of current members are given as returns to the older members.

But there are numerous differences. In SS people know how the system works. There aren't really high returns immediately. The number of investors doesn't have to increase at such a huge rate or else it will collapse.

And, of course, there isn't a guy getting rich quick behind the scenes .

 

[JEROME DA GNOME]

And, of course, there isn't a guy getting rich quick behind the scenes .

The government is taxing under false pretense. You are aware that the government collects more than they pay out and spend all the excess.

 

[WildCat]

But Social Security covers other things as well, like disabilities.

Believe it or not, so does private insurance.

And in a Ponzi scheme, you "invest" in a company and get really high returns, which is generated from the "investments" of other people who want to get the really high returns as well.

Funny, that's exactly how SS works! The early recipients got way more out of it than they put in. Recipients in the future (maybe now?) will get less than they put in.

 

[balrog666]

But Social Security covers other things as well, like disabilities.

And in a Ponzi scheme, you "invest" in a company and get really high returns, which is generated from the "investments" of other people who want to get the really high returns as well. However, you don't know that that is what the company is really doing. This can continue as long as the number of investors is consistently increasing at an exponential rate. Once it can't keep the rate up, it breaks down.

It is only similar to SS in that the investments of current members are given as returns to the older members.

But there are numerous differences. In SS people know how the system works. There aren't really high returns immediately. The number of investors doesn't have to increase at such a huge rate or else it will collapse.

And, of course, there isn't a guy getting rich quick behind the scenes .

So, if you "invest" in Social Security and are promised (or receive) much more than you put in, it's a Ponzi scheme.

But if you get out less or nothing (i.e., you die before age 67), then it's not a Ponzi scheme.

Oh, yeah, I understand you now.

 

[Tsukasa Buddha]

Believe it or not, so does private insurance.

401k programs cover disability, survivorship, etc?

Funny, that's exactly how SS works! The early recipients got way more out of it than they put in. Recipients in the future (maybe now?) will get less than they put in.

Way to ignore the rest of what I posted.

I said that the current members dues going to the older members returns was the only way they were similar. And I am not saying that changes won't have to be made to adapt to other variables like changing demographics. However, these changes won't involve an exponential expantion of people paying into the system.