They did get more out, but for the most part they rolled it back in. Same with the original Ponzi scheme.
U.S. Social Security - Largest Ponzi Scheme - EVER
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There was a long discussion about this on an economics forum recently. The conclusion I reached was that it does share some traits with a Ponzi scheme, but it's a bit hyperbolical to call it one.
The main trait that is shares is that it promises more money out than was put in, and that money doesn't come from wealth generation like a normal investment, it comes from later contributors.
But it also differs in a very important way. While it promises big returns, those returns are only available if you live long enough. Ponzi schemes promise those returns regardless; if you die your estate gets the money. SS does provide death benefits to surviving family, but it's not 100% of what you would have gotten had you lived. So SS could be engineered to, on average, not pay out more than was taken in. Ponzi schemes can't.
That depends on whether you consider involuntary contribution to be a form of fraud, it's certainly a form of force.
May I ask how? Are they exempt because of participation in another pension scheme?
Well, first, if the property is taken by force, then it is by definition not fraud.
Second, it's demonstrably not involuntary. As I said, anyone who likes can get out of paying social security; just get the right job.
... which in turn means that the property is not taken by force, either.
So you're wrong on three counts in only 20 words, which is impressive even for an anarchist.
Got it in one.
Tsukasa Buddha
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It also depends on whether you consider following the laws, esp. those of a democratic nation, to be involuntary if you disagree with them.
Tsukasa Buddha
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Social Security is not a pension plan, though it shares some aspects of one.
It does not. As you point out, it offers absurdly long returns if you live long enough. But it's not a promise. It's no different than buying an annuity (which you can do from any insurance agent) or a conventional pension --- both of which take money (if necessary) from later contributers and in fact are required to by law if investment income is insufficient to cover required distributions, and as long as the average payments are less than the average contribution (from whatever source), then it's fine. When I die at 55, it will subsidize your golf play at 105.
That's part of why the whole GM problem exists; until a few years ago, GM ran a pension fund for UAW employees that was largely funded out of current reciepts (you bought a car in May, part of the price went to my grandfather's June check in Battle Creek, MI). The GM accountants argued that they could not continue to support the increasingly large pension payment and wanted to shift to an endowment-based payment. In the long run, this would have reduced GM's contributions, but in the short run it required substantially greater contributions. And then the economy went south and gas went to $5/gal....
The key thing that you're missing about a Ponzi scheme is that it is a fraud; it hinges on the fact that Mr. Ponzi is telling you untruths about how and where he's getting the results he does. GM's pension scheme was not a Ponzi scheme and would have worked if GM had been better managed. Social security is not a Ponzi scheme and can be made to work with some politically difficult decisions. No one is telling lies about either of these (except for the conspiracy theorists who assert that SS is a Ponzi scheme).
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boloboffin
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In its basics, that sounds like the conservative "solution" to Social Security.
Did I say that *I* considered it to be fraud? Pretty impressive reading comprehension considering it's only 20 words, for a statist anyway.
But you're wrong, it's still force because some options are forcefully taken away from me, such as using a non-employer retirement account or making no contribution at all.
Except for the whole "GM would have to spend more money" issue. And the whole "GM would still be responsible for the endowment" issue.
Basically, the whole "responsibility" issue. GM -- to its credit -- tried to take a responsible course (which involved taking on a whole bunch of short-term spending commitments). The conservative "let's all privatize SS" bandwagon seemed to me to be a simple attempt to bail out on their prior commitments.
Any law which would have you forced into jail for non-compliance is, by definition, involuntary. Regardless of how or why the rule was created.
No, but you certainly implied it in your hypothetical.
Yawn. No, it's not force. The fact that the goverment won't let you fly like a bird doesn't mean that it's forcing you to bicycle.
... except in anarchy-speak, where "force" and "fraud" are synonyms and mean "anything that inconvenciences me personally"
It's as close as you can come to a promise without actually being one. My SS statement, which I just got the other day, sure makes it sounds like a promise.
But that's not the point of what I was saying. The point is where that additional money comes from. In an annuity or insurance policy, the extra wealth that I would get comes from wealth generated by the insurance company (if the company is run properly, anyway). In SS, and Ponzi schemes, it comes only from within the system, from other contributors, no additional wealth is generated.
portlandatheist
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As long as each of us have 5+ children, there is nothing to worry about
boloboffin
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I guess I was just talking about the "divide up the pool of cash into accounts each person owns" part. From what you say, it sounds like GM was trying to keep the fees and such from impacting payments. The conservative privatization of SS would have taken that right out of your account.
(edit: what hypothetical? You may be confusing someone else's comment with mine)
I can't control your inference. I simply said that *if* you think they're the same, then it would be fraud. Plenty of people think that way, myself not included, though they usually refer to fraud as a "substitute for force".
You're going to stick with that analogy?... Okay.
I can't fly like a bird with or without government intervention. I can take my FICA and put it into a 401k. Did your mom not teach you the difference between "can" and "may"?
So, being physically forced into a small barred room is now an "inconvenience"?
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And in theory, so does the money for the SS -- in the so-called "social security trust fund." Paid-in contributions that exceed current liabilities are used, and have historically been used, to buy government securities and the income from those securities has been used to generate additional money to fund future liabilities. I believe the rate of return is around 5-6%, which is really rather a sweetheart deal.
There were about $2 trillion dollars in this fund as of late 2006; I don't have more recent figures to hand, nor are they really relevant. More relevant is the fact that the fund is expected to grow for the next decade or two, precisely because the demographics are still in our favor. Only after about 2020-2025 are we expected to have to tap the trust fund.
Now, you might suggest that government bonds are a stupid spot for the government to park excess money. That suggestion has, in fact, been made. But that's not the same as saying that the money doesn't exist -- that money is just as "real" as the T-bills that banks have been flocking to buy in the past several months, and if the banks are to be believed, then it's probably better and safer than buying anything on the commercial market.
At this level of detail, social security is probably in much better shape than your own pension fund, especially with the level of equity risk that we've seen in the market right now, with more than two trillion dollars of reserve capital parked in essentially risk-free investments.
That's true. I guess the real issue is where money would come to make up a shortfall. A non-Ponzi scheme would be required to suffer losses or fold. SS could do that, but it also has the option of forcing more contributions.
It's not really a Ponzi scheme in practice, it's more of a potential one.