12 replies to this topic

[Luminosity]

Social Security is sort of a ponzi scheme but if they would stop raiding it for other purposes, it would be a lot better. Isn't the system in Chile rife with fraud and graft?

[Mind]

Hmmm, will have to look up the Chile system. I might be confusing the retirement system with the unemployment insurance (or health savings accounts).

Edited by Mind, 08 July 2012 - 10:43 AM.

[niner]

Social Security is sort of a ponzi scheme but if they would stop raiding it for other purposes, it would be a lot better. Isn't the system in Chile rife with fraud and graft?

Ponzi schemes can't be made sound by relatively small tweaks, like changing the COLA base from CPI to wage growth, and making small changes to retirement age. Social Security isn't a Ponzi Scheme. Social Security is not being "raided". That's a myth. Language like that detracts from the real issues of how much people should pay for SS and how much people should benefit from it. We should be considering issues of basic fairness and how much debt we can safely pass on to our descendants. And what the hell does Chile have to do with anything? We're talking about America.

[maxwatt]

I disagree, side with niner here: When Social Security was enacted the life expectancy at retirement age was about five years. It is now more than double that. Raising the retirement age to track greater life expectancy, or having a rapidly increasing population of young workers would easily solve that actuarial problem......

If Bernie Madoff had a rapidly increasing population of "new investors" he wouldn't be sitting in jail right now. The U.S. Social Security is a ponzi scheme. I don't like saying it Maxwatt. I am just going by the definition of a ponzi scheme.

Also, wouldn't you agree that it is a perverse incentive for having kids, increasing the population of an already burdened and polluted planet, just to keep alive a failing and seriously flawed "retirement system"? If we want to be more sustainable, we should encourage systems like exist in Chile and Australia. The U.S. faces tough choices, but we should be thinking about the future.

We live in different worlds; from where I sit, what you say isn't right, but it isn't even wrong.

Lets replace the word "government" with "the King".
Then anti-government statements take on a different meaning. Some things become clearer. And we replaced Kings with democracy, so instead of "King" say "We the people."

As for fiat currencies: they work well when the priviliged classes want them to. When they don't, they figure out how to blow them up. They don't collapse by themselves when well-managed.

[Mind]

Social Security is sort of a ponzi scheme but if they would stop raiding it for other purposes, it would be a lot better. Isn't the system in Chile rife with fraud and graft?

Ponzi schemes can't be made sound by relatively small tweaks, like changing the COLA base from CPI to wage growth, and making small changes to retirement age. Social Security isn't a Ponzi Scheme. Social Security is not being "raided". That's a myth. Language like that detracts from the real issues of how much people should pay for SS and how much people should benefit from it. We should be considering issues of basic fairness and how much debt we can safely pass on to our descendants. And what the hell does Chile have to do with anything? We're talking about America.

I have been trying to bring up examples of more efficient, equitable, and/or just systems of benefits that other countries use. I don't see any harm in that. Maybe Americans could learn something.

Bernie Madoff could have absolutely tweaked his payouts and survived a lot longer. Social Security is not an investment. It has no true assets. If current employees/workers did not pay into the ponzi scheme it would absolutely collapse. Shortfalls would have to come from general funds-taxes. I know everyone wishes it was more of a true retirement account (like an asset). I know it has been sold that way for years, but it just isn't. The sooner corrupt politicians and SSA itself stop selling it as "retirement", the better off we will be - the sooner it can be reformed.

Edited by Mind, 08 July 2012 - 11:01 AM.

[Mind]

I disagree, side with niner here: When Social Security was enacted the life expectancy at retirement age was about five years. It is now more than double that. Raising the retirement age to track greater life expectancy, or having a rapidly increasing population of young workers would easily solve that actuarial problem......

If Bernie Madoff had a rapidly increasing population of "new investors" he wouldn't be sitting in jail right now. The U.S. Social Security is a ponzi scheme. I don't like saying it Maxwatt. I am just going by the definition of a ponzi scheme.

Also, wouldn't you agree that it is a perverse incentive for having kids, increasing the population of an already burdened and polluted planet, just to keep alive a failing and seriously flawed "retirement system"? If we want to be more sustainable, we should encourage systems like exist in Chile and Australia. The U.S. faces tough choices, but we should be thinking about the future.

We live in different worlds; from where I sit, what you say isn't right, but it isn't even wrong.

Lets replace the word "government" with "the King".
Then anti-government statements take on a different meaning. Some things become clearer. And we replaced Kings with democracy, so instead of "King" say "We the people."

As for fiat currencies: they work well when the priviliged classes want them to. When they don't, they figure out how to blow them up. They don't collapse by themselves when well-managed.

it is a great thought experiment to replace the words. "The King", "The Government', and "The Majority" (in a real democracy), can all be awful when wielding too much power.

[maxwatt]

Government is lke beating on a drum. It's OK when it's your drum and you're the one that's doing it.

[niner]

Social Security is sort of a ponzi scheme but if they would stop raiding it for other purposes, it would be a lot better. Isn't the system in Chile rife with fraud and graft?

Ponzi schemes can't be made sound by relatively small tweaks, like changing the COLA base from CPI to wage growth, and making small changes to retirement age. Social Security isn't a Ponzi Scheme. Social Security is not being "raided". That's a myth. Language like that detracts from the real issues of how much people should pay for SS and how much people should benefit from it. We should be considering issues of basic fairness and how much debt we can safely pass on to our descendants. And what the hell does Chile have to do with anything? We're talking about America.

I have been trying to bring up examples of more efficient, equitable, and/or just systems of benefits that other countries use. I don't see any harm in that. Maybe Americans could learn something.

Bernie Madoff could have absolutely tweaked his payouts and survived a lot longer. Social Security is not an investment. It has no true assets. If current employees/workers did not pay into the ponzi scheme it would absolutely collapse. Shortfalls would have to come from general funds-taxes. I know everyone wishes it was more of a true retirement account (like an asset). I know it has been sold that way for years, but it just isn't. The sooner corrupt politicians and SSA itself stop selling it as "retirement", the better off we will be - the sooner it can be reformed.

A Ponzi scheme is a criminal enterprise where money from new investors is used to pay off early investors in order to make it look like a good investment, while the people running the scam take a large cut. SS is a Pay As You Go social insurance plan. As long as receipts from workers match the outgo to beneficiaries, everything is fine. There is no criminal intent there, and it doesn't require an ever-increasing number of workers, just a constant ratio of in/out. The problem comes when the number of workers shrinks relative to the cost of benefits. There are easy fixes for this- you just decrease benefits or increase taxes. Calling it a "Ponzi scheme" is not just inaccurate, it's terribly counterproductive. It detracts from the discussion that we should be having, which is how much SS we can afford, how much low income people should pay into it, how much high income people should take out, and what ratio of payments to benefits anyone is entitled to. If you don't think that there should be any social insurance plan at all, you should make the case for that without claiming that the current system is something it's not, otherwise, you just sound like the angry old guy who sits on his porch all day, shaking his fist at everyone who walks by.

It's very easy to be demagogic about SS, because it's a weird hybrid of welfare, insurance, and retirement plan. The more you pay in, the higher your benefits are. In that way, it's like a retirement account. Some people, including my wife's parents, get vastly more out than they paid in. In that way, and particularly when it's taken as SSI, it's like welfare. Other people, like my mom, pay into the system all their life, die too soon, and collect nothing. In that way, it's like insurance. I've paid insurance premiums on my house and car for years without making a claim. I'm buying a reduction in risk, so I'm not getting ripped off; I just haven't needed it yet.

The problems that I see with SS are that the working poor pay too high a fraction of their income, the wealthy pay an insignificant fraction of their income, and our broken political system is incapable of making hard choices about either benefits or taxes. If a politician is responsible and does the right thing, the other side will crucify him for it, and the population is too moronic to figure out how they are being manipulated by lying politicians.

[platypus]

If a single payer system comes to the U.S., the MEDICAL care system will be over-run with tens of millions, maybe over 100 million people who are sick because of their lifestyle.

How about running the basic medical care in a socialistic way, i.e. without an ulterior profit motive?

[Mind]

I know that under the guise of legality and the fact that the U.S. government runs the SS scheme, makes it look less like a ponzi scheme, or that one can artfully and semantically argue that it isn't. But if you strip away the terminology and just look at the mechanics, it is hard to not see ponzi mechanics at work. If I started Mind's "Social Insurance", and decades later it was going insolvent because I needed new people to pay in and didn't pay out what I promised and I filled the "trust fund" with Mind's rock-solid IOU's, no matter how hard I pleaded and tried to argue in court that it wasn't fraud, I would probably go to jail. What SSA tells you you should get in the future, is not what you will get. People should know that it can be changed at any time. A real retirement system would keep your payments in an individual fund.

Niner, no matter the terminology, you make solid points about the solvency. SS, Medicaid, and Medicare are all going broke. Pragmatically, we would be better off going with "Senior Welfare" and "Medical Welfare" for the poor and infirm.

[Mind]

I argued the ponzi-mechanics are at work in SS, but I am going to have to cede this one to you Niner (and Maxwatt). I'll have to settle for "ponzi-like". I have to go back to the Supreme Court decision I referenced earlier that stated no one has any legal claim on any money they have paid into SS. Even though SS "talks like a duck"(ponzi), it doesn't "walk like a duck". The way it has been sold and the way most people imagine it works is different than what it is. If a private citizen tried to do the same thing (sell it differently than what it actually is) they would probably get into hot water. SS is getting top-heavy and something needs to be done otherwise it will crash in a very ponzi-like manner. That is the hard reality.

Sorry for taking up so much of your time. You made a cogent argument.

[JLL]

If a single payer system comes to the U.S., the MEDICAL care system will be over-run with tens of millions, maybe over 100 million people who are sick because of their lifestyle.

How about running the basic medical care in a socialistic way, i.e. without an ulterior profit motive?

Yeah that always works.

[platypus]

If a single payer system comes to the U.S., the MEDICAL care system will be over-run with tens of millions, maybe over 100 million people who are sick because of their lifestyle.

How about running the basic medical care in a socialistic way, i.e. without an ulterior profit motive?

Yeah that always works.

Well yes it does, and way better than your broken system that is contributing to your fiscal problems.