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Today In Asinine Winger Analogies

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When both Rick Perry and Glenn Reynolds embrace an argument you know it’s going to be uniquely stupid:

RICK PERRY CALLS SOCIAL SECURITY A PONZI SCHEME.

Well, I have heard Yale Law Professor John Langbein say that if a private entity did what Social Security has done, they’d all be in jail. So Perry’s right up there with Ivy League experts on the subject.

Well, this may come as news to Reynolds, Perry, and an “Ivy League expert,” but in fact companies that sell life insurance, companies that offer pension plans as compensation, banks that lend out money on the anticipation of maintaining and acquiring new customers, etc. etc. are in fact allowed to stay in business. And even if this transparently stupid assertion was true, it would still be beside the point. It also wouldn’t be legal for you or me to force someone off the streets at gunpoint and hold them in a room for 25 years, but I’m guessing that even certified Ivy League professor John Langbein* does not believe that therefore the state and federal prison systems should be disbanded. States are obviously able to raise revenues in ways that private actors are not.

Or perhaps putting it in diagram form would help.

*As noted by a special guest star in comments, it should be emphasized that I don’t mean to imply that the real Langbein actually means what Reynolds implies that he means.

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  • Uncle Kvetch

    if a private entity did what Social Security has done, they’d all be in jail

    The breath, it is taken, the eyes, they are crossed, the brain, it is begging for mercy.

    I had pegged Reynolds as one of those “Not an idiot, but plays one for his audience so they’ll think he’s one of them” types. Was I ever wrong.

    • mpowell

      Nah, he’s ever so careful to avoid doing anything as identifiably stupid as calling SS a ponzi scheme himself. He just feeds his audience dog sh*t for arguments because he knows they like the taste.

      • Joshua

        Is the Instapundit still pulling that trick? When someone calls him out on his stupidity, he claims he’s just linking?

        How does this stupid asshole still have readers?

        • firefall

          I’m assuming he pays them

  • mark f

    The update to the Instapundit post is awesome. Someone named “Prof. Stephen Clark” says Obama has no legitimate counter argument because it’s indisputably true. Reynolds throws him an “Indeed.”

  • Rob

    Of course they’d be in jail, they don’t have the power to tax. Well not until President Rick Perry signs the IRS Privatization and Make Capital Gains Free Act.

    • Dahlia Lithwick

      That may well have been Langbein’s point, even if Reynolds was too stupidly blinkered to understand it. Langbein is on record saying that making Social Security more like private pension plans is a really bad idea, precisely because we would lose its redistributionist features.

      • Hogan

        Damn, I thought I changed that. Lemieux’s out of town? I’ll blame him.

        • Otto Klemperer

          Ho-GUN!!!!

          • Njorl

            Werner, not Otto.

            • Hogan

              Unless I’m a violinist with the Los Angeles Philharmonic.

            • Bill Murray

              see that’s what’s funny about. I too used the incorrect name

      • Scott Lemieux

        Yeah, I had the same thought as Dahlia; particularly given that there was no link, I assume an extremely high probability that Reynolds was willfully misleading his readers about Langbein’s point.

    • Bill Murray

      Tax Farms are so French

    • David B.

      Exactly the point I wanted to make.

  • strannix

    By “uniquely stupid”, I assume you mean “utterly typical of the current right-wing intelligentsia”.

    • David B.

      There is no peak stupid, just as there is no peak wingnut. (If there were, I assume the two would reach a singularity, however.)

      • Njorl

        Oxymoronically, I think it requires some intelligence to attain the rarefied heights of stupidity.

    • BradP

      right-wing intelligentsia = Rick Perry and Glenn Reynolds?

      • DrDick

        Let’s not forget William Kristol and Jonah Goldberg!

  • Joshua

    If there’s no Social Security for me, it’s because the baby boomers gutted it for everyone younger than them.

    Something stinks but it ain’t the Social Security Administration.

    • dave3544

      You obviously don’t understand how deeply the Boomers care about their grandchildrens’ futures.

      I have actually had my in-laws make this argument to me. Not with a straight face, but with an angry face because they really truly cannot believe how selfish I am to think the country should rack up trillions in debt so that I don’t have to sacrifice.

      We spend a lot of “family time” quietly watching television together.

      • Cousin Dave?!

      • DrDick

        Some of us (I am almost 60) are quite passionate about protecting and strengthening SS, not just for ourselves, but for our children and grandchildren (I have 2).

    • This line of argument is a continuation of the canard that the Community Reinvestment Act and the GSEs caused the mortgage meltdown.

      The wingnuts, even in the service of Wall Street, are trying to redirect public anger over the financial meltdown away from the financial industry and its deregulatory enablers, and towards the modern state. Using the terminology of investment scams is just another way to do this.

      • Whoops, that’s supposed to be a stand-alone comment about “Ponzi Scheme,” not a reply to anyone.

      • BradP

        away from the financial industry and its deregulatory enablers, and towards the modern state

        Unfortunately, they are one and the same.

    • wengler

      Bots don’t get Social Security.

  • david mizner

    Perry is turning himself into a bad general election candidate before our very eyes. I’d say this has been a very good couple of weeks for the President, if you care about that kind of thing.

    • I can’t believe I bought the hype about this guy.

      He’s just another Fred Thompson, a “We hate our frontrunner, who will save us?” freak show getting his 15 minutes from the Republican primary voters.

      Donald Trump used to win Republican primary polls, too.

      • david mizner

        I’m actually still believing the hype (but then my prognostication record isn’t exactly stellar.) I think there’s a good chance he’ll win the GOP primary — crazy and a “real” Christian donchyaknow) but I think in a general he would send Latinos, suburbanites, women, and moderates of all stripes running into the President’s arms.

      • Scott Lemieux

        I still say he’s the Republican frontrunner. And if he should win the primaries, it will be an interesting test about where the “campaigns don’t matter much” theory starts to break down that I would just as soon not conduct…

        • He’s certainly the frontrunner right now, in the sense that he’s leading the polls.

          But how many times have we seen this movie before? Remember the Herman Cain bubble after he won the first debate?

          • Scott Lemieux

            I should address this in a separate post…

            • david mizner

              Just please don’t write about that other non-issue that everyone else is writing about, which I just wrote a comment about.

  • BradP

    I’m not agreeing with Perry, but there is a lot about that diagram to reasonably disagree with:

    “Is run by the government, which can print money and tax people”

    Taxation, under most justifications, requires some form of consent. While this is a difference between the two, it is not a morally relevant one.

    “Is not a deliberate fraud”

    But it is hardly treated as an iron-clad obligation. Again, a difference, but not much of one, as everyone here has to be well aware of the US government to cancel their end of contractual agreements at a whim. How much of a moral difference is there between a Ponzi schemer and a government who continues to collect SS taxes while “putting SS benefits on the table”?

    “Is paid into by every American who works”

    I don’t get how this is a meaningful difference.

    “Is supervised by social security Administrator and Horace translator Michael Astrue, who made $200,000 in 2011”

    This is an apples and oranges comparison, and it is irrelevant. If Bernie Madoff had paid some accountant to unwittingly supervise and administer the receipts and payments, it would not have been any less of a ponzi scheme.

    “Promises fairly modest rates of return over a period of decades”

    A difference of degree and not kind. A ponzi scheme could feasibly promise the same thing.

    “Is invested in US treasury bonds”
    Which would be similar to Madoff using the funds he gained through a Ponzi scheme as capital for his own company and saying “When this investment pays off, I can just continue my scheme”.

    _________________________________________

    The point of all this is to point out that the moral difference between a ponzi scheme and social security lies in the faith and credit of the US government, and the intent and honesty of our elected representatives.

    I personally believe, at 29 years old, that I will be on the “collapsing” end of social security, but that it will be a result of incompetence rather than fraudulence.

    So yes, social security to me is not a Ponzi scheme, but no, I do not care about the difference.

    • dave3544

      So, basically if a “ponzi scheme” were run so that no one made huge piles of cash, it did not promise almost instant wealth for a “small” investment, and it was responsibly managed, then it’d be just like SS. Is that your point?

      Yeah, it sucks that one day SS may go away or be significantly weakened for younger workers, but see your point about “consent.” This is significantly different than a ponzi scheme in that a ponzi scheme is designed to go away before you collect.

      • BradP

        So, basically if a “ponzi scheme” were run so that no one made huge piles of cash, it did not promise almost instant wealth for a “small” investment, and it was responsibly managed, then it’d be just like SS. Is that your point?

        I question the first and third point of that first sentence. I am quite sure that a high proportion of those in control of social security would manage it irresponsibly for their own personal gain.

        We probably wouldn’t be having this public discussion if that weren’t true.

        Yeah, it sucks that one day SS may go away or be significantly weakened for younger workers, but see your point about “consent.” This is significantly different than a ponzi scheme in that a ponzi scheme is designed to go away before you collect.

        Precisely my point about the difference coming down to the “intent and honesty of our elected representatives”. Perry and Reynolds are liars and hacks looking for publicity, but there are a lot of people think that the government is making some very negligent promises, knowing that the promises will not likely be fulfilled.

        • timb

          I work with Social Security clients everyday, Brad, and if that statement was correct, then I would an unemployed lawyer looking for a handout.

          I’m betting the 75% of people who retire with absolutely no savings would also disagree with you point

        • Of course, the promises of a (classic) Ponzi scheme cannot (long) be fulfilled. The promises of SS can easily be fulfilled. The scam is to claim that SS will not be fulfilled because it “cannot” be. But it only cannot be because people keep trying to destroy it.

          This is just an instance of the standard Republican Plan to Show That Government Doesn’t Work via the two prog strategy of incompetence (with a healthy does of corruption) when in power and tantrums when out. I really wonder how long they can sustain it before either 1) people get sick of it or 2) it all falls apart.

          • Malaclypse

            My hope is that, should they actually end SS, that that might be the one time heightening the contradictions would actually work, and lead to a “let’s not simply fuck over 90% of the population” POLICY.

            • Malaclypse

              Sorry about the CAPS LOCK. As always, I blame expansive readings of the Commerce Clause.

            • Given how appalling the new normals over the past decade are, I worry.

              • Malaclypse

                So do I.

    • Joshua

      But it is hardly treated as an iron-clad obligation. Again, a difference, but not much of one, as everyone here has to be well aware of the US government to cancel their end of contractual agreements at a whim.

      At a whim? The US government can’t just skip out of town like Lyle Lanley. Hell just the fact that we know they are putting it on the table says, in effect, that it’s not a Ponzi scheme.

      We all know what the GOP (and some Dems) have been wanting to do to Social Security for decades. But we keep electing them. We deserve what we get.

      • BradP

        At a whim?

        Compared to the lifetime contributions of future beneficiaries? Yes, at a whim.

    • wengler

      What’s the ponzi scheme aspect of it? It’s a program that some people pay into a little and have gotten a lot out of(especially at the beginning), while others have paid a lot into and gotten little to nothing out of.

      This makes Social Security the same as any other insurance program. It’s designed to pay retired people money so they don’t live in desperate poverty.

      Only in America are social insurance programs declared scams.

      • BradP

        This makes Social Security the same as any other insurance program.

        The qualities of social security listed in the Venn diagram do not align well with the qualities of an insurance program.

        • DrDick

          True. There are no excessive administrative costs or efforts to deny coverage.

    • Hogan

      So taxation requires some form of consent, but defaulting on T-bills in the Social Security Trust Fund doesn’t?

      • BradP

        I’m not entirely sure how people on here would justify the actions of the Fed. I’d say the money management of the central bank falls less on social contract theory than does taxation.

        With that said, I don’t know what you are getting at. I didn’t wish to give the impression that the Fed defaulting on bonds is morally justified.

        • Hogan

          You said taxation requires consent, but the government could void its SS obligations on a whim. I assume “whim” means something that includes “without consent of the governed,” and wonder why that’s different.

          • BradP

            You said taxation requires consent, but the government could void its SS obligations on a whim.

            I see.

            Its a is-ought difference.

            The comment about taxation dealt with moral justification. The comment about SS obligations dealt with political realities.

            To illustrate, it seems it would be much easier to drop SS benefits than to raise taxes, even though both should reflect the consent of the governed.

            Its an unfortunate and plain disconnect.

            • dave3544

              I’d think that the fact that we’ve been talking about SS “reform” for a good portion of my lifetime would also negate the “whim” factor.

              I may hate that SS could be gone before I collect. I’d have a legitimate “Hey, I paid for all those old fogies to golf in Arizona!” beef, but the depressing fact would be that the majority of my fellow voting citizens voted for people who believe in cutting taxes before providing retirement security. They may be stupid, but they are not whimsical.

              • BradP

                This is true. “On a whim” is incorrect, and I could not tell you which is more difficult: cutting entitlements or raising taxes.

            • jefft452

              “The comment about SS obligations dealt with political realities.”

              This comment?

              “…US government to cancel their end of contractual agreements at a whim”

              You actually think that Bohener could wake up tomorrow and say “Fuck it, lets not send out SS checks this month” is dealing with political realities?

              wow

              • BradP

                You actually think that Bohener could wake up tomorrow and say “Fuck it, lets not send out SS checks this month” is dealing with political realities?

                No, I think they can drop benefits without nearly the amount of consideration and forethought that millions of lifetimes spent contributing should demand.

    • I’m suprised at your not getting some of these.

      “Is run by the government, which can print money and tax people”

      Taxation, under most justifications, requires some form of consent. While this is a difference between the two, it is not a morally relevant one.

      Taxation by a democratic government is not morally relevantly different from fraud? Innnnnteresting. (Obviously, it is.)

      I think it’s a throwaway with the underlying point being, “The Government has many sources of income. Bernie does not.”

      “Is not a deliberate fraud”

      But it is hardly treated as an iron-clad obligation. Again, a difference, but not much of one, as everyone here has to be well aware of the US government to cancel their end of contractual agreements at a whim. How much of a moral difference is there between a Ponzi schemer and a government who continues to collect SS taxes while “putting SS benefits on the table”?

      A Ponzi scheme cannot payout to the investors. After the first round, it cannot return the investment. Simply cannot.

      Putting SS benefits on the table is a choice at this point. I don’t know that it’s morally worse, but it’s definitely loathsome. But this conflates Social Security qua program with what the people who are erroneously calling SS a Ponzi scheme are trying to turn SS into. Even then, they aren’t trying to turn it into a Ponzi scheme. They are trying to wind down SS. Well, and raid it to give money to rich folks. But that doesn’t make SS itself on a moral plane with a Ponzi scheme, nor does it make it a fraud. It means that these attempts to destroy SS are morally wrong. But the wrong probably isn’t fraud, but promise breaking or a form of embezzlement or simply “Destroying SS”.

      “Is paid into by every American who works”

      I don’t get how this is a meaningful difference.

      Pipeline vs. pyramid. See the SSA discussion.

      “Is supervised by social security Administrator and Horace translator Michael Astrue, who made $200,000 in 2011″

      This is an apples and oranges comparison, and it is irrelevant. If Bernie Madoff had paid some accountant to unwittingly supervise and administer the receipts and payments, it would not have been any less of a ponzi scheme.

      The point of the ponzi scheme is to rip off the investors. The schemer typically has no income but what he skims off. Astrue, who runs SS, has no significant interest in the vast bulk of SS collections.

      “Promises fairly modest rates of return over a period of decades”

      A difference of degree and not kind. A ponzi scheme could feasibly promise the same thing.

      Then it wouldn’t be a Ponzi scheme. C’mon. The way that it works is by promising unbelievably high rates of returns, then delivering them for the first round investors. That’s fundamental. If you promise a 3 percent return, then you are a bank, not a Ponzi scheme.

      (Ok, we should be a bit careful. There should be some other form of income than the deposits themselves….which leads us to…)

      “Is invested in US treasury bonds”
      Which would be similar to Madoff using the funds he gained through a Ponzi scheme as capital for his own company and saying “When this investment pays off, I can just continue my scheme”.

      Some SS money flows straight through to the beneficiaries. Some is lent out at a rate of return. The latter is like a deposit in a bank. There is a legal obligation on that money. Just like with a bank. A bank can go bust and the money would be lost. Congress can pass a law confiscating all bank deposits, which would take the money from the depositors. Congress can cut benefits.

      None of this is like a Ponzi scheme wherein, if successfully carried out, the schemer walks away with the last round of money. If not, the money is poorly distributed from the rightful owners.

      One could perhaps quibble with the diagram’s phrasing, but I don’t think you’ve remotely met the bar of reasonable disagreement, esp. when you try to make SS and a Ponzi scheme closer than they clearly are.

      Don’t enable!

      • BradP

        Taxation by a democratic government is not morally relevantly different from fraud? Innnnnteresting. (Obviously, it is.)

        I think it’s a throwaway with the underlying point being, “The Government has many sources of income. Bernie does not.”

        It is a throwaway. The Iraq War campaign was sold fraudulently (even if unconvincingly). It is not made better by the governments ability to tax people to pay for the fraud. Likewise, if Bernie Madoff had alternative sources of funds greater than the losses experienced by those he schemed, we would not be giving him a pass.

        This is a difference between the two, but not a moral difference.

        Putting SS benefits on the table is a choice at this point. I don’t know that it’s morally worse, but it’s definitely loathsome. But this conflates Social Security qua program with what the people who are erroneously calling SS a Ponzi scheme are trying to turn SS into. Even then, they aren’t trying to turn it into a Ponzi scheme. They are trying to wind down SS. Well, and raid it to give money to rich folks. But that doesn’t make SS itself on a moral plane with a Ponzi scheme, nor does it make it a fraud. It means that these attempts to destroy SS are morally wrong. But the wrong probably isn’t fraud, but promise breaking or a form of embezzlement or simply “Destroying SS”.

        Many people do believe (however falsely), like the anonymous poster above illustrated, that SS has reached a point where it is a promised benefit that cannot be fulfilled, and they think those that promise it know that.

        I don’t go quite that far. Although I do believe many republicans are playing politics with SS and treating it like a ponzi scheme (promising it without securing the funding), I believe that the mechanisms for securing it are there.

        With that said, I do believe the proponents of it are somewhat willfully downplaying the general negligence our government has shown on both sides of the aisle. And when it comes to something like SS, I don’t particularly care whether it is fraudulence or negligence.

        Pipeline vs. pyramid. See the SSA discussion.

        This certainly is valid, although not directly deducible from “Everyone pays”. I would say that constantly increasing life expectancies and standards of living puts the “pipeline” analogy to the test as well.

        The point of the ponzi scheme is to rip off the investors. The schemer typically has no income but what he skims off. Astrue, who runs SS, has no significant interest in the vast bulk of SS collections.

        Like I said, this is apples and oranges. You should compare who make promises and benefit with those who make promises and beneft. I do not think you can deny that there is a pretty big social and financial benefit to those legislators who promise entitlements.

        And hopefully you can forgive my cynicism of government, since I believe that the majority of those who make promises concerning social security and other entitlements are far more concerned with gaining short term political points rather than giving long-term social benefits.

        None of this is like a Ponzi scheme wherein, if successfully carried out, the schemer walks away with the last round of money. If not, the money is poorly distributed from the rightful owners.

        Do you think Madoff was sitting on his hands, waiting for that last round of money? He was constantly pulling it forward and skimming value off the top.

        And finally, just reviewing the Madoff case shows how overstated the differences are in that diagram:

        1. Madoff did not offer outrageously good returns, just very consistently good returns.

        2. Madoff offered these returns for decades, probably since the 70s.

        3. Madoff’s scheme was based on a legitimate (or at least real) brokerage company.

        4. Questions about the possibility of Madoff’s promised returns were repeatedly ignored for over a decade, and it wasn’t until the downturn sapped all of the cash Madoff had left that his sons finally self-reported the company.

        • Malaclypse

          Although I do believe many republicans are playing politics with SS and treating it like a ponzi scheme (promising it without securing the funding), I believe that the mechanisms for securing it are there.

          It was secured, back in 1983 (and upthread I mistakenly said this happened in 1986). You know what needs to change for SS to work as designed? Not a fucking thing.

          That is what makes it different from a ponzi scheme.

          • BradP

            Yep, nothing like greatly increasing the contributions of the newest investors, pushing the accounting off-budget to mask the total debt level, and then writing yourself IOUs so that you can spend the surplus now on other things to secure the system and really set the bar high for investment schemes.

      • Anonymous

        “Is paid into by every American who works”

        Not true.

        Municipal workers are exempted if they choose (and they ALL do).
        Teacher are exempted if they choose (and they ALL do).
        The liberals that set this up favored these groups, but for the schmucks that make up the rest of us…..not so much.

        Wonder why everyone that can opt out….does?

    • mpowell

      Actually Brad, I do agree with you here. That diagram is pretty stupid. A ponzi scheme is not just any old scam. There are certain classic structures of ponzi schemes or their close relatives in the promotion of bogus products industry and this diagram hits very few of them.

      And it doesn’t do a very good job of why SS is not a ponzi scheme. Many of the best explanations relate to SS’s sustainability, which is under no real risk.

      • It is a throwaway. The Iraq War campaign was sold fraudulently (even if unconvincingly). It is not made better by the governments ability to tax people to pay for the fraud. Likewise, if Bernie Madoff had alternative sources of funds greater than the losses experienced by those he schemed, we would not be giving him a pass.

        Sure. But not every point has to strike at fraud vs. non-fraud. Not every point of difference need be a moral one.

        What’s striking about your “critique” is that you take something which is clearly not intended as a serious analysis, but as a droll illustration, and then act as if this shows that there’s something to the Perry nonsense. This is bad and, I would think, counterproductive to your own purposes.

        Many people do believe (however falsely), like the anonymous poster above illustrated, that SS has reached a point where it is a promised benefit that cannot be fulfilled, and they think those that promise it know that.

        People falsely believing something is a Ponzi scheme makes it more Ponzi scheme-esque? I don’t think so.

        I don’t go quite that far. Although I do believe many republicans are playing politics with SS and treating it like a ponzi scheme (promising it without securing the funding), I believe that the mechanisms for securing it are there.

        Side note: Ponzi scheme != promising without securing. There is one potential Ponziy part, which is the prefunding/trust fund part. Of course, that depends exactly on someone stealing the fund. As it stands it’s perfectly fine and a normal practice. It is not inhernetly a Ponzi scheme any more than any pension fund is. The rest is just current taxation for a current benefit (i.e., less poor old people).

        With that said, I do believe the proponents of it are somewhat willfully downplaying the general negligence our government has shown on both sides of the aisle. And when it comes to something like SS, I don’t particularly care whether it is fraudulence or negligence.

        What negligence? There’s plenty of malfeasance but little or no negligence at the moment. All the long run trends for SS are reasonable to good. There may need to be slight adjustments at various points, but, uh, yeah, just like any multigenerational program. Or multiyear program.

        This certainly is valid, although not directly deducible from “Everyone pays”. I would say that constantly increasing life expectancies and standards of living puts the “pipeline” analogy to the test as well.

        You seem to conflate “any possible criticism” with “so it’s a ponzi scheme criticism”. Not good, esp with your conflation of “infelicities with the droll venn diagram” and “infelicities with the case for SS”. Improve, please.

        Like I said, this is apples and oranges. You should compare who make promises and benefit with those who make promises and beneft. I do not think you can deny that there is a pretty big social and financial benefit to those legislators who promise entitlements.

        Can I deny it? Well, yes. There you go, I did! Yay me!

        Come now, this is analytically void. (Non scammy) bankers get a pretty big social and direct financial benefit by not just promising but delivering services. OMG ALL BANKING IS A PONZI SCHEME?!!

        You are perilously close to fiat currency kook territory here.

        You need to start with the fact that SS as currently designed and enacted is not a Ponzi scheme, or any other sort of fraud, in either intent or effect. It’s one of the best programs of any kind in terms of its responsible management, administration, cost, and beneficial effect. This cannot be overemphasized. SS really really works and there’s no intrinsic reason why it cannot work essentially forever, given all that we currently know. Alternative schemes have a really bad track record.

        Now, it is possible that someone will destroy SS. There are many ways to do this. One could crash the US economy to the point that the government dissolves. One could abolish it either in one blow or by a thousand cuts. But none of these show that SS is a Ponzi scheme or any other sort of fraud any more than a bank robbery shows that the bank was fraudulent, or even that most embezzelments (e.g., by a manager) would. This is really really really basic.

        It’s not only analytically essential, it’s also strategically essential. The whole point of the Ponzi scheme accusation (as with the bankruptcy accusation) is to get the governed to “consent’ enough to the looting that the looting can occur. That’s the fraud.

        And hopefully you can forgive my cynicism of government, since I believe that the majority of those who make promises concerning social security and other entitlements are far more concerned with gaining short term political points rather than giving long-term social benefits.

        If you look at an arbitrary Republican, you are almost certainly correct. If you look at Democrats, as a party and even most individuals, it’s clearly wrong. You just need to look at the track record to see this. You help those aiming to destroy it when you fail to recognize this reality.

        Think FEMA. FEMA really works under Democratic administration and fails hard under Republican ones. This isn’t a failure of FEMA per se or the concept of FEMA. It’s a failure of Republicans. And it’s not a “Oops this is hard” failure, it’s a willful failure.

        Do you think Madoff was sitting on his hands, waiting for that last round of money? He was constantly pulling it forward and skimming value off the top.

        Of course he was. It’s wasn’t quite the standard kind of Ponzi scheme. (From the Wikipedia article, “Madoff’s operation differed from a typical Ponzi scheme. While most Ponzis are based on nonexistent businesses, Madoff’s brokerage operation was very real.”, ” A scheme that targets members of a particular religious or ethnic community is a type of affinity fraud, and a Newsweek article identified Madoff’s scheme as “an affinity Ponzi”.”, “Madoff’s annual returns were “unusually consistent”, around 10%, and were a key factor in perpetuating the fraud. Ponzi schemes typically pay returns of 20% or higher, and collapse quickly.” Note too the effect of targeting charities.) So what? That makes the droll venn diagram a bit more infelicitous, which, really doesn’t hugely matter, does it? Are the possible infelicities of the diagram anywhere near the falsehoods of Perry in wrongness?

        Some simple questions with simple answers:

        Is SS as a program a classic Ponzi scheme? No, it’s sustainable and nonfraudulent. The relation between income (not investement!) and outgo are transparent. The host organization has massive other resources to tap and can cover all SS obligations indefinitely.

        Is SS a Madoff like Ponzi scheme? No, it’s sustainable and non-fraudulent. The relation between income (not investement!) and outgo are transparent. The host organization has massive other resources to tap and can cover all SS obligations indefinitely. The differences between a Madoffian Ponzi scheme and a classic Ponzi scheme are not germane (e.g., it’s doesn’t rely on fooling people (with tactics like affinity, exclusivity, etc.), it has transparent accounting, it’s not investment based, etc.)

        Can SS be destroyed? Of course. Just like anything can be destroyed. But if it is destroyed, it will be destroyed deliberately as an act of malevolence and malfeasance, not because of an inherent problem with SS. Just as there’s no reason for an incompetent FEMA, or the current rate of unemployment, or the current deficit (given tax projections) OTHER THAN destructive actions taken primarily by one political party and its elite enablers.

        It’s a choice. A bad choice. A choice made on fraudulent grounds. But a choice. None of these are “real” problems (unlike, say, the challenges of health care costs). It’s important to get this analysis correct!

      • See the SSA’s discussion. It’s excellent. The summary:

        Social Security is and always has been either a “pay-as-you-go” system or one that was partially advance-funded. Its structure, logic, and mode of operation have nothing in common with Ponzi schemes or chain letters or pyramid schemes.

        The only problem with the standard discussion of Ponzi schemes esp. with reference to Madoff, is that classic Ponzi schemes quickly collapse due to the exponential growth of the obligations, and the tendency for numerous, very high payouts among other factors. If you dork the exponent appropriately, you can stretch out the point of collapse. Indeed, if you make the initial investments large enough and keep the pool of investors stable, you can just pay returns out of principle for quite some time. That doesn’t, of course, make it sustainable. And opacity is required since no one would agree to that if the actual plan were known.

        • Hogan

          If you dork the exponent appropriately

          I have no idea what that means, but it sure sounds like fun.

          • It is fun!

            Take a classic exponential function 2^N (2 raised to the Nth power, where N is your input). It’s easy to see how that grows very quickly. But you can have worse exponents (e.g., 2^2n o 2 ^100n) or much better ones (2^0.5n, 2^0.0001n). In the case of the better ones, you shift the tipping point (i.e., the point where things are so bad you can’t handle them) further into the future.

            So, if you only offer 5% return rather than 20% you stretch out the time before the Ponzi scheme must collapse.

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  • cpinva

    if a private company accomplished what social security has, for 75 years, they’d be a large cap stock on the NYSE, and a definite “buy”.

    the problem with ivy league schools (or any schools) is that they can’t possibly have only very, very smart people on their faculty, there are only so many of those to go around.

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