Thursday, September 8, 2011
If Social Security is a Ponzi Scheme, so is Society
The line about Social Security being a ponzi scheme annoys me. It is in the sense that it requires new workers to pay for old workers. But in this sense, so is a family, a corporation, or society itself. All organizations require constant infusions of new blood to work. The difference between these things and a ponzi scheme is that they have actual value, they do something. A Ponzi scheme involves a shell investment with no intrinsic worth, which is not the case with Social Security. Just because it requires new workers to pay for it doesn't mean we don't gain value. Does anyone really want to face the prospect of not being able to move because we might have to take care of mom and dad in their old age, or go back to having an extra bedroom in the house for when our parents are to old to work? I don't think so. We get value from it, just like we get values from organizations. The inter-generational transfer aspect is shared among all social institutions pointing this out shouldn't be perceived as a gotcha. It really shows how much damage has been done to our society that pointing this out seems like a gotcha to so many people.