If You Don’t Believe Me – Believe Your Nobel Winner


Ask your Google who said this:

Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today’s young may well get less than they put in).

I’ll give you a clue.  His name starts with Paul and ends with Krugman.

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5 comments
  1. nickgb said:

    If only Krugman had already clarified what he was saying, pointing out that this quote is out of context (and regrettable).

    • And if only the claim the Social Security is a Ponzi scheme (repeated over and over again from a party’s front-running presidential candidate in a book and in a debate, rather than tossed off once by a commentator in a column a decade or two ago) weren’t transparently false: http://motherjones.com/kevin-drum/2010/10/most-important-social-security-chart

      Then this might be a most sensible post indeed.

      • pino said:

        Then this might be a most sensible post indeed.

        Again, Krugman gets to change his mind. But I do find it illustrative that he made this claim back when he was a real economist.

    • pino said:

      If only Krugman had already clarified what he was saying, pointing out that this quote is out of context (and regrettable).

      I resonate very much to the idea that comments made 15 years ago may not be relevant to the discussion today. Krugman is undoubtedly a different thinker. So if he has changed his mind, good on him – a rigid clinging to all old comments is not really very healthy.

      However, it should be used to illustrate a larger context. Social Security isn’t an investment. Unlike a 401k, it can’t grow without the continued contribution of future subscribers. In some ways, the Ponzi is different; the whole concept is fraud and kept secret from the investor. However, in some ways it’s worse; you HAVE to play the Social Security game.

      Is it more like a pyramid scheme than a Ponzi scheme? Maybe, maybe not. We know for certain that it DOES posses a critical similarity to the Ponzi; money invested has been taken out by the “holder” and spent. Maddof bought yachts and hookers. Government has purchased, well, whatever they’ve purchased.

      The point is, we’re not getting our money back. We’re getting our kids’ money even as we now pay for our folks.

      Call it whatever you want, it certainly isn’t an investment in something that returns value.

  2. Alan Scott said:

    pino,

    Our good friends on the left only demagogue this issue and the geezers who know better are willingly stupid . There is one great truth in modern America. When a Democrat politician or the AARP speak about Social Security, they are lying.

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