Wikipedia defines a Ponzi scheme as "a fraudulent investment operation paying returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors."
Arguing over whether or not Social Security meets the precise technical definition of being a Ponzi scheme might be fun, but it misses the point. The fact is the money paid in is not invested and therefore does not generate earnings to pay future benefits.
As the number of working people per retiree continues to shrink, it will become more obvious that Social Security, as it currently exists, is in fact a failure as Texas Gov. Rick Perry has stated. Until it is converted to a true investment fund, it cannot succeed in the future.
Chile's plan was developed by economists from the University of Chicago and Milton Friedman. The same basic plan was put in place in Galveston County, Texas, where county and city workers contribute to their own personal plans with available professional guidance (instead of Social Security). They get three to five times what they would get from Social Security.
It's a much better plan and financially sound. It works. (But then workers would not need big government and might be more independent and not vote like the other lemmings.)
Steve Dickler
Hilton Head Island
Comments