Well said, Dr. Baker.

Now you realize the AP is shorthand for American Propaganda? Where have you been?

I don't know that your headline is far off the mark, Dr. Baker.

SS *is* a Ponzi scheme, with the difference that the suckers have no way to escape.

Early 'investors' in SS made out like bandits. Even people retiring now will do relatively well. People entering the workforce now will do terribly.

The near term SS "crisis" has to do with the fact that SS taxes have been subsidizing the rest of the budget for many years. The tide is about to turn, putting an additional severe strain on the fiscal situation.

Re bond rates -- You ignore that China is riding a tiger that keeps it holding bonds, AND that the Fed has been hugely buying them with vapor money. As one of your brethren well said, "Things that cannot go on forever, don't."

Dean,

This is something you discuss frequently, and you hit on many good points, but regarding your comment: "As the country gets richer", I'm not so certain we will.

Regarding SS as a ponzi scheme, it doesn't meet the definition entirely, but whatever sort of scheme you want to call it, it is true that early beneficiaries benefit more than later ones. This wouldn't be so offensive if SS was voluntary.

Elaborating slightly--

Early 'investors' in SS made out like bandits. Even people retiring now will do relatively well. People entering the workforce now will do terribly, even if, as I agree is likely, they are paid everything they have been promised.

I think Dean is right to criticize AP for using the "Ponzi scheme" label for Social Security. A Ponzi scheme is, by design, unsustainable. It must eventually implode, with at least the last in losing most/all of their investment. Even if a cohort of SS contributors end up receiving an inferior ROI than earlier beneficiaries, the label "Ponzi scheme" is, at best, hyperbole.

That said, if we can calculate or predict with high probability that future SS recipients end up with a much worse ROI than earlier contributors and recipients (due to reductions in elegibility and/or benefits to mitigate largely demographics-driven deficits, and/or due to the investment structure of the program), then there is a valid conceptual point to be made (as per Patient Renter and Gilpin above) that later "investors" receive a predictably, substantially inferior ROI, and that the superior ROI received by earlier investors was generated not by growth of invested capital, but by the infusion of capital from the later investors, which is indeed a parallel to a Ponzi Scheme, albeit only applicable in a very limited sense with regard to SS (thus, again, AP should not have used that label).

John Gilpin should have the world leaders ear, as he makes clear he above all other humans can see clearly 40 years into the future.

"Even people retiring now will do relatively well. People entering the workforce now will do terribly.."

This amazing vision of John Gilpin must not be wasted, for as he makes clear, he is Godlike in his visionary powers.

John Gilpin certainty is amazing. Of course those with Godlike powers similar to John Gilpin told me in my youth how much easier the class of '75 would have it over those who graduated in '55 and they turned out to be complete idiots. Could it be those who certain of events forty years into the future are complete idiots?

Since SS is pay-as-you go (setting aside the Trust Fund which adjusts for the baby boom), the amount of money available to pay out per retiree obviously depends on rate of population increase (not just birth rate). But then so do a lot of things, some in a favorable way some not. If you want retirement income that depends on something else, like whether the stock market is in a boom or a bust at the time you retire, you are free to invest in other types of retirement - SS was never intended to be more than a bare minimum and it is actually less than that now. The idea that there will be some kind of crisis in 30-40 years that must be addressed with drastic action now is sheer fabrication. One could make up a very long list of things that could reach a crisis by 2040 or so and SS would not make it on that list.

People are surprised how crazy the debate about health care has gotten ("they're going to kill grandma"), but the SS "debate" has been at a high level of craziness for a long time ("SS is a Ponzi scheme"). In both cases it is because a lot of money is being spent on behalf of rich people and industries who want more, or don't want to give up any of what they have.

Skeptonomist,

Re: SS is pay-as-you go (setting aside the Trust Fund which adjusts for the baby boom)

How exactly has the "Trust Fund" "adjusted" for the baby boom in some way that makes SS any less pay-as-you-go? Do you think there is a pile of cash or marketable securities in the SS "Trust Funds"? Do you realize all the "Trust Fund" balances represent are claims against future general tax revenues, in other words, pay-as-you-go?

The corporate media and the aristocrats who own it hate social security because it stands in the way of their plan to make sure that you have to work until the day you drop dead.

Brooks - "Do you think there is a pile of cash or marketable securities in the SS "Trust Funds"?"

Um, yes. I would call US Treasury Bonds marketable securities. The rest of the world does too.

AndrewS,

Don't be silly. First, you're not even technically correct: the Treasuries held by the SS Trust Funds are "special issue", not marketable securities. Second, obviously my point was that the SS "trust funds" do not have cash to spend on SS benefits, nor do they have securities that they can sell to private investors to raise cash, as opposed to simply redeeming the bonds as a claim against general fund tax revenues. Get it?

shorter right-wing-nuts:
We stole the money and we aren't giving it back.

For the record, baby boomers will probably get the worst rate of return on their SS contributions, primarily because we saw an increase in the eligibility age and also because wage growth was really bad over most of our working life times.

It is reasonably to assume that there will be some future tax increases, but this will not have very much effect on the immediate post-boomers, since they will not pay it for most of their working lives. Also, if we have the labor shortage that our "experts" promise us, then real wages will rise more rapidly, will increase the rates of return for the post-boomers.

Of course, younger generations will under almost any circumstances will get more back than older people simple because income grows (at least on average) through time. Hence, the lack of concern of many us for the young people whining about "generational injustice."

We can give them the SS that we receive, as well as the quality of Medicare that we receive, and our future fiscal problems would immediately disappear.

One other point worth mentioning -- there is no reason for any serious person to allow the U.S. government bonds held by the trust fund to be treated any differently than any other government bond. If there is an effort to default on the bonds held by SS, then we absolutely should insist on a default on the bonds held by Goldman Sachs and the rest.

This is entirely a political issue, not an economic one. There is no reason that reasonable people should ever allow such a partial default that hits retired workers, but leaves wealthy bondholders unaffected.

Dean,

Re: One other point worth mentioning -- there is no reason for any serious person to allow the U.S. government bonds held by the trust fund to be treated any differently than any other government bond. If there is an effort to default on the bonds held by SS, then we absolutely should insist on a default on the bonds held by Goldman Sachs and the rest.

It’s unclear, but is that intended as a supposed refutation of something I’ve said? If so, it’s a straw man that you’ve erected in the past in response to similar points I’ve made. As I’ve explained previously, nothing in anything I’ve said implies – or even relates to – defaulting on those bonds (and I assume the bonds will and should be honored*). If you think otherwise and/or if the above was intended as some sort of refutation of something I’ve said, please be clear.

* Not that honoring those bonds has any significance, since future revenues are, in effect (through changes in tax structure), fungible. If we want to spend less on SS, we can just do so, and the amount we plan to spend over the next few decades far exceeds the Trust Fund balances, so we could, hypothetically, cut most SS spending without getting anywhere near spending as little as the amount of the SS Trust Fund balances. And if we cut projected SS spending (as part of deficit-reduction) so deeply that it would generate perpetual surpluses, we would just cut FICA SS and offset that tax cut with revenue-neutral increases in other taxes, resulting in no change in projected overall revenues, a reduction in projected overall spending, and thus lower deficits. I’ve explained all this seveal times before, including at the link I provided upthread to my comment on another Beat the Press thread.

Brooks,

Whose the "we" you talking about when you are referring to "your" nutty ideas?

As has been proven ad nauseum, the folks who do the most complaining of taxes tlk of cuts are exactly those people who have their teeth most firmly clamped on the government teat.

Guys;

The problem isn't soc sec at all, it's taxes. Starting about now the payroll tax surplus that must by law be loaned to the treasury is going to decline, forcing treasury to find some other source of lending. In a decade or so, the trust fund is going to need to be tapped and in a generation or two it will be depleted, requiring even greater borrowing.

Or else - horrors - we must raise taxes enough to cover government expenses. Raising taxes is inconceivable, so the cheese binds.

And Dean, you're wrong about baby boomers getting the worst rate of return. I'm in my eighties and have been paying the extra FICA from when it started until I retired. No way am I going to live until the trust fund surplus I contributed to is returned. At that I'm getting more that those a little younger.

Finally, soc sec IS NOT a financial investment, and ROI simply does not apply.

Joe

Each generation of SS retirees end up with a check that buys a bigger basket of goods than that of earlier retirees. This will remain true even after a reset of benefits to 74% in 2037 (SSA) or 84% in 2043 (CBO). Given that bitching that by some measures the Greatest Generation got a better ROI is pretty god damn selfish.

patient renter: Social Security IS voluntary. ALWAYS has been and always will be.

OJCsr: AGREED. Social Security collections are definately not an investment, but a simple TAX. Buying Treasury Notes WITH those TAXDOLLARS IS an investment.

AP has been a disaster for over a decade. Their main goal seems to be the production of cheap puff pieces for resale and pandering to the right. They assume we're all too dumb to notice since they would be. Not so.

Of course the AP article is sloppy and lacks useful things like numbers, but SS as you've described is technically a Ponzi scheme until fixed in some way (e.g., as you've described). Perhaps we could waste less space on the inflammatory language (both inciting and rebutting) and focus on the fix. The political problem lies less in the actuarial tables than in the lack of trust in government to meet its promises--an entirely justified fear.

Link to my blog! I talk about this stuff.

www.joshfulton.blogspot.com

One thing to keep in mind:

Social Security's trust fund holds government debt, not cash. When Social Security goes cash-flow negative, the U.S. govt's options for paying off the trust fund are to raise taxes, cut spending elsewhere, borrow the money, or monetize the additional debt.

The 2009 Trustees report puts the year Social Security goes cash-flow negative as 2016. If the Trustees' rosy assumptions of economic growth don't materialize Social Security could go cash-flow negative even sooner, depending on whether Baby Boomers end up working longer than the Trustees anticipated. Retirement nest-eggs in the stock market got hit hard and the collapse of the housing bubble put an end to hopes of getting rich by living in a house. To make up for these hits, Baby Boomers may end up working longer than the Trustees anticipate.

After re-reading what I posted, there are a couple clarifications I'd like to make:

1. It would have been clearer if I had said, "Social Security's trust fund holds *U.S.* government debt, not cash."

2. "or monetize the additional debt." 'Additional' was sloppy word choice on my part since in the absence of a buyer at satisfactory interest rate, the debt being monetized in this case would be the debt that was previously held by the Social Security trust fund.

>CBO projects that it will be fully funded through 2043 (the next 34 years) with no changes whatsoever.

I just got my social security statement today, and it says "By 2041, the payroll taxes collected will be enough to pay only about 78 percent of the scheduled benefits."

What CBO projection are you looking at? Last year's CBO projection says that "Social Security trust funds will be exhausted in 2049." Obviously things have gotten much worse since then.

The Trustees projections are the reverse of 'rosy'. Over the last decade CBO numbere, which show a less dire outlook, have been more accurate than SSA numbers, as on balance have been SSA's Low Cost compared to Intermediate Cost.

The Low Cost advantage has diminished since about 2005 but even with the current meltdown the bias is to the positive side for SS solvency.

"Social Security IS voluntary. ALWAYS has been and always will be."

You might want to educate yourself. The FICA tax is 100% mandatory, always has been and always will be.

http://www.ssa.gov/history/InternetMyths.html

Now go perpetuate your mythical BS elsewhere.

The facts are that younger generations are paying a larger percentage of their income than older retires did.

Social security tax rates have been increasing through the years, so someone who was working in 1960 was paying 3%, whereas someone working in 1990 was paying 6%. (And employers also pay that same rate.)

You can observe the rates here: http://www.ssa.gov/OACT/ProgData/taxRates.html

Also, if you were born in 1937, payments start at age 65. In 1960, age 67.

And yes, of course, the federal government can borrow to pay social security into the future.

It takes no Godlike vision to know that SS 'investors' entering the workforce now will do terribly relative to earlier ones. All it takes is an understanding of how SS works. (See preceding comment by AndrewDover, eg.)

If any statements here involve Godlike vision, it is the assurances by Dean and others that the country will keep getting richer (and the implication that the new riches will be reasonably spread around). There are many reasons to doubt both of these propositions.

The only thing that distinguishes SS from a 'private' Ponzi scheme is that, being coercive, SS's latecoming 'investors', even the alert ones, cannot get out. In fact, new cohorts are constantly being dragooned into participation. Thus, SS is unlikely to end, like a regular Pozi scheme, with a bang. It can instead go whimpering on indefinitely.

All the electrons expended here so far have had to do with SS. Dean has not addressed the matter of why longterm interest rates remain so low:

"Re bond rates -- You ignore that China is riding a tiger that keeps it holding bonds, AND that the Fed has been hugely buying them with vapor money. As one of your brethren well said, "Things that cannot go on forever, don't."

SS works by taxing todays workers to support todays retirees.

Here's what the SEC says about Ponzi schemes:

"The Ponzi scheme continues to work on the "rob-Peter-to-pay-Paul" principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses."

So why isn't SS a Ponzi scheme?

Here's the link to the SEC website: http://www.sec.gov/answers/ponzi.htm

Ben,

SS is not a Ponzi scheme because no one is anticipating the collapse of the u.S. economy. As long as the economy grows at a remotely respectable clip then SS benefits will be payable and there is no reason for the "whole scheme to collapse." of course, if the U.S. economy collapses, then SS will be in real trouble.

Dean,

Re: As long as the economy grows at a remotely respectable clip then SS benefits will be payable

Why would the U.S. economy have to grow at all for SS benefits to be payable? SS spending never rises above about 6% of GDP. Total federal spending each year over the past several decades has been about 20% of GDP. Obviously it's just a matter of priorities -- how much we want to spend in total and how much on each program. What is your point regarding economic growth being necessary for SS benefits to be payable? Do you mean "payable" without making particular sacrifices, and if so, which?

Dean - Under that logic, then Bernie Madoff wasn't running a Ponzi scheme until the day his scheme collapsed? Just because no one is expecting the US to fail doesn't mean that SS isn't a Ponzi scheme. I think it would be more honest to say that SS is a Ponzi scheme that is unlikely to collapse due to the relative size in comparison with underlying economy.

Ben,

Re: I think it would be more honest to say that SS is a Ponzi scheme that is unlikely to collapse

It's clear from that statement that you don't know what a Ponzi scheme is. There is no such thing as "a Ponzi scheme that is unlikely to collapse".

Social Security is a pay-as-you-go program with current taxpayers paying current beneficiaries. There is also the political promise government makes to taxpayers that future taxpayers will do essentially the same for them when they become eligible. So it's a combination of taxpayer support for current seniors and an inter-generational promise made by the current government on behalf of future taxpayers. That's not the same thing as a Ponzi scheme.

Brooks - A Ponzi scheme is when someone uses new investors to pay off old ones, and during the process that someone skims off the top. The government uses today's SS tax revenues to pay for those who have previously paid in, and the government uses the remainder to pay for other projects. There is no lock-box. That's why it is a Ponzi or pyramid scheme. The fact that the government has the ability to tax and print money to fill any future void, makes it no less of a Ponzi scheme. Please correct me where I am incorrect.

(I'd still like for Mr. Baker to chime in).

Ben,

Nope. Let's use a simplified illustration, leaving aside issues of demographic shifts (worker-to-retiree ratio and anything else) and questions about different ROI's of one generation's "investment" vs. that of another (using the term "investment" loosely, based on the intergenerational promise described in my prior comment). So all we have is the very basic dynamics of current taxpayers funding benefits to current beneficiaries, and the assumption that this practice will continue across generations, and there are no issues at all regarding relative ROI or projected "gaps" between dedicated revenues and spending, etc.

You would call the above a Ponzi scheme simply because current taxpayers fund current beneficiaries and because the government promises that this practice will continue across generations so that current taxpayers will later be beneficiaries supported by future taxpayers.

No, that doesn't mean it's a Ponzi scheme. It's more like members of a family of working age supporting the family elders and children and assuming that when the children reach working age, they will do the same. Would you tell the parents that their support of their kids, with the expectation that in the future the kids will return the favor, is a Ponzi scheme?

No, a Ponzi scheme will almost inevitably collapse, because returns (at what appear to investors to be above market rates of return for the apparent risk level) are provided to early investors simply via infusions of capital from new investors, and eventually the operation can't find enough new investors to continue doing so.

And please don't bother noting the difference between private choices vs. compulsory contributions (taxes), because that would miss the point.

I suggest you not exert effort trying to justify a particular label ("Ponzi scheme") that doesn't really fit, and instead just make whatever arguments you wish to make. I would assume that the validity and strength of your arguments is not dependent on a particular label, so best not to waste time and effort on a semantic battle (particularly when you're wrong).

And by the way, there is no "void" other than in an administrative and bookkeeping sense. Social Security is merely part of the whole, with SS revenues part of overall revenues and SS spending part of overall spending, and we can shift all the splits around as we wish, so SS "solvency" and "gap", etc., are mostly irrelevant to policy choices. The only real "void" that exists is our overall fiscal imbalance -- total spending vs. total revenues, and the related projected increase in publicly-held debt-to-GDP. And if we end up printing money, THAT will be the reason, not some "gap" that results merely from internal bookkeeping.

Brooks - You start off by essentially agreeing with the elements of my comparison between SS and a Ponzi scheme. Then you said: "No, that doesn't mean it's a Ponzi scheme. It's more like members of a family of working age supporting the family elders and children and assuming that when the children reach working age, they will do the same. Would you tell the parents that their support of their kids, with the expectation that in the future the kids will return the favor, is a Ponzi scheme?"

How egalitarian of you. Unfortunately SS was never sold as a pay-as-you-go scheme of today's workers supporting the elderly. It was billed as an insurance plan that everyone paid into expecting those funds to be there when they got older. It is not an insurance plan. It is a transfer plan.

You can say that it's semantics, but pointing out that SS is a Ponzi scheme is important. Most people think there is some mythical lockbox will all this cash waiting to take care of them. That is not the case at all. Any "lockbox" is really just the excess tax revenue of each year that the government has taken the liberty of lending to itself. The principal and interest that is promised from the "investments" made in the "lockbox" is to be paid from future tax receipts.

It is important for my younger generation to know and understand the truth. As demographics change and less and less workers are required to support more and more retirees, taxes must be increased, benefits must be reducec, and/or the eligibility age must be raised. Just because the government is in a better position then most who run a Ponzi scheme doesn't mean it's not running one.

Ben,

I can't explain any more clearly than I already have why you are wrong in labeling SS a Ponzi scheme. Perhaps you could learn what a Ponzi scheme is and also Google keywords "Social Security" and "Ponzi" (together) and read other explanations that might get through to you (and obviously I'm not referring to links to people employing that label as you are, but rather to those explaining why the label doesn't fit).

Such inappropriate labeling is hyperbole (at best), and while it does have appeal with the segment(s) that are already on your side or likely to end up there anyway, it makes one look silly and unreliable as a source of analysis and opinion to anyone who can see through it and wants to think about the issue intelligently and reasonably objectively. On balance, I think you'll have more influence dropping that distracting and inappropriate label and just making the point(s) you wish to make, but I realize that (unfortunately) much can be achieved in public opinion by engaging in such hyperbole and misleading people (inadvertently or intentionally, and in your case I think inadvertently because I think you believe what you're saying).

Now, as for substance (as opposed to labels), if your point is that some people are under the mistaken impression that what they put into SS is being saved (or saved and invested) for them and/or that some people don't appreciate the possibility that they could end up getting less in benefits than the current structure would calculate (since all they really have, at best, is a political promise or implication; and given difficult demographic trends and the long-term fiscal outlook) then by all means, make that point.

If you want to point out that the SS "Trust Funds" don't really have any assets other than a claim against future tax revenues and thus don't really (as some imply) help fund future SS spending, that's another worthwhile point to make.

If you want to advocate reducing projected spending on SS by raising the retirement age, reducing benefits (across the board and/or via means testing), go ahead and make your case (and do so rationally, by explaining what the alternatives are and why your policy preference is "better").

Brooks - I'm enjoying this back and forth. I'd actually like for you to go back and read what you just wrote. You agree with each of my arguments that support the fact that SS is a Ponzi scheme. Yet, somehow you still refuse to acknowldege that SS is in fact a Ponzi scheme. Amazing. SS must be a sacred institution to you. In that case, I don't expect you to out-and-out agree with me. But just remember, if it walks like a duck, and quacks like a duck, well... you know.

(BTW, I'd still like to have Mr. Baker sound off on this. He is the expert, and maybe he could shed some light onto whether or not my argument is flawed).

Ben,

I guess you have me all figured out. I'm the resident communist commenter here on Beat the Press. The regulars here are always criticizing me for being an extreme leftist ideologue, and in particular for saying anything -- even if clearly self-contradictory -- in defense of projected spending on SS. So yes, it's not that I've explained your error to you, it's that I've agreed completely with you and then illogically asserted that you are wrong, because completely contradicting myself is a small price to pay in defense of what is a "sacred institution" to me. Even a hint at possible drawbacks of spending every single dollar of projected SS spending makes me lose all capacity for even basic logic (or just turns me into a shameless liar). People here criticize me for that all the time. But you figured it out in, like, no time. Pretty impressive.

Oh, and as for Dean Baker, I can guarantee you that if he responds at all, he'll say you're wrong in calling SS a Ponzi scheme. But that's the other thing for which I get criticized around here all the time: invariably agreeing with Dean Baker.

Oh and Ben,

You didn't address my point and question. If there were no concerns about demographic trends (particularly worker-to-retiree ratio), relative ROI for different cohorts or even an overall long-term fiscal imbalance, but just a program through which current taxpayers fund benefits for current beneficiaries, and a political promise/implication that in the future those taxpayers will have their benefits funded by younger generations, would you still call it a Ponzi scheme or not?

I didn't intend on making this a name calling session, I just can't figure out how you could agree with my three main points, yet ignore what seems to be an obvious conclusion. Mr. Baker in his last post even said that: "SS is not a Ponzi scheme because no one is anticipating the collapse of the u.S. economy." Well at the time, no one was anticipating the collapse of Bernie Madoff either.

To your point and question, ignoring all the points you bring up (even though these are the points that highlight the fact that SS is in fact a Ponzi scheme), yes, I would still consider it a Ponzi scheme because it is still essentially a system of robbing Peter to pay Paul. This is the very essence of a Ponzi scheme. I still haven't seen any points brought up to refute that claim.

Sorry, I accidentally attributed that last post to Brooks. My bad.

Ben,

No skin off my back re: your prior post. And there are indeed times when it's perfectly reasonable to conclude that someone's thinking (his logic, objectivity, etc.) is clouded by passion in advocating/opposing some policy (and ditto for sincerity and good-faith engagement in general). But this is obviously not one of those times, so I found your comment amusing.

As for your definition of a Ponzi scheme, a definition that would apply to a program funded per the scenario I presented, it is an incorrect definition. I've explained the distinctions clearly, and as I've said, I don't think I can improve upon my prior explanation. Again, I suggest you Google a bit. There are explanations from others that perhaps will click in your mind where mine has failed.

All I can do is essentially repeat that it is simply incorrect to label a "Ponzi scheme" any pay-as-you-go program combined with an explicit or implicit intergenerational promise/implication that it will continue as such over generations, particularly under the assumption in my scenario, which is financial stability and equitable ROI across generations.

By contrast, a Ponzi scheme is based on -- and dependent upon -- an ever expanding influx of new investors (to provide what appears to investors to be a significantly higher than market rate of return for the perceived level of risk) and is almost certainly going to collapse because it is almost certainly going to run out of new investors at some point. A Ponzi scheme is a type of pyramid scheme. ok, I'll do some homework for you: http://www.sec.gov/answers/pyramid.htm But do a bit of that Googling I suggested, too, rather than just responding with more insistence that you're right.

If you still can't understand that distinction, I don't think I can help you. But I guess you can just create your own definitions if you want.

I can't continue this string because you are just playing word games. The fact that you feel there is some esoteric, implied, inter-generational agreement to support the elderly does not change the fact that the government robs (through required taxation) Peter to pay Paul (the truist, most basic definition of a Ponzi scheme... see the link from the SEC I provided earlier). Again, nothing you have said has refuted this point, in fact when you state that SS is "pay-as-you-go program" you only support my arguement.

I would like to breakdown the definition of a Ponzi scheme you provided above and see how SS compares:

"a Ponzi scheme is based on -- and dependent upon -- an ever expanding influx of new investors (to provide what appears to investors to be a significantly higher than market rate of return for the perceived level of risk)" - The gov mandates that everyone takes part in SS. So the amount of people isn't ever expanding (that's dependant upon birth rates), but the amount of money pouring into the system through increasing tax rates takes care of that (http://www.ssa.gov/OACT/ProgData/taxRates.html). So this shows that an ever expanding influx of money into system is required for its survival. When this expansion stops (when the government can't tax anymore or they can't cut benefits enough, or they can't raise the age high enough, the system fails (a la Bernie Madoff). Now you can argue that the government can manipulate each of those factors to such an extent that the program will never actually "fail." But, again, just because SS can't "fail" doesn't mean that it's not structured like a pyramid scheme.

Ben,

You simply have no idea what you are talking about, yet you are sure you are right, and my guess is that you haven't even bothered to check the SEC link that I provided, let alone done even a couple of minutes of Googling for other explanations as to why SS does not fit the definition of a Ponzi scheme. Instead, you insist on your own fabricated definition, which is that any pay-as-you-go system of intergenerational transfer payments is a Ponzi scheme, even if completely stable. You insist on applying a label that simply doesn't fit...and then you say that I am "playing word games" (LOL -- that's pretty good, if inadvertent, comedic irony). Well, apples just ain't oranges, Ben, no matter how many times you insist they are.

Too bad that whatever legitimate points you may have had are lost in your insistence that your incorrect, made-up definition is correct, all to try to justify the hyperbole of some partisan talking point.

Brooks - I agree that SS doesn't consist of individuals voluntarily "investing" into a "scam" in the hopes of making a better than market return. But the structure of the SS system (all US citizens being forced to pay into a system with the hope that there will be adequate folks contributing in the future) is the exact same as a Ponzi scheme. Yesterday's "investors" being paid off by today's "investors" is the essential component. As I stated before, an increasing number of participants isn't required like a textbook pyramid scheme because the government (by fiat) can dictate the terms of taxation, eligibility age, and output amount.

Again, you can argue that the government can manipulate each of the three output factors (eligibility age, amount, ) to such an extent that the program will never actually "fail." But, just because SS can't "fail" doesn't mean that it's not structured like a pyramid scheme.

Let me touch on the three points I made that you agreed with:

1. "Now, as for substance (as opposed to labels), if your point is that some people are under the mistaken impression that what they put into SS is being saved (or saved and invested) for them and/or that some people don't appreciate the possibility that they could end up getting less in benefits than the current structure would calculate (since all they really have, at best, is a political promise or implication; and given difficult demographic trends and the long-term fiscal outlook) then by all means, make that point." - So like a Ponzi scheme the "investment" is not sustainable. But unlike Madoff, the government has the ability to tell people to just deal with it.

2 "If you want to point out that the SS "Trust Funds" don't really have any assets other than a claim against future tax revenues and thus don't really (as some imply) help fund future SS spending, that's another worthwhile point to make." - There is no real "investment" made by the individual citizen. The government simply takes current tax revenue, pays current benificiaries, and uses the rest for other government funding. This would be comparable to Madoff buying his jets and fancy yachts with the money he's not paying out in "dividends."

3. "If you want to advocate reducing projected spending on SS by raising the retirement age, reducing benefits (across the board and/or via means testing), go ahead and make your case (and do so rationally, by explaining what the alternatives are and why your policy preference is "better")." - This is the means by which the government can keep SS solvent. Unfortunately for Madoff, this is where the comparison breaks off. He had no power to tell his investors to go pound sand. The government has this power, which is why I agree that SS will never truly "fail."

So when you look at all the elements of SS I don't see how on a point by point basis you can argue that it is not structured like a Ponzi scheme.

Ben,

Jeez, man. Look, let's start where were should, at the more basic level. You are not just saying that "if something walks like a duck and quacks like a duck and looks like a duck, it's a duck", you are saying that "if something walks like a duck, it's a duck", so the sensible place to start is to assess the validity of that basic premise.

I presented a basic, hypothetical scenario of a program of pay-as-you-go, intergenerational transfer payments with the political promise/implication that the practice would continue across future generations. I explicitly excluded from my simplified scenario issues related to demographics and expected differences in "ROI" across cohorts. In other words, my scenario assumes stability across generations, a smooth flow with equitable ROI across generations (or at least doesn't assume otherwise).

You said that the above program would be a Ponzi scheme simply because it is a pay-as-you-go, intergenerational program (rather than a savings and investment program). You're saying that those characteristics are sufficient to make something a Ponzi scheme. You are just plain wrong. You are simply making up a definition for that term. Period.

I point this out to you, and you just insist on your definition and mix in those other elements that my scenario excludes, perhaps because you realize at this point that you're simply wrong in calling the program in my scenario a Ponzi scheme, but you don't want to admit it. It's like our dialogue has gone like this:

You: If a program has elements "A" and "B", it's a Ponzi scheme.

Me: What if it just has element A?

You: It's still a Ponzi scheme.

Me: No, if it has only element A, that wouldn't suffice to fit the definition of a Ponzi scheme.

You: Yes it would, and if it has "A" and "B", it's a Ponzi scheme.

If you're going to continue insisting on your own made-up definitions, and then avoiding conceding your error by trying to shift attention to other elements, then it will become even clearer that you're just a guy who either can't grasp the basic concepts involved and is unfamiliar with proper definitions or (more likely) realizes he is wrong but just won't admit it and feels compelled to keep insisting he's right.

If you can't man-up at least enough to admit that the program in my hypothetical scenario -- a stable program of pay-as-you-go intergenerational transfer payments with the political promise/implication that the practice will continue across future generations -- does not fit the definition of a Ponzi scheme, then you are a waste of my time because you probably are not discussing this stuff in good faith. I'm not interested in continuing to go back and forth with you just so you can maintain the pretense that you have a legitimate argument on this point and protect your ego. Look, admitting that you erred on one aspect of this discussion wouldn't kill you, but knowingly persisting with nonsense and obvious attempts at diversion is quite pathetic.

Brooks - Let's look at Madoff the way you're asking me to look at SS. If you ignore Madoff's made up ROI, would you call the scam Madoff was running a Ponzi scheme? All Madoff was doing was taking money from new/returning investors, paying out dividends to all investors from that stream of new investment, and then skimming off the difference. People were investing for future returns (the way citizens today are mandated to do with SS). Madoff was skimming off the top to finance himself (the way the gov skims off the top to finance itself). You can't ignore the guts of Madoff's scam. That's how you're asking me to evaluate SS. That's not evaluating it honestly.

Ben,

Stop playing games just to avoid admitting that you were wrong. I tried walking you through this matter by starting with the most basic elements, leaving out other elements for subsequent discussion if I could get you to acknowledge the obvious regarding that first step. I presented you with a hypothetical program scenario that obviously did not fit the definition of a Ponzi scheme, but you made any rational discussion impossible by insisting that the program in that scenario was indeed a Ponzi scheme, in other words, just pulling your own definition out of your butt and mindlessly, repeatedly insisting upon its validity. And now you are quite obviously, persistently trying to divert attention from that point to a broader argument involving all other elements.

You are employing a very familiar tactic among commenters on blogs who realize they are wrong or at least suspect that they are wrong. You are rejecting a very relevant, useful hypothetical question because it's a hypothetical, and claiming that it's unreasonable to ask you to answer it. Of course, you already did answer it. You insisted that it was a Ponzi scheme. Now you are claiming you can't answer it because it's a hypothetical, and are trying to divert the discussion to other elements related to the

Look, it seems highly likely at this point that you are in ego/image-protection mode and are just trying to avoid admitting that you are wrong and to create the impression with anyone who may be reading this exchange that you have some legitimate argument regarding that scenario I presented, but in case this helps, forget about SS or any other program in reality. My asking you this hypothetical is NOT "how [I'm] asking [you] to evaluate SS" (and frankly, I think you are faking confusion between the two). I'm just asking you about a hypothetical scenario for a hypothetical program with the characteristics I included. And I ask you again: Will you admit that this hypothetical program is NOT a Ponzi scheme?

If you won't admit that, then you are either incapable of grasping the relevant concepts and applying proper definitions or (more likely) just unwilling to admit you were wrong.

You are putting up a straw-man arguement with a hypothetical. I did the same thing with my last Bernie Madoff comparison. It shows how stupid it is to ignore the vital elements and say that there is a real comparison. Which is why you ignored it altogether.

So here goes. Technically, in your hypothetical world, it is not a Ponzi scheme for the government to make a promise to provide old-age care, take money from today's tax payers, use that money pay previous tax payers, and keep the difference for themselves. But with that same line of thinking, it is not a Ponzi scheme for Bernie Madoff to promise outrageous returns, gain new investors because of his "performance," use new/returning investors to pay out dividends those investors, and pocketing the difference for himself.

Can you still not see how there is no real comparison there at all? How silly does that sound?

The only difference between Madoff and the government is that the government, unlike Madoff, has the ability to force people to keep paying in, alter the outlays, and the starting point for those outlays to keep the system solvent.

How pathetic. You start out (in your second paragraph) seeming to be admitting that you were wrong and that my hypothetical program would not be a Ponzi scheme as you previously vigorously insisted it would be, but then immediately pivot to an absurd comparison to Madoff's Ponzi scheme that moots your admission and revert back to some implication that you were right in the first place to call my hypothetical program a Ponzi scheme.

My guess is that you're not sincerely confused, but instead are just a typical insecure and/or hyperpartisan guy in the blogosphere who just can't bring himself to admit that he was wrong about something and more generally engage in good faith.

Go waste someone else's time.

Maybe next time you won't waste whatever important, valid points you may have to make by persistently insisting on absurd assertions.

1) Unlike Madoff, the Govt could simply stop social security tomorrow just by issuing T-Bonds to all participants, and then meet the interest payments.

2) Social Security is both a transfer program and an insurance program.

It insures against running out of retirement income by paying out less to those who die early.

It transfers from high income retirees to low income. Try doubling your income and see if your benefit doubles:
http://www.socialsecurity.gov/retire2/AnypiaApplet.html

Brooks - You keep calling me hyper-sensitive and an uber-partisan, yet you can't refute my arguement. You just say that I'm wrong. You said I can't look at the program in reality, but I have to look at some mythical version of it (a version which doesn't reflect reality at all).

Why is my comparison with Madoff to SS in the alternative universe you like to live in "absurd?" I evaluated Madoff the way you asked me to evaluate SS (in a dishonest way). My comparison only highlights the absurdity of your arguement.

I think an honest review of our back-and-forth would show that it is you who in fact are the "typical insecure and/or hyperpartisan guy in the blogosphere." Good luck with that.

Ben,

No, and stop pretending to be thick (apologies if you are actually thick).

How exactly am I supposed to "refute the argument" of someone who claims that a term means something that it just doesn't mean? A Ponzi scheme is a type of pyramid scheme. And it says so on the very SEC page from which you quoted in one of your comments. But you apparently didn't bother to then click on the "pyramid schemes" link to find out what a pyramid scheme is. If you had, you would have gotten to the page at the link I provided you, which perhaps you still haven't bothered to check http://www.sec.gov/answers/pyramid.htm . That description of a pyramid scheme should be enough for you to instantly and easily see that your repeated insistence that the hypothetical program I described -- a stable, pay-as-you-go, ongoing intergenerational transfer payment system -- is WRONG, yet you first persisted with this nonsense, refusing to admit that you were wrong even though it was obvious (unless you think you are free to just make up whatever definitions of terms you wish), then pretending that you can't comment on a hypothetical even though you obviously could and had even already done, and then throwing out some strange, possible pseudo-admission that you were wrong followed immediately by an absurd comparison to Madoff intended to revert back to your insistence that you really were right all along, and now your pathetic, obviously invalid assertion, in clear contradiction to what I've explained to you, that I'm saying you "can't look at the program in reality, but I have to look at some mythical version of it" simply because I have started with abstraction containing basic elements which you insist (incorrectly and absurdly) are sufficient for a program to fit the definition of a Ponzi scheme, and I have tried to get you to realize that such a fabricated (by you) definition is just plain wrong. You refuse to admit it, which means you are either quite thick or dishonest, and in either case, not worth my time.

Grow up. Develop enough maturity and integrity to admit when you're wrong about something, instead of blocking any chance at productive discussion by insisting childishly that you were right and playing games to avoid admitting you were simply wrong.

"That description of a pyramid scheme should be enough for you to instantly and easily see that your repeated insistence that the hypothetical program I described -- a stable, pay-as-you-go, ongoing intergenerational transfer payment system -- is WRONG"

Should be:
"That description of a pyramid scheme should be enough for you to instantly and easily see that your repeated insistence that the hypothetical program I described -- a stable, pay-as-you-go, ongoing intergenerational transfer payment system -- is a Ponzi scheme is WRONG"

Brooks - A pyramid scheme requires more and more investment over time to pay dividends to old investors and the growing number of new investors who provide the means to pay out those dividends. This is to say that a pyramid scheme requires more and more investment over time to remain solvent because there is no true investment going on. The pool of resources that has been put into the scheme is not being used for productive investment, but rather to support the mirage of investment and to line the pockets of the perpetrator. A pyramid scheme traditionally obtains the new investment from new investors.

If you were to hold the government to the original terms of SS it would rely on more and more investment overtime to remain solvent, like a pyramid scheme. The taxes that have been collected over time have not been invested, but isntead have been spent on pet projects. New investment is required to support the mirage of an insurance plan. Where SS differs from your textbook definition of a pyramid scheme is that SS doesn't rely on a growing number of new investors (as everyone is already in the system) for ever increasing amounts of investment. The government makes up for the growing short fall by increased tax rates (as I showed with this link: http://www.ssa.gov/OACT/ProgData/taxRates.html) to support additional payments into the system and by altering the terms of payment (eligibility age and the amount of benefits paid). A traditional Ponzi scheme does not have these special powers. If the government did not have this special ability and had to pony up to the terms that people "agreed to" when they first started paying in, more and more of the governments budget over time would be paid out to beneficiaries until the government eventually went bankrupt. Which, if you reversed all the previous tax hikes, reductions in benefits, and changes in elegibility age, that day would have been yesterday.

You're asking me to ignore the special situation that the government is in with regard to SS (by being able to control the input (taxes) and output (benefits) via force) in order to say that it isn't a textbook investment Ponzi scheme. Talk about semantics and hyperbole.

BTW, if you disagree with what I've written above, please do not write back that it's "absurd" and I'm an "idealogue" incapable of admitting I'm "wrong." Just point out specifically where I am correct, and provide your reasoning for why you feel I am incorrect. Let's keep it constructive.

Ben,

You remain pathetically evasive. I tried to take a constructive approach, and you made it impossible, and you continue to do so, not that I am any longer interested in trying to talk it through with someone who has so clearly demonstrated bad faith -- a childish, utter unwillingness to admit he's wrong when he clearly is, claiming that he can't answer a hypothetical even though he already had, falsely claiming that I was insisting that he ONLY consider my hypothetical as if that represented the reality, etc.

Even at this point you continue to be evasive. Again, you started out essentially saying either that a program with elements A and B is a Ponzi scheme or that a Ponzi scheme with just element A is a Ponzi scheme. So I started with just A (my hypothetical), asking you if you would call that a Ponzi scheme. You insisted that it is, even though it obviously isn't. I explained your error to you, and provided links to proper definitions and explanations, and I assume you probably realized at some point that you clearly wrong. But you have kept insisting that you were right, with one possible pseudo-admission you were wrong followed by that strange Madoff comparison that mooted what you had just said and reverted back to insisting that you were right all along.

Again, my hypothetical is a program of ongoing intergenerational transfer payments that is stable, i.e., that has no shifts of demographics or changes in "ROI" across generations, etc., just a smooth, ongoing, intergenerational transfer payment system. You call that a Ponzi scheme, and can't bring yourself to admit that it isn't, even though (unless you're a complete idiot) you know at this point that you're wrong.

Why would I want to proceed to spend time discussing the more complex reality (the A and B) with someone who is either too clueless or too dishonest to admit that even the simpler hypothetical program is NOT a Ponzi scheme? If you can't even agree to an obvious, objective fact (or pretty darn close to it), why would I think there is any chance you would agree to something with some degree of subjectivity, no matter how strong a case I made and no matter how weak your arguments? Why would I bother trying to convince you on the more complex matter, given that it appears impossible to get you to even admit the obvious in the simpler case?

When you demonstrate such unreasonableness, such bad-faith, (presumably) fake ignorance and stupidity, people who seek intelligent, rational, good-faith discussion/debate will be much less likely to want to discuss/debate stuff with you. It's one of the most common problems among commenters in the blogosphere: immature, insecure and/or hyperpartisan people who simply cannot bring themselves to concede that they were wrong about something -- or to concede anything, for that matter, such as some drawback of a policy they advocate.

"or that a Ponzi scheme with just element A is a Ponzi scheme"

should be:
"or that a program with just element A is a Ponzi scheme

Your contempt towards my arguement only shows that your arguement is intellectually bankrupt. It can't stand on it's own merit, so you must go into attack mode. All I asked was for you to refute what I had written. And you couldn't do it. You called me childish and pathetically evasive.

I've already addressed your hypothetical earlier. You want me to agree that taking from A and giving to B is not a Ponzi scheme. I agreed with that. But, I said that if you're going to say that, you have to look at Madoff the same way. And under that same microscope, he wasn't running a Ponzi scheme either. He simply took from A and gave to B. This only shows how ignoring the REALITY of the situation doesn't really show you anything at all. Hopefully that clarifies things for you.

So, let's try this again. I will try to break it down to a more elementary level for you.

1. Pyramid schemes require an ever growing influx of money. Ponzi schemes rely on new investors. SS relies on ever increasing tax rates, changes to eligibility, and a reduction in benefits.

2. Pyramid schemes use that influx of money to pay "investors" and don't really invest that money (the perpetrators keep the difference). SS uses that influx of tax dollars to pay out beneficiaries (the gov keep thes difference).

3. Pyramid schemes reach a breaking point when the influx of money into the scheme can't cover the outlays needed to pay all investors. SS will likely never truly "fail" because the gov can control the input factors (required tax payment and tax rates) and output factors (eligibilty age and the amount benifits paid).

This last point is the one that I have conceded all along. It is what makes SS different from any scheme a private citizen could run, and hence why SS will never truly "fail." This leads me all the way back the the statement I made (that you took exception to) that started this whole thing: "I think it would be more honest to say that SS is a Ponzi scheme that is unlikely to collapse."

Please refute any of the three statements made above. And, keep your childish, whiney remarks to yourself, and stay on the issue. (BTW, I know that you can't do that because you already know you don't have a leg to stand on, so you will have to come out in attack mode again).

Ben,

More silly evasiveness from you.

Re: I've already addressed your hypothetical earlier. You want me to agree that taking from A and giving to B is not a Ponzi scheme. I agreed with that. But, I said that if you're going to say that, you have to look at Madoff the same way. And under that same microscope, he wasn't running a Ponzi scheme either. He simply took from A and gave to B.

Huh? Are you totally lost on what I mean by A and B?? I'm not talking about A and B as different segments of people. I'm talking about elements of a program. My "A" is what I have said it is all along: simply a stable, smooth, ongoing system of intergenerational transfer payments, without any issues of shifts in demographics, "ROI", etc. (or at least no presumption of such issues). My "B" refers to elements including such issues. I tried to take things one step at a time, starting with the simpler case and seeing if we could at least agree upon the obvious: that a program with just Element A does not fit the definition of a Ponzi scheme. If you had been capable of agreeing to that much -- which is apparently now impossible because it would mean admitting you were wrong, which is apparently something you need to avoid no matter how obvious it is that you are indeed wrong -- we could have moved on to a possibly intelligent, productive discussion of the more complex reality, considering the "B" elements. But your immaturity and lack of integrity blocked such a progression.

And your repeated, bizarre, trying-to-have-it-both-ways argument (admitting you were wrong while also implying that you were really right) with the Madoff comparison is just asinine. Madoff was running a Ponzi scheme. A Ponzi scheme is a type of pyramid scheme. A stable, smooth system of ongoing intergenerational transfer payments is NOT a pyramid scheme and thus NOT a Ponzi scheme. For you to persist in equating the two and in insisting that either they are both Ponzi schemes or neither is a Ponzi scheme is so incredibly stupid that either you are an idiot or you are persistently dishonest. So again, why should I bother getting into a discussion of the more complex aspects of the overall question with someone who exhibits either utter stupidity or (more likely) utter dishonesty and an utter inability to concede any point no matter how obvious?

It's amazing that you are really this immature. Seriously, can't you just admit that you were completely wrong to call a stable, smooth system of ongoing intergenerational transfer payments a "Ponzi scheme", and that such a system, unlike Madoff's operation, would NOT be a pyramid scheme and thus would NOT be a Ponzi scheme (while Madoff's operation WAS)? Geez, man. Grow up. How pathetic.

Intellectually bankrupt and back in attack mode. Did I ever call that one.

You keep saying that SS is a "stable, smooth system" but I contend that stability is only due to the power the government has to compel people to participate. This is the only thing that keeps SS from falling apart. It's what separates the Madoff's from SS. The only way you can call SS "stable" and "smooth" is to ignore the REALITY that without the forced influx of taxpayer money the system would fail (since the gov can't tax indefinitely they alter the output side as will to maintain "stability").

To try to show you why you can't ignore that REALITY, I compared Madoff through the same microscope. Let's try a different angle. Assume Madoff had the power to tell people who had already invested into his scheme that they had to continue to give him money (like the gov does with SS). In that case, it would never "fail." If you want to alter REALITY like you do with SS, then he wasn't running a Ponzi scheme either. I don't know how to make it any simpler for you.

Please look at the 3 elementary level components I laid out the comprise a Ponzi scheme, and refute them. Any of them. You can't. I'm begging you because you are really starting to sound foolish and truly evasive.

Re: You keep saying that SS is a "stable, smooth system"

Huh? I'm starting to wonder if I've been underestimating your sincerity and overestimating your intelligence. When did I ever say that SS was a stable, smooth system. Obviously I presented a hypothetical and have explicitly identified it as such repeatedly. For example, on one occasion I even said: "forget about SS or any other program in reality. My asking you this hypothetical is NOT "how [I'm] asking [you] to evaluate SS" (and frankly, I think you are faking confusion between the two). I'm just asking you about a hypothetical scenario for a hypothetical program with the characteristics I included. And I ask you again: Will you admit that this hypothetical program is NOT a Ponzi scheme?"

Do you know what a hypothetical is? Do you know how and why hypotheticals can be useful? Or are you a genuine idiot rather than someone pretending to be an idiot?

And I almost included in my last comment an easy prediction that you would start accusing me of evasiveness, because I'm not responding to your diversionary efforts derived from your evasiveness.

Again:
It's amazing that you are really this immature. Seriously, can't you just admit that you were completely wrong to call a stable, smooth system of ongoing intergenerational transfer payments a "Ponzi scheme", and that such a system, unlike Madoff's operation, would NOT be a pyramid scheme and thus would NOT be a Ponzi scheme (while Madoff's operation WAS)?

And again:
why should I bother getting into a discussion of the more complex aspects of the overall question with someone who exhibits either utter stupidity or...utter dishonesty and an utter inability to concede any point no matter how obvious?

So again, you wasted whatever worthwhile points you may have had by acting so childishly (with apologies to children, many of whom are much more capable of admitting when they were wrong). Once you show such bad faith, people interested in rational, good-faith discussion/debate tend to lose interest in investing time in much more discussion/debate with you. Try to learn that lesson from this encounter.

Ok, your hypothetical is not a Ponzi scheme. But is just as as close to your hypothetical as SS is. I'm not sure where your insistence on this hypothetical (and ignoring the REALITY) gets you. You want to talk about a hypothetical that is no where near the REALITY of a Ponzi scheme or SS. So what's the point?

"But is just as as close to your hypothetical as SS is."

I'm saying that a Ponzi scheme is as close to your hypothetical as SS is.

You might be making some progress, but it's not a matter of proximity -- how "close" my hypothetical is to a Ponzi scheme. My hypothetical is simply NOT a Ponzi scheme, because it is not a pyramid scheme at all, and as that SEC page told you, a Ponzi scheme is a type of pyramid scheme.

So stop dancing around with words to try to hedge or smokescreen your admission. Just admit that you were completely wrong.

(1) You were completely wrong when you said that any program of ongoing intergenerational transfer payments, even if stable, is a Ponzi scheme. You insisted: I would still consider it a Ponzi scheme because it is still essentially a system of robbing Peter to pay Paul. This is the very essence of a Ponzi scheme. You were just completely wrong. Can you admit that without trying to hedge?

(2) I said There is no such thing as "a Ponzi scheme that is unlikely to collapse" and you keep insisting that there is such a thing. Again, a Ponzi scheme is a type of pyramid scheme (an "investment" pyramid scheme), and there is no such thing as an "investment" pyramid scheme that is unlikely to collapse, right? Which means you are wrong on that one, too, right?

Come on. You can do it. I promise: Just plain admitting that you were completely wrong about something (when you obviously were) won't kill ya'. You might even feel good about your personal growth.

Ben,

I'll even give you a script to help you out. You can simply say: "Yes, I was completely wrong on both counts (and I should have just admitted as much rather than wasting your time with persistent, absurd insistence that I was right and with various evasions of the question). But I still think SS is a Ponzi scheme because of elements it has that your hypothetical does not"

Brooks - I already said your hypothetical is not a Ponzi scheme. It also is not SS, nor is it any other form of a pyramid scheme. So you're arguing a point that is absolutely irrelevant to whether or not SS is a Ponzi scheme. SO WHO CARES ABOUT YOUR IRRELEVANT HYPOTHETICAL!?!? Who cares if your hypothetical is or is not a Ponzi scheme. You're hypothetical isn't reality and therefore isn't relevant. ARE YOU EVEN AWAKE OVER THERE!?!?!

Ben,

Poor, poor, Ben. This is so traumatic for you, and you brought it all upon yourself. You talked out your butt, got called on it, couldn't bring yourself to admit you were wrong -- so instead persistently insisted insincerely that you were right and engaged in persistent evasiveness, then kinda sorta hinted at an admission while simultaneously kinda sorta saying that you really were right, and now acknowledging the obvious reality (that my hypothetical program is not a Ponzi scheme) without managing to bring yourself to type the words "I was wrong", and getting all bent out of shape and screaming (all CAPS) with distress at bringing yourself begrudgingly even that far. Kinda sad, man. I mean, except for a five year-old. Maybe even for a five year-old.

Why does my hypothetical matter? Why was that a sensible starting point for discussing this overall question, and why would it have been a useful starting point if you had been a reasonably mature, honest person? I've explained that to you very clearly more than once. If you still don't understand my explanation you are an idiot, and if you do understand but are insincerely pretending there was no point to asking you that hypothetical question, then you are just a very, very insecure, defensive, unreasonable and quite dishonest person.

Hey, just for fun, let me ask you this:
You just said that my hypothetical is not a Ponzi scheme. Previously you insisted that it was. That means you were completely wrong, right? Can you say "I was wrong to call your hypothetical program a Ponzi scheme"?

You also insisted that it's possible for a Ponzi scheme to be "unlikely to collapse". Again, a Ponzi scheme is a type of pyramid schemes and pyramid schemes are inherently (or at least very close to inherently) unustainable and will certainly (or at least almost certainly) collapse. Can you say "I was wrong to say there is such a thing as a Ponzi scheme that is unlikely to collapse"?

By the way, congratulations on your very small bit of personal growth. Even coming as far as you did and admitting something that is extremely obvious (rather than persisting with nonsensical denial) seemed very difficult for you.

Ben,

So, lessons for ya':

1) If you're going to insist on using some provocative label, check on what the definition and criteria really are, rather than just pulling stuff out of your butt.

2) If someone makes it clear to you that you were just plain wrong about something, be mature and honest enough to admit it, and then advance the discussion from there. As in "ok, I was wrong about that. What you're talking about would not be a Ponzi scheme. But here are the differences between SS and your hypothetical program that I think make SS a Ponzi scheme." Imagine if you had just been adult enough to say that way upthread? We could have moved forward to consider whether or not SS had those other elements you claimed and whether or not, with those additional elements, SS met the definition of a Ponzi scheme. But instead you acted like a child, persistently denying the obvious, and revealing yourself as someone who cannot admit that he is wrong about something no matter how obvious his error (and who will instead waste another person's time with persistent, nonsensical denials and evasiveness), and therefore as someone who is very unlikely to admit he is wrong when his error is anything less than completely obvious, and therefore someone not to be taken seriously. Well done -- lol.

Your hypothetical absolutely does not matter. It has no merit in this discussion. Here's a hypothetical for you: A stable, smooth system of ongoing inter-investor transfer payments is NOT a pyramid scheme and thus NOT a Ponzi scheme. Well it says that it's stable and smooth. Everyone's happy. You don't need to know why it is stable and smooth. It just says that it is. It involves transfers between investors. No harm no foul. This is not a Ponzi scheme in your retarded world either.

Can you now see the absurdity to your hypothetical? It's plain stupid. It does not reflect reality at all. I've spent a good amount of time showing you that, but you keep saying I'm evasive. Yet, you never addressed the three points I made as to why SS is in fact a Ponzi scheme. There's a good reason for that. Because it is the real world, and your weak theory doesn't work there.

Go ahead, and tell me why the three points I made are incorrect. Pick any of them. You can't. Because that is the reality of SS, and it's just an inconvenient... wait for it... truth.

So keep throwing around ideas in your alternate universe. The rest of us taxpayers here on planet earth will live with the reality that SS is unsustainable, that my younger generation will see no benefit (beyond nominal terms), and that we will have to wait longer to receive any benefits. Let's keep this Ponzi scheme going.

Most importantly, I've shown why your hypothetical is stupid. Please show me why any of my three main, elementary level assertions about SS are incorrect. You can't. So go ahead and call me more names. You sound like Keith Olberman or Rachael Madow. That's exactly how they argue when they don't have fact-based opinions to stand on. It shows how weak your position is.

LOL! Why "Keith Olberman or Rachael Madow" but not "Sean Hannity or Rush Limbaugh"? Hmm? Are you implying that only liberals behave in the way that you're describing and that you think I am doing so because I'm acting like a typical hyperpartisan liberal?

All you're showing in your repeated insistence that my hypothetical had no useful purpose is that you ain't too bright. But keep it up if you wish. Just, if you're a college kid, steer clear of courses in logic, economics or philosophy, (or for that anything involving algebra, and probably plenty of other subjects) because hypotheticals are central tools in all of them, in order to ask questions like: Does A = X, or does A + B = X? If someone is claiming that something with A and B is X, would they make that claim if it only had A, and if so, why? Is he right or wrong, and if he's wrong, what else is required (what "B") to equal X?

But this is probably all sailing over your head rather than penetrating that coconut shell ya' got there.

Oh, and keep pretending I haven't given you a darn good reason why, after all it took just to get you to admit something that was extremely, immediately obvious, I wouldn't want to invest a lot more time sorting out more complex and less obvious matters. You've shown yourself to be an immature, dishonest child who, at best, will require a great deal of someone else's time, effort and patience just to admit something that is extremely obvious and quick to see. What's the likelihood you will engage rationally and in good faith with more complex, less obvious matters? Pretty small. Learn your lesson, grow up, and maybe you won't waste whatever worthwhile points you may have by acting like a very insecure child.

Just as I said. You are unable to say what is wrong with any of my 3, purposely elementary, points about SS and how it compares with a Ponzi scheme. You have to work within the flexible confines of the abstract and hypothetical to make your arguement work. Where as mine holds up in the REAL WORLD. You can pick any single one of my points. If it's so obviously incorrect, then you shouldn't have a problem debunking it. But you won't; because you can't. Your arguement doesn't hold up in the real worl. Keep living in your alternate universe. Talk about pathetic and childish.

Also, if your hypothetical holds so much weight. Explain in a sentence or two why it is relevant. Keeping in mind the way I was able to take what Madoff did, use your twisted, alternate logic, and show that it in fact was not a Ponzi scheme. Once again, you can't.

Ben,

Re: You have to work within the flexible confines of the abstract and hypothetical to make your arguement work.

LOL, Geez, man. I'm shifting my assumptions a bit. You're still very dishonest, but there's more genuine confusion on your part than I previously thought. I gave you too much credit on the intelligence dimension. What argument are you saying is the argument that I'm trying to make "work" via my hypothetical? Apparently you think that I'm arguing that if you don't consider my hypothetical program a Ponzi scheme, then you shouldn't consider SS a Ponzi scheme, even though I've clearly explained to you (repeatedly) the purpose and limitations of my hypothetical, and it means nothing of the sort. The fact that my hypothetical program is not a Ponzi scheme just means that additional elements would be required for something to be rightly called a Ponzi scheme. That's all. And if you had dealt with the hypothetical like an adult and admitted that you were initially just plainly wrong in calling it a Ponzi scheme, we could have moved on from there to discuss those other questions. Sheesh, I've already explained all this to you.

I've already explained to you clearly, more than once, why my hypothetical was a sensible starting point -- emphasis on starting point, although you turned it into a roadblock with you persistent childish nonsense, repeatedly denying the obvious -- and if you don't really still don't get it, you're just a pretty dumb guy, and if you do understand it and you're pretending otherwise, that's just further dishonesty on your part.

As for your broader argument, I could take the time to deconstruct and correct all your non sequiturs and other errors, but that would be tedious, and probably few if any others are following this thread at this point, and you have demonstrated almost no combination of learning curve and honesty, so why should I bother? You are a mass of confusion (your definitions, premises and logic are a mess) in addition to being persistently dishonest as part of your apparent personal insecurity and inability to admit when you are wrong no matter how obvious it is.

For what it's worth regarding the broader question, first, as I suggested from the start, you really should drop the semantic battle (particularly given that you are wrong) and make your arguments without that "Ponzi scheme" label, since, as I said, the validity and importance of whatever you have to say is presumably not dependent on use of that label. Second, if you are going to make a good-faith effort at sorting out whether or not that label applies, you should do your homework rather than insisting on pulling definitions and criteria out of your butt, and you should learn to distinguish between characteristics that Ponzi schemes have vs. characteristics that suffice to fit the definition of a Ponzi scheme (I've probably lost you already on that one), and learn to distinguish between "necessary" and "sufficient". And learn to define terms/criteria/matters of degree with appropriate clarity and precision. You probably don't get much of what I've just said, but maybe someone smarter than you can explain it to you.

Oh, and no answer to my question re: Olbermann, etc.? Gosh, what a shame.

Good luck learning to (1) form a coherent argument, (2) check facts to a reasonable degree rather than just pulling stuff out of your butt, (3) understand the usefulness and meaning of hypotheticals, and (4) growing enough personal security to admit when you are wrong, at least when it is as obvious as it was in this case.

Unfortunately for you, I'm done trying to move you along in all that personal growth. Good luck.

Brooks -

You just said: "The fact that my hypothetical program is not a Ponzi scheme just means that additional elements would be required for something to be rightly called a Ponzi scheme." - There is no point in doing this. You are proving nothing. And I already said that your hypothetical is not a Ponzi scheme, just like Madoff is not, when scrutinzed under the same assumptions. The reason I won't say "I'm wrong" because any logical person would think that your hypothetical would have a point and try to simplify SS and then say "I gotcha." But, in fact your hypothetical had no point at all. I didn't realize you were that stupid. I guess I gave you too much credit. So now that you've wasted so much time and we've established that your hypothetical only shows that you need to consider REALITY before comparing SS to a Ponzi scheme, perhaps you'd like to tackle one of my 3 ELEMENTARY points. I made them very basic. I even numbered them for you.

But again, you can't get past this hypothetical. All you've shown is that you want to harp on one stupid point that holds no real weight (as you admitted in the above quote). That's all we've been talking about for 2 days now is your hypothetical. I guess you are trying to wear me down to where I just throw in the towel and acknowledge the fact you'll just continue to dance around the real issue and never address it. I won't though. I'd like for you to be honest and tackle just one of my points. Again, you haven't because you can't.

lol. Listen, dumb dumb (and by the way, being a persistent, vocal idiot doesn't make you any less of an idiot, any more than persistent pretense makes you less dishonest), my hypothetical should taken us no time at all. It was obvious that my hypothetical program was NOT a Ponzi scheme. If you had been adult enough to just say so, we would have moved on from there to sort out the rest of the matter, but instead you childishly persisted in denying the obvious, getting evasive, etc., and in the process (1) wasted our time, and (2) revealed yourself to be some combination of stupid and dishonest, meaning not someone to be taken seriously or worthy of engaging in more time-consuming discussion of questions whose answers are perhaps less obvious. Or to put it in your "duck" terms, if you persistently insist that anything with feathers is a duck, even though it's clear (and it's been clearly demonstrated to you) that you're wrong and it's hard to believe that you don't realize you're wrong (unless you're really, really stupid), don't be surprised if people aren't interested in engaging you in a more complex analysis of the object in question and discussion of whether or not it's a duck.

Which brings me back to...grow up. Don't let your immaturity, insecurity, etc., and related persistent dishonesty get in the way of whatever points you are trying to make or questions you should be asking yourself and others.

Good luck.

Oh, and your supposed worry that I would just say "gotcha" if you admitted the obvious is quite lame, particularly for this type of forum (as opposed to, say, a time-limited segment on TV or a call-in conversation with a radio talk show host likely to cut off the conversation when convenient to him).

If you had admitted that "A" (the elements of my hypothetical program) wasn't sufficient to call something a Ponzi scheme, and if I had been silly enough to then say "Gotcha! Then you are admitting that SS is not a Ponzi scheme!" You could have simply said, "No, that doesn't follow, because SS is different from your hypothetical program and has elements B and C, which make it a Ponzi scheme". In fact, a mature person would have just said all that upfront in one comment, before any "Gotcha!" reply.

So there's another lesson for you to take away from all this: Don't make obviously lame excuses for your other obviously lame conduct.

And once again, you've shown that you have no reliable philisophical stance to refute my claim that SS is indeed a Ponzi scheme (except for a hypothetical which you acknowledged really proves nothing except that you need more info before determining if something is in fact a Ponzi scheme). To you, it's blatantly obvious that SS isn't a Ponzi scheme, yet you can't refute anyone of the 3 pillars I've built my arguement upon. That's all I've asked for an entire day now. But you know that you can't because I am right and you are wrong (in REAL terms). You're an idiot and thanks for wasting my time in the process of me establishing that you are a true partisan.

(PS - I'll take back calling you an idiot if you can provide anything with substance to this conversation. I'm begging you to provide something that refutes my REALITY-based arguement. But, you've already proven you can't do that, so I'll have to be satisfied knowing you are in fact an absolute imbecile).

What sort of "true partisan" am I? Spell it out.

Brooks - You have evaded arguing the real issue for over two days now. For one very good reason. You do not have a good enough counter-arguement to defeat my position, and that irritates you (which is why you've spent so much time berating me with snide remarks and name-calling). All I can guess is that SS and all the other FDR and LBJ-era big government social programs must be very sacred to you. And when you can't defend them in REALITY, you can only attack the one who's putting up the opposing viewpoint. If that's not the truth, that's certainly how it appears. And hence, why you still have not addressed any of my three points.

Ben -- Again: What sort of "true partisan" am I? Spell it out.

Everyone -- (just as a recap for future reference if I link back to this sometime as an example of very, very silly, immature, insecure, dishonest behavior in the blogosphere) Here's some REALITY, as I've explained to Ben repeatedly and very clearly: He showed himself on this thread to clearly be an extremely immature, dishonest person (in addition to not very bright and prone to oblivious confusion, non sequiturs, etc.) who, when presented with information/argument clearly proving that he was wrong about something, will waste the other person's time with persistent denials of the obvious, assorted evasions, etc., all to avoid just admitting having been wrong, accepting the valid premise, and letting the discussion proceed rationally. Now he complains because someone doesn't want to waste even more time with him on more complex matters, after he wasted all that time persistently denying an extremely simple, obvious fact. And now he persists with the contention that if someone -- for the aforementioned very good reason -- does not want to waste even more time with such an immature, dishonest person so unlikely to engage in good faith, it must mean that that other person has no refutation for whatever confused additional assertions he is making.

He is at this point throwing a tantrum like the bratty, dishonest, highly insecure four year-old that he apparently is inside.

And once again, you've shown you can't make a valid counter-arguement. You have to resort to more name calling.

I answered your question on partisanship when I said: "All I can guess is that SS and all the other FDR and LBJ-era big government social programs must be very sacred to you." You're obviously a democrat at a minimum, but most likely a socialist.

Let's recap the points you've made so far:

- SS is not a Ponzi scheme.
- A stable inter-generational wealth transfer plan is not a Ponzi scheme.
- The above description does not describe SS.

WTF HAVE YOU SAID THAT PROVIDES ANY VALUE IN DETERMINING WHETHER OR NOT SS IS IN FACT A PONZI SCHEME!?!?!

I have laid out 3 distinct points and made a more than coherent argument. I've laid it out in a simple, elementary form for you to disect at your discretion. You've had over 2 days now to formulate an arguement. But, you haven't. Because you are philisophically incapable of doing so. You have hit a wall, so you revert to childish name calling. You need to apologize to your socialist comrade's for not being articulat a defense of your position.

Again, I'm begging for you to make a single RELEVANT point about SS. At this point I'll take anything, like: "It has been around for a while." This discussion obviously has to fall to that level for you to compete.

You need to apologize to your socialist comrade's for not being articulat a defense of your position.

Should say:

You need to apologize to your socialist comrade's for not being able to articulate a defense of your position.

LOL re: calling me a "socialist". Thank you for that one! You're a riot. This one's a keeper!

As for the rest, http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=08&year=2009&base_name=ap_a_giant_rightwing_propagand#comments

Someone who wastes a good chunk of someone else's time insisting that X + X = 3X and then, after being shown his error very clearly, persistently denies that he is wrong (out of utter stupidity or utter dishonesty), should not expect, after such a clear demonstration of stupidity, dishonesty or both, and in particular an inability to admit when he's wrong no matter how obvious it is, that the person whose time he has wasted will be willing to engage him in an even more time-consuming discussion of more complex algebra. After all, the chances are extremely low that he will understand and admit he is wrong if his arguments have been refuted, and the chances are quite high that he will engage in all sorts of bad-faith tactics (dishonesty, evasiveness, very lazy non sequiturs, gross misrepresentations of the other person's arguments, etc.) as well as throwing out numerous non sequiturs that would have to be set straight -- not that he would understand and admit his errors no matter how clearly explained to him.

Brooks - You once again continue avoiding the REAL issue.

Let's recap the points you've made so far, AGAIN:

- SS is not a Ponzi scheme.
- A stable inter-generational wealth transfer plan is not a Ponzi scheme.
- The above description does not describe SS.

What did I miss? Nothing. You've made no relevant points. Ever since I laid out my arguement, you've gone into attack mode. You're using the fact that I thought you were trying to bait me into an "I gotcha" position with your hypothetical that I knew had no relevance. It turned out that's not what you were trying to do at all. You were just literally providing a hypothetical example that had no relevance. And now, that's all you want to talk about.

I've repeatedly attempted to bring you back to REALITY, yet you keep harping on this one stupid point that you already acknowledged holds NO significance.

So I will just have to be satisfied knowing that you are intellectually and philisophically bankrupt.

That is unless you can tackle one of my 3 ELEMENTARY points. But, alas, you won't because you can't. Between all of your whining and name-calling, you are truly pathetic and devoid of reason. I've tried to keep this as professional as possible, but at this point, I realize there's no point. You have nothing of value to contribute. This back-and-forth could continue indefinitely.

I'm sure this is a waste of my time at this point, but is anyone out there that can engage in a intelligent dialogue related to the 3 reasons why I feel that SS is in fact a Ponzi scheme?

I'm sure no one esle (including Mr. Baker) is reading this. But if there is anyone else who can make a coherent arguement, please chime in.

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=08&year=2009&base_name=ap_a_giant_rightwing_propagand#comment-6286798

Apparently nobody told Ben when he was a kid that if he insists on persistently cheating, the other kids won't want to waste their time playing with him.

Cheating?

lol, I was wondering if that would confuse you. You really ain't too bright. Which is not to say that I think you are so extremely stupid that you believed all the nonsense you've spewed. You were quite dishonest in addition to being, to some extent, sincerely and obliviously confused.

You're just funny at this point.

Are you on drugs?

Oh, and BTW, you still have no arguement against my 3 points. You're pathetic. You're passing yourself off as some know-it-all intellectual, yet you can't refute any of my THREE ELEMENTARY POINTS!!! Sad. Just sad.

It's time to admit you are wrong. We've done this long enough. I'll even help you, just respond with: "You are right. I am an idiot and have no intellectual grounds to counter your arguement. Therefore, I have been trying to attack you personally to distract from the fact that I'm not all that smart."

Just respond with that, and I can consider this charade done. I would have stopped writing long ago, but I can't wait to see what evasive, non-sensical thing you'll say next. I'm waiting with baited breath.

What Ben is given, repeatedly and clearly:
An explanation as to why he is not worth engaging further, particularly on anything with even a bit of complexity
(because he has shown himself not only somewhat thick, but more importantly extremely resistant to admitting that he is wrong about even some very simple, objective matter when it is extremely obvious that he is wrong, instead wasting others' time with persistent insistence that he are right [even beyond the point at which even he realizes he is wrong], evasiveness to avoid admitting he is wrong, etc., all because he apparently lacks the maturity, personal security and integrity to engage in good faith if that means admitting that he was wrong about something.)

What Ben thinks -- or dishonestly claims to think -- he is receiving:
Just gratuitous personal attacks
(rather than what it is: the perfectly reasonable justification for not wasting more of one's time with him, which happens to relate directly to unflattering observations of his behavior and related personal traits)

Keep goin', Benny. Funny stuff. Perhaps this thread can, in the future, be the basis of discussion/debate over the split, at given points and for given comments of yours, between how much is a reflection of your sincere confusion (stupidity, if you will) vs. just plain dishonesty (spewing nonsense even you don't believe is valid).

In any case, assuming honesty in this case, let's add to the ways in which you ain't too bright your inability to distinguish between a gratuitous insult and a meaningful explanation of something that has a legitimate role a dialogue (e.g., explanation of why I'm justified in not wasting more time with you on your ignorance and confusion regarding Ponzi schemes and SS) that happens to include insults.

But by all means, keep goin'. It seems that you just can't help but add more to the Stupidity and/or the Dishonesty file. Which is amusing, and which may be a useful reference for me at some point (regarding behavior of commenters on blogs)

Ben,

It's been amusing, so I've responded further than I thought I would. But beyond this point I think the comic value of your repititious manifestations of confusion and/or insecurity-born dishonest will drop significantly (again, the comic value, not the quantity of such material you continue to provide), so I'll just let you add whatever you'd like.

Go ahead with the last word, and good luck with the personal security and integrity issues, the making-stuff-up and talking-out-yer-butt rather than looking stuff up issues, and the problems you have with basic logic. Maybe if you grow up and show that you are willing to engage in good faith even if it means you might have to admit being wrong, people seeking rational discussion/debate will be more willing to spend time addressing your assertions/questions.

You really need to go back an read this thread. I answer everyone of your claims. I refute each with one of the 3 arguments which are the basis of my opinion of SS as a Ponzi scheme. You have refuted none, "0", zilch, zippo, nada of the points I've brought up. You only insist that you are right. You even say at one point - "I can't explain any more clearly than I already have why you are wrong in labeling SS a Ponzi scheme." - At this point, you had only given your hypothetical as defence of SS not being a Ponzi scheme. This comparison hinged on the "stability" of your hypothetical. Later on you would state: "When did I ever say that SS was a stable, smooth system."

So you were hanging your entire argument on your hypothetical up to this point and how it compared to SS. Then you pull the rug out from under your own argument. This blew up your entire point. From here on out, you refused to continue the debate. BECAUSE YOU KNEW YOU HAD NO POINTS OF VALUE TO OFFER. It's all right above for you to read for yourself.

Again, you can just tell me that you really have nothing new to add to this argument, apologize for wasting my time, and the we can just go our separate ways. But you won't because it is you who are actually guilty of all the things you are accusing me of. Classic move, but you don't have the facts on your side. They are laid out above quite clearly. You won't though because at this point, you realize you have no defence left. You're not only an idiot, but you're dishonest too. Nice combination.

Again, you are intellectually and philisophically bankrupt.

That was posted by me, BTW.

Brooks, you managed to get Mr. Baker off the hook. Nice work. He was the one who said it is "propaganda" to say that SS is a Ponzi scheme. I really wanted his opinion on it. On top of that, you wasted three days of my life which I will never get back. And, the only thing I established is that "Brooks," whoever that is, is an idiot. Thanks again.