Gary Galles on the worst pyramid scheme of them all, Social Security:
"Seniors hurt in Ponzi scam" headlined the story of elderly Southern Californians bilked in a pyramid scheme. While sad, the story reminded me of Social Security, since it is also a Ponzi scheme involving those older, with high payoffs to early recipients coming from pockets of later participants. With Social Security, however, it benefits those older at others' expense.
Pyramid scams collapse when they run out of enough new "investors" to pay earlier promises. Some use this fact to deny that Social Security is really a massive redistribution scheme, since it has lasted over 70 years. That assertion misses two substantial differences between Social Security and other Ponzi schemes however: Social Security involves far longer generations, with people collecting on current promises far into the future; and it has been not one, but a series of Ponzi schemes.
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