The principles that rule this blog

Principles that will govern my thoughts as I express them here (from my opening statement):

  • Freedom of the individual should be as total as possible, limited only by the fact that nobody should be free to cause physical injury to another, or to deprive another person of his freedoms.
  • Government is necessary primarily to provide those services that private enterprise won't, or won't at a price that people can afford.
  • No person has a right to have his own beliefs on religious, moral, political, or other controversial issues imposed on others who do not share those beliefs.

I believe that Abraham Lincoln expressed it very well:

“The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do, at all, or cannot
so well do, for themselves — in their separate, individual capacities.”

Comments will be invited, and I will attempt to reply to any comments that are offered in a serious and non-abusive manner. However, I will not tolerate abusive or profane language (my reasoning is that this is my blog, and so I can control it; I wouldn't interfere with your using such language on your own!)

If anyone finds an opinion that I express to be contrary to my principles, they are welcome to point this out. I hope that I can make a rational case for my comments. Because, in fact, one label I'll happily accept is rationalist.

Sunday, September 11, 2011

Social Security -- a Ponzi scheme?

Governor Rick Perry of Texas, one of the candidates for the Republican nomination for the Presidency, recently called Social Security a Ponzi scheme. He's been criticized for this. But the real point is not whether Social Security is or is not properly described as a Ponzi scheme. It is, according to the definition, much like a Ponzi scheme because money from later "investors" is being used to pay off earlier ones. But unlike a true Ponzi scheme, there doesn't seem to be any plan by the U. S. Government to take the money and run. Rather, it is able to use its taxing power to force people to put money into it, which Carlo Ponzi could not do.

The real question is what to do about it? Canceling it is out of the question — so many people have paid into it all the money that might have gone into retirement savings, so canceling it would make it a Ponzi scheme, complete with the "take the money and run" aspect. It might be true that the program should not have been started in the 1930s on the basis it was, but it's too late to change that aspect of it. What we need to know is what Perry would put in its place. Anything that replaces Social Security has to take care of current retirees — people who didn't get a chance to invest that money in a better alternative — as well as current workers, many of which have already put in much of the money that could have been invested. Perhaps new workers could be put into a better program, more like what an IRA is, but anyone who has already been working and put money into Social Security needs somehow to be helped to compensate for his lost opportunity to invest that money. Perhaps the only fair thing would be to keep all retirees receiving money on the current plan and return, with interest, all money that current workers have paid into Social Security. But where would that money come from?

Ponzi scheme or not, the real question is how Social Security will be changed, and what it means to current retirees and current workers. Perry's criticism of the program does not serve a valid purpose, unless he presents his alternative.

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