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Charles Ponzi

As Charles succinctly puts it in Things That Matter, “I’m open to empirical evidence.” That is, he is not just worth listening to, but willing to listen. That is why I have spoken up over the years on some of the rare occasions when I’ve disagreed with him – e.g., on the Bush Islamic democracy project (a big part of the enterprise that Charles refers to as “Democratic Globalism”) and, specifically, on the State Department-authored constitution for post-Saddam Iraq (establishing Islam as the state religion and installing sharia as fundamental law – Charles approved, I was a naysayer).

As noted above, Charles told Jon Stewart that Social Security was one of “the great achievements of liberalism,” and – along with its Great Society descendants, Medicare and Medicaid – was among the “achievements of the New Deal.” Ron takes umbrage at my suggestion that Charles, while ingratiating himself to Stewart’s progressive audience, might conceivably have been more generous in describing welfare state programs than he would have been in speaking or writing for his customary, largely conservative audience – i.e., that the latent admiration he has for these progressive nostrums more naturally emerged in a progressive setting.

Am I wrong? It wouldn’t be the first time … but let’s have another peek at Things That Matter. In the main, it is a collection of memorable Krauthammer columns and essays from the last three decades. It turns out there is one on Social Security.

Know what it’s called? If you guessed “Of Course It’s a Ponzi Scheme,” you win the prize.

Writing for his broadly conservative audience in 2011, Dr. K said Social Security is essentially indistinguishable from Charles Ponzi’s classic scam. Now, the Ponzi scheme may be a “great achievement” … but only if we are talking about the annals of fraud.

Dr. K’s column explains that the Social Security program deludes Americans into believing they are making “investments” that will generate dividends. In reality, it is a “pay-as-you-go” scheme in which government spends the money as it comes in, with early entrants getting paid by the “investments” of later entrants. As Charles puts it, “Pay-as-you-go is the definition of a Ponzi scheme.” Ultimately in the latter, he writes, “Word gets around that there are no profits, just money transferred from new to old. The merry-go-round stops, the scheme collapses and the remaining investors lose everything.”

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All Comments   (8)
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Goes back to the late 1950s when Ayn Rand criticized Republicans/conservatives for "Me, too"ing the welfare state.

Fifty years down the road, nothing has changed.
37 weeks ago
37 weeks ago Link To Comment
Dear Andrew,

I agree with you on almost everything but has Charles weighed in on this very public Red on Red debate? My simple interpretation of what Charles said on the Daily Show was that those programs were a great achievement of liberalism but not that they were good for the country. Just like Obamacare was supposedly a great achievement of progressivism, it is a disaster in practice. Am I missing something?
37 weeks ago
37 weeks ago Link To Comment
You might be right. Only Charles Krauthammer's acclamation of New Deal welfare programs is open to confusion and interpretation as you have done here, not unlike Patrick Buchanan's tribute to Hitler as "an individual of great courage" is open to interpretation.
37 weeks ago
37 weeks ago Link To Comment
All Jon Burack is saying is that if the fiction that Social Security is an insurance program is maintained, it is indeed a Ponzi scheme; if it is transformed into a straightfoward redistributionist program, it will no longer be. But there are obviously very good political reasons why it was sold and continues to be represented as the former. Straightfoward redistribution has always been extremely difficult in the US--without the communal, collectivist and monarchical traditions of Europe, it is too clear that nothing but robbery from one group of people for the benefit of another is taking place. So redistribution always gets disguised as insurance, with the question of how, if most individuals are unable to set aside enough money for their own health care and retirement, pooling everyone's money will suddenly provide for enough of it. In fact, just taking money from, say, 80% of the population and giving it to the neediest 20% would be far simpler and more sustainable--but, again, politically impossible (and immoral). There is probably no way to break the fantasy that we all have more money together than we do individually, at least intellectually--only reality can destroy such fantasies. But until that point it is helpful to have as many people as possible challenging the fantasy, and beginning to construct necessarily radical alternatives that people will be able to discuss as more of them realize they will have no choice.
37 weeks ago
37 weeks ago Link To Comment
This is dishonest on the Social Security-Ponzi analogy. Krauthammer is right that mandatory contributions undercut the analogy, and contra McCarthy it is not a distinction without a difference. You cannot pull your money (taxes) out of the system simply because you suspect the rate of return isn't good enough. Raise those taxes or adjust the payouts in various ways and the program is perfectly sustainable. What has made it problematic is not its semi-Ponzi character (which by the FDR was not happy about either - McCarthy is VERY unfair to his understanding of what he was doing and why), but the vast demographic transformation underway. It was not a transformation FDR or anyone could have expected in the extreme form it has taken - skyrocketing life expectancy and baby boom-baby bust fertility. Krauthammer dwelt on that with Stewart not to ingratiate himself with a liberal audience, but because it is so.
37 weeks ago
37 weeks ago Link To Comment
Your link shows up on PJ Media's most popular, but does not show up on their main page. Go figure, you, and I, oppose Ron Radosh's argument.
37 weeks ago
37 weeks ago Link To Comment
37 weeks ago
37 weeks ago Link To Comment
Life may be too short to unwind everything Ron Radosh distorts in his PJMedia blog post on Monday.

Certainly too short for casual readers to follow.

I need to say that again: mainstream Republican enthusiasm for the welfare state.

The Pubs want theirs a la carte.
37 weeks ago
37 weeks ago Link To Comment
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