Fortune Magazine Refutes ‘Social Security Ponzi’ Claim

If you’ve been following the AdSurfDaily case and the Bernard Madoff case, there’s a good chance you’ve seen people claim that Social Security is a Ponzi scheme.

Some members of ASD have said the government had no business going after Andy Bowdoin when it was knee-deep in its own Ponzi scheme.

Fortune magazine has published a piece on why Social Security is not a Ponzi scheme. It’s worth the time it will take to read it — a breezy couple of minutes.

The Fortune story was written by Mitchell Zuckoff, author of “Ponzi’s Scheme: The True Story of a Financial Legend.”

You’ll see a familiar term (other than ‘Ponzi”) in the article; it’s “black box” — something that our guest columnist “Entertained” has written about here and elsewhere.

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2 Responses to “Fortune Magazine Refutes ‘Social Security Ponzi’ Claim”

  1. Delighted to read this article. I’ve never understood how people could drag the social security system into the ponzi argement. The first is a public social fund paid into by all and drawn out from by those who need it – and not always the first in. It has continuance as its objective and may be subject to outside funding when necessary.

    The second is a business venture based on profit which is unsustainable from the outset and relies on new members to pay profit to old, leaving the new without funds. it rarely has a genuine product or service involved and is set up with criminal or negligent intent.

    Like oil and water – but I guess it suits the purposes of some to try to justify ponzis!

  2. Hi alasycia,

    On the very day Bernard Madoff was accused of running a $50 billion Ponzi scheme, the Social Security argument got trotted out.

    It also has been a constant presence in Pro-ASD arguments. Some folks have said that Social Security gives Andy Bowdoin an argument to get off the hook.

    It’s also been used in the sense of “selective enforcement” with respect to Bowdoin, as in the government has no business litigating against him if it’s running its very own Ponzi scheme.

    At best, the Social Security argument is a deflection. At worst, it is an incredibly hollow rationalization that shortchanges the life-altering pain Ponzis can cause.

    Some folks touched by the Madoff Ponzi have had to sell personal items to make the rent money. Charities have dissolved. Fortunes have been lost. Inheritances have vaporized. Universities and pensions funds have lost precious money. There also has been at least one suicide.

    So, yes, as you point out, the Social Security argument does suit the purposes of some people to try to justify Ponzis.