Our newspapers frequently offer an odd juxtaposition of events daring us to see parallels, to compare and contrast.
Glenn Cook’s column in the Sunday Review-Journal on how the Social Security and Medicare entitlement programs will inevitably become welfare programs with means testing requirements brought to mind a piece in The Wall Street Journal a couple of days earlier by Stephen Greenspan, an emeritus professor of educational psychology at the University of Connecticut and author of the 2009 “Annals of Gullibility.”
Greenspan, no relation to the former Fed chairman, is twice an authority on gullibility. He has studied it and he has lived it. Greenspan lost a portion of his personal savings in the Bernard Madoff Ponzi scheme that wiped out so many investors and charitable organizations recently.
The two articles made me stop and ask: What is the difference between entitlement programs and Ponzi schemes?
According to the Securities and Exchange Commission, Ponzi schemes are basically pyramid schemes that are named for Charles Ponzi, who in the 1920s duped thousands of New Englanders into investing in postage stamp speculation. Ponzi claimed to be able to use the differences between currencies and stamps to give investors a 40 percent return in 90 days. In fact, earlier investors were paid handsomely and, of course, touted this to others. Ponzi was using new investors and pay the earlier ones. The pyramid collapsed when new investors failed to keep up with the promises to the earlier ones.
Social Security and Medicare are funded by current workers who are taxed to pay for current retirees. The taxes paid in by the current retirees were long ago spent on earlier retirees.
Both are mathematically impossible to maintain. Both are fraud.
The only difference is that one is voluntary and the other is mandatory.
Actually, according to an article in the American Thinker, the mandatory one can be far more lucrative.
The first monthly Social Security check was issued in 1940 to Ida May Fuller, a retired legal secretary from Ludlow, Vt., writes Noel Sheppard. “This maiden disbursement was $22.54, which, according to Social Security Online, after cost of living increases and 35 years of receipts until her death in 1975, totaled a startling $22,888.92 in payments from a system to which Mrs. Fuller contributed $24.75.”
Ponzi was a piker.
My perspicacity appears to be shared by a number of observers. Put the keywords Social Security and Ponzi in a search engine and you’ll find dozens of newspaper and magazine articles, many of the newer finds relating specifically to Madoff’s ripoff.
You find the most interesting things in newspapers, don’t you?