See what I mean. David expressed my worst fears very well. Michael Perelman Economics Department California State University Chico, CA 95929
530 898 5321 fax 530 898 5901 http://michaelperelman.wordpress.com -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of David B. Shemano Sent: Friday, August 13, 2010 3:13 PM To: Progressive Economics Subject: Re: [Pen-l] Social Security as Ponzi scheme Michael Perelman writes: >> What troubles me is the difference between the rights of bondholders and >> the rights of people who have paid into social security. I suspect that >> the idea of some will be to tell people that "we" cannot afford to honor >> those obligations. If so, it will resemble a Ponzi scheme. There is no "right" to social security, in the sense that there is no contract between the taxpayer and the government. There is no "trust fund" in the sense that, legally, the money in the "trust fund" belongs to the government and not the taxpayer and the taxpayer has no legal claim on the funds. See, http://en.wikipedia.org/wiki/Helvering_v._Davis; http://en.wikipedia.org/wiki/Flemming_v._Nestor. To the extent that we think of social security as a self-funded transfer arrangement, then it is a ponzi scheme, in the sense that it "pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned." http://en.wikipedia.org/wiki/Ponzi_scheme. To the extent that we ignore the rhetoric of "trust funds" and recognize that the payroll tax is just another tax designed to fund current expenditures, I think the ponzi rhetoric is misplaced. David Shemano _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
