Ah, the Ponzi Scheme

R ick Perry.  Ponzi scheme.  I have this terrible suspicion that the Republican party is going to be very sorry for labeling Perry with that one if he actually wins the nomination and has to run for President.  Social Security is one of those sacred cows that occupies a…how do you say it…”strange” position in our political dynamic.  Everyone thinks it’s OK to bitch about Social Security, we’re all staring at the rotting corpse, but actually doing something?  No no no no no.    This is how it looks to me:

1.  We all know Social Security is a giant hollow tree waiting to collapse.

2.  The reason for this is very simple.  Social Security is a lovely concept which unfortunately manifests itself in the short-term as a giant pile of money sitting in a room somewhere.

3.  Congress found it easier to “borrow” from that pile than raise taxes, because Americans are children who demand daddy use rent money to buy them a popsicle or they throw a tantrum, call Social Services claiming abuse, and have daddy removed.  The idea was that Congress would eventually pay it back.   

4.  Of course they will.  Every story I ever hear about companies plundering retirement accounts for quick cash always turns out well.  This is also why Indians don’t kill their only cow.

5.  Americans are stupid and let them do it without raising bloody hell.  That means we did it to ourselves.   Accept it. 

6.  Now it’s out of money because it only works if we accumulate cash for a long period of time.  We can never…NEVER…fix that.  The money is gone. 

Now is SS a ponzi scheme?  Of course not.  Ponzi schemes are predicated on the idea that someone sits at the top of the heap, and cash flows upwards from the schmucks at the bottom. You keep paying off the people at the top with the new peoples’ cash.  Eventually you run out of schmucks, and it all falls apart.  Well, we’ve always got more unretired people than retired people in this country, even with the baby boomers, so SS should always work just fine.     An example of a real ponzi-type scheme is Quixtar (Slightly different.  These go on much longer because the salespeople are also consumers.  Think Tony Montoya in Scarface) I had some asshole once  try to induct me into Quixtar as one of his “guys”.  It was douchy.  I still have the Quixtar brochure he gave me where he literally drew the following diagram to adamantly defend how the cash flow of Quixtar is not a pyramid:

                                                        o                                                 /\

                                             /                   \                                    /      \

                                        0                             0                          /              \

                                /           \                    /        \                               |

                           0                   0            0               0                          | 

                     /        \          /        \      /   \          /   \                        |

                 o              o     o          o    o       o     o      o                      |

              * The arrow represents the flow of cash*

What a dick.  The second I can put images on here I’m uploading the scan of that picture drawn below the word “Quixtar” on the brochure.  It’s like a Picasso of delusion.  I suppose if you don’t understand basic geometry then middling economics must seem like Joseph and the Amazing Technicolor Clitoris.  Maybe Quixtar’s marketing strategy should be like the simple matchbook drawing tests where you write down what shape you think a triangle is and mail it in to determine if you’re “Quixtar material.”

Douche:  I think it’s a square!

Quixtar:  Let me buy you some coffee.   

So how  is Social Security different from a ponzi scheme?  Very simple.  Social Security looks like this:


             00000000000                                                                    /\

            00000000000                                                              /          \ 

 ———————————–  Retirement Age           /                   \

                000                                                                               |

             00000000                                                                    |      

       000000000000                                                                    |

  00000000000000000000                                                         |



What’s different?  In this case, the arrow represents the flow of people.  Unlike a ponzi or pyramid scheme, you move up as you get older.  You aren’t just giving all your cash to one dude at the top.   There’s vertical motion in the pack.  There will always be a large group of unretired people below you waiting to cross the retirement threshhold, and one day it will be their turn.  In ponzi schemes, you never move up the ladder.  Ever.  As a result, there’s a natural terminating point.  That’s also the problem with Quixtar.  (emphatically NOT a pyramid)  You are either one of the lucky SOB’s who got in early when there were still tons of suckers willing to jump into your investment pool, or you arrive too late and the pool is already a s-t-filled hog waller you stand in until you get ptomaine poisoning.  (Incidentally, ptomaine poisoning is BS.  I just like the way it sounded there)   Social Security CAN work,  the same way banks lending mortgages CAN work…unless someone ruins it by taking all the money or writing bad loans.

So is Rick Perry wrong to call it a ponzi scheme?  Sure.  It’s hyperbolic politics.  But that doesn’t make Mitt Romney any more useful for simply pointing it out.  Just savvier.  He’s still not offering any solutions. 

What is the solution to Social Security?  Well…

Look, this is a little bit like alternative fuel cars.  We talked for thirty years about how s-t was falling apart in the environment, but we never actaully started building hybrids en mass until gas prices cleared $2.50 a gallon.  In some regards, George Bush did more for the environment by invading Iraq and ruining the international economy than Greenpeace ever did, because now we can’t afford to drive gas guzzlers.  But to the point, the answers are clearly written on the bottom line for Social Security.  Here they are:

1.  Stop doing it – and commit political suicide,  because when you take money away from large groups of people you don’t get elected in this country.  

2.  Raise SS tax a whole lot to recoup your losses – and commit political suicide, because when you take money away from large groups of people you don’t get elected in this country.

3.  Raise the retirement age so fewer people collect SS – and commit political suicide, because when you take money away from large groups of people…

S-t, you even TALK about taking money from people and you get lambasted.    Basically, we’re all going to ignore this until the checks stop getting written, and then we’ll do whatever we want  because it doesn’t matter any more.  You can’t take money away from people who are already not getting any, but at least you don’t get directly blamed for it.  That’s how most things work here.  In our country, the person who tries to plug the leak in a sinking ship is the person we blame if the boat sinks anyway.  That’s f-ked up.  Look at Obama and healthcare.

Best approach to a car accident:  Walk on by. 

Seriously, stop and realize that we live in a country that is trillions of dollars in debt, and yet most of the country will adamantly defend how the solution cannot involve raising taxes.  I asked an economist how this all works, and he drew a little diagram for me.

It’s very simple.  Our government’s check book  is up here at the top, represented by an “o” thusly:


Now we want this government to buy us pretty toys, so the government has to raise money to fill its check book.  It collects taxes from us to do this.             


            /           \                     

         o               o                                 


Now the citizens don’t want to pay enough taxes to actually buy what they want, so we have to get a bunch of “guys” like China to lend us money to pay for our stuff.



                           /            \
                          o             o

                      /      \       /      \

                  0           0  0          0


Likewise, in order to get the money to keep lending to us, China has to get a whole s-t-ton of people, called “poor Chinese citizens”, to work for peanuts and live in s-t and filth working in factories for 90 hrs a week at a barely-livable wage just so the people at the top can keep living beyond their means.  When the whole thing plays out, it looks about like this.


                                                    o                                       /\

                                             /          \                               /      \ 

                                          o               o                       /                \         

                                     /     \            /   \                              |     

                                 o         o          o       0                           |

                            /      \  /      \    /    \   /    \                     |

                           o      o  o       o  o      o  o     o                   | 

That arrow does NOT represent the flow of people. We call the people who try that little trick “illegal immigrants” and persecute them for trying to take advantage of things like Social Security.  You could argue their citizenship and subsequent entitlement to Social Security is legitimized because we allow them to work here, they pay Social Security tax, and the American people are exploiting them to get cheap stuff – and commit political suicide, because…yeah. 

Oh, and these poor schmucks at the bottom?  The same thing happens to them  that happens to the douchebag at the bottom of the Quixtar chain or the last person joining the investment club.  They sit in a slowly collapsing sinkhole of piss and s-t and get f-ked, and listen to everyone above them who’s making bank tell them how they’re doing a great patriotic thing for China and the rest of the world by throwing their lives away so other people can get rich.    Pretty great huh? 

Ben Tomkins is a violinist, teacher, journalist and critically acclaimed composer currently living in Denver, Colorado. He hates stupidity and generally believes that the volume of one’s voice is inversely proportional to one’s knowledge of an issue. Reach Ben Tomkins at BenTomkins@DaytonCityPaper.com.

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