Krugman on Social Security Circa 1996: ‘The Ponzi Game Will Soon Be Over’
As NewsBusters reported Tuesday, liberal media outlets and their members have been talking about Social Security being a Ponzi scheme since at least 1967. Add New York Times columnist Paul Krugman to the list of detractors as demonstrated by something he wrote for the December 1996/January 1997 issue of Boston Review: Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today's young may well get less than they put in). This was in stark contrast to what Krugman wrote at the Times in November 2007 partially in response to Chris Matthews and the late Tim Russert having the nerve to discuss the Ponziesque nature of Social Security on live television: Consider, for example, this exchange about Social Security between Chris Matthews of MSNBC and Tim Russert of NBC, on a recent edition of Mr. Matthews’s program “Hardball.” Mr. Russert : “Everyone knows Social Security, as it’s constructed, is not going to be in the same place it’s going to be for the next generation, Democrats, Republicans, liberals, conservatives.” Mr. Matthews: “It’s a bad Ponzi scheme, at this point.” Mr. Russert : “Yes.” But the “everyone” who knows that Social Security is doomed doesn’t include anyone who actually understands the numbers. In fact, the whole Beltway obsession with the fiscal burden of an aging population is misguided.
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on September 13, 2011. Filed under