I am pleased that Mr. Ridgel knows the definition of a Ponzi operation: one whose basis is to pay returns to the early investors/contributors using the funds obtained from later investors/contributors. He is right. Social Security meets many of the definition”s requirements, but there is a vast difference between a public/government Ponzi and one operated in the private sector.
A Ponzi becomes a “scheme” when the operators run out of new funds and collapse. Social Security is designed to be ongoing and does not meet the “scheme” criteria.
I suspect Mr. Ridgel”s main complaint is that Social Security is government mandated and employees must comply.
His view is based on the fact that he might have been able to be a more successful investor than he feels the government has been. The problem is that most employees probably would not have the drive and self control that he feels he would have. I suspect that most people would not have saved their payment equivalents, done the investing and paid the purchase and sale commissions and not touched the capital until the age of 65. And that is the whole social basis of the program, people are forced to save.
Recall that employees in 1936 were fortunate if they had a high school education and had no appropriate financial knowledge. Social Security is a good example of an activity that has done very well for the vast majority of people who probably would not have done their own saving and would now be supported by the country. On top of that, without Social Security there would be no Medicare.
Ridgel notes that he started Social Security at the age of 12. I believe he is 80 and I have a couple of years on him. My first experience with Social Security was at age 13 and I had a job that was the envy of my friends. It paid all of 40 cents per hour. No question, if I had not paid Social Security, I would have spent the money. I”ll bet Randy would have done the same.
Randy leads one to sympathize with him because (all) he got at 65 was $480 per month. If this were an annuity, at four percent, he would be drawing on a capital of about $144,000.
Far different from the $1,200,000 he notes in his letter. I suspect David James would have used the same algebra he and I discussed when talking of Social Security ($480*12)=(yield %* X). Beyond that, Randy did not contribute to Social Security all his life as most Social Security recipients have done.
Mr. Ridgel had a much better deal than Social Security, he was a government employee for most of his working life, and he probably deposits his substantial and enviable retirement payment (as a retired naval officer) in the same account as his Social Security payment. Not only did he not contribute to his Naval retirement, he and his family also benefited from the Navy”s generosity in areas such as medical treatment, housing and post exchanges.
He has not done badly working the system. I think he has a dim view of government employment and of government-run operations (he views them as socialist), but he appears to have benefited greatly as a result of being a part of things he doesn”t approve of.
A lot of conservatives ideologically don”t like Social Security because of the contribution mandate. David James was one of them and he would smile and say he would happily accept it even though as the retired managing partner of a major CPA firm, he really could get along without it. He also felt that it was a necessary program for the country to protect people who probably would not protect themselves.
A necessary evil, so to speak. Interestingly, Charles Krauthammer, a noted arch-conservative columnist, recently wrote expressing the same conclusion, a very necessary evil that must be continued.
Guthrie “Guff” Worth
Lakeport
