A description of my blog. http://www.my-site.com 6800938538971663930 A Risky Scheme 2004/03/#6800938538971663930 2004-03-17 The debate over how to fix Social Security seems almost surreal to me. The problem, in case you haven't been paying attention, is that just before I'm due to retire, Social Security will run out of money. This will happen because the Social Security program is a ponzi scheme. This means that one day in the not-so-distant future I will show up at the Social Security office expecting my first check, and I will be greeted instead with balloons and confetti and noisemakers and a marching band, and they will congratulate me on being the one billionth person to enroll in the Social Security program, and then they will hand me a bill for 300 gazillion dollars. The debate has focussed on tweaking the ponzi scheme so that it will be able to last until my son retires, at which point he will be stuck with a bill for 800 bajillion gazillion dollars -- and no marching band.


I sometimes imagine a meeting of federal bureaucrats trying to figure out a solution to the problem:



Bureaucrat 1: By the time Rob Kroese retires, we will have twice as much money going out as coming it. We have to do something.

Bureaucrat 2: The only options are to either increase the amount of money coming in, or reduce the amount of money going out.

Bureaucrat 1: How do we do that?

Bureaucrat 2: Well, to increase the amount of money coming in, we'd have to raise taxes.

Bureaucrat 1: I think we tried that already. People don't like that.

Bureaucrat 2: Ok, well we can decrease the amount of money going out by reducing benefits.

Bureaucrat 1: Tried that too. No sale.

Bureaucrat 2: What if we start a rumor that money causes cancer in old people? Old people will believe anything.

Bureaucrat 1: No, then we'd just have to increase medical benefits.

Bureaucrat 2: Hm. If only there was some way to...

Bureaucrat 1: What?

Bureaucrat 2: Nothing. It was a stupid idea.

Bureaucrat 1: Come on, Bureaucrat 2, we need to think outside the box!

Bureaucrat 2: Well, I was just thinking that it would be nice if there was some way to, er, multiply money.

Bureaucrat 1: Multiply it?

Bureaucrat 2: Yeah, like puppies. You'd start out with $2 and end up with $4.

Bureaucrat 1: You mean like gambling?

Bureaucrat 2: Yeah! We could take all the money to Vegas! It would be just like that show with James Caan!

Bureaucrat 1: What show with James Caan?

Bureaucrat 2: I don't know. I hear he's in a show about Vegas. I was going to say "C.S.I.", but I don't think we need to kill anybody.

Bureaucrat 1: Too risky. Besides, I hear that gambling is what's known as a "zero-sum game."

Bureaucrat 2: What does that mean?

Bureaucrat 1: It means that the money doesn't actually multiply. It just gets moved around. Sometimes you win, and sometimes you lose.

Bureaucrat 2: If only there was some way to multiply money that wasn't a "zero-sum game." It wouldn't have to be flashy, and we wouldn't even have to make that much money. We just need a way of gradually multiplying the money.

Bureaucrat 1: You mean like the stock market.

Bureaucrat 2: (puts hands over ears) RISKY SCHEME! RISKY SCHEME!

Bureaucrat 1: What are you doing?

Bureaucrat 2: I heard that the stock market is a risky scheme.

Bureaucrat 1: So where do you put your money?

Bureaucrat 2: I've been stuffing $20 under my mattress every week for the past 20 years.

Bureaucrat 1: How's that working out for you?

Bureaucrat 2: It was a good idea in theory, but the problem is that things seem to have gotten more expensive than they were 20 years ago. Oh, and apparently my grandmother has been taking the money out.

Bureaucrat 1: Sounds a little risky.

Bureaucrat 2: It's working so far. I guess I'll find out next year when I retire.

Bureaucrat 1: Well, I like the stock market idea. The only problem is that it would give the government way too much influence in the market.

Bureaucrat 2: What do you mean?

Bureaucrat 1: If the government put all the Social Security money into the stock market, it would make the government one of the biggest shareholders in a lot of corporations.

Bureaucrat 2: Oh! I thought you meant giving the money back to people, with the understanding that they would need to invest it in diversified index funds with a good reputation, and not allow them to touch the money until they were 65.

Bureaucrat 1: Now THAT would be a risky scheme!

Bureaucrat 2: Tell me about it.

Bureaucrat 1: So...raise taxes or cut benefits?



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