The Biggest Ponzi Scheme of All

I'm a believer that there are ideas that are outstanding in theory but suffer miserably in practice. Some of these might include trusting your teenage children to make the right decision, believing anything a used car salesman says, marriage (oops, that was a slip) and socialism.

The ideals of socialism remain grand, so much so that many posit that a society built on the purest principles of socialism would be Utopia. Within the tenets of economic socialism, the common willingness of society to operate as a whole is rewarded with equality for all.

Sound good? Scratch greed, envy but while you're at scratch individual achievement, drive and anything that delineates the degree of effort you expend.

So, what does this have to do with Ponzi? Just everything.

The theory of Socialism or even Marxism are rooted in a distribution of goods based on our current system, not some never-never land of do overs. So let's call it what it is, a RE-distribution of wealth/goods. And what does THAT have to do with a Ponzi?

I'm getting there.

In a Ponzi scheme, the perpetrator promises the original investors a return, part of the money they invested, which is paid out by recruiting new investors while the initial investors' money is long since been misappropriated by the perpetrator.

As I consider many of our underfunded social programs, I see a similar pattern. Consider Social Security. You are not the original investor, your grandparents were. Two generations since, Uncle Sam is still paying the original retirees (investors) and you - the baby boomers. The baby boomer retirees are no longer payers, it's the new "investors", our children and their children.

Now we are seeing the effects much similar to a Ponzi scheme in the financial meltdown of our economy and our troubled social programs including Social Security. When our debt (what we as a people spend to fund our country, ie. the investors' return) is more than our GDP (what we as a country produces, ie. income from new investors) the scheme goes bankrupt.

A long way to get here true, but it seems to me that in granting mortgages to unqualified borrowers, educating the children of illegal workers, welfare to unwed mothers and now bailouts (welfare) to industries, insurance companies and banks we are traveling down a path with a certain destination. The failure of Socialism is that there always comes a point when there is nothing left to distribute. Simply put, if the wealthy sector has $1,000, and every month $100 is redistributed to the less advantaged sector, it doesn't take a math scholar to realize that two things happen. First, there is little incentive for the wealthy to continue to compound wealth, and second the $1,000 doesn't last very long.

Historically, this has been the downfall of socialism AND the failure of the Ponzi scheme. Both have an end point. They run out of investors. And thus it seems to me that our system of Capitalism has born the best for, if not everyone, most.

Reward a person for a job well done, and he tries to do even better. And those who succeed in our society help our society succeed. We have found in the U.S. a blend of social policies that try to reward effort, but recognize the challenges of disadvantage. What we have lost is the reality that as successful as this promise may be, it has to be paid for and that is our generation's responsibility.

Credit cards, mortgages, the auto industry, Wall Street ~ we as a generation have engaged in a grand Ponzi scheme. We have Madoff'd our children's future. We don't get everything we want now and let future generations pay later.

Sorry for rambling but,

~ I'm just sayin'!