Power To The People: Can We Privatize The Welfare State? – Forbes

John C. Goodman

John C. Goodman

Government insurance for the elderly is invariably run like a Ponzi scheme. Payroll taxes paid by workers are not invested for future benefits. Those tax revenues are spent the very day, the very hour, the very minute they arrive in the Treasury’s bank account. The U S experience is not unique. Social insurance is run like a Ponzi scheme in most countries around the world.

In the United States, the Social Security Actuaries publish an annual accounting of the unfunded liability in Social Security and Medicare. Looking indefinitely into the future, the unfunded liability in Social Security is almost $28 trillion. That’s the difference between the promised benefits for future generations of retirees minus expected taxes dedicated to fund those benefits. That’s more than twice the size of the official outstanding debt of the U.S. government…

In 1960, nearly two-thirds of the families in the bottom fifth of the income distributions were headed by someone who worked. By 1991, only one-third of these households were headed by someone who worked and only 11% worked full time. Early on in the War on Poverty, the federal government’s own studies showed the devastating effects it was having. In the guaranteed income experiments of the 1970s, for every $1 of extra welfare given to low-income persons, they reduced their labor earnings by 80 cents.

via Power To The People: Can We Privatize The Welfare State? – Forbes.