No Refuge for Scoundrels

Five Steps to Fascism

2012-01-18T07:10:00.000-08:00

In As We Go Marching, John T. Flynn lists five characteristics of fascism. Let's list them, and see how we score!

1. Planned Deficit Spending

We're about to see the debt ceiling raised, again. We don't even bother passing budgets anymore; money is just created and disseminated, seemingly at random. Interestingly, Flynn described the situation during the New Deal, when Congress wrote FDR a blank check and then rubber-stamped his every decision.

And then we had a depression that lasted 14 years!

2. The Planned Economy
Fascism is different from Socialism, in that it sees no necessity for the government to "own" the means of production. Private ownership is no obstacle, as long as the government can direct the activities of private producers.

In America, the economy is directed through a vast web of subsidies, tax credits, corporate welfare, and "stimulus packages." The Federal Government provides student loans, mortgages, medical services, food; and it invests in businesses like GM and Solyndra.

3. Militarism as an Economic Institution
The Military-Industrial Complex. It is staggering how much legislation is passed because of threats to shrink military expenditures in a holdout's district. After WW2, contrary to Keynesian expectations, there was a boom as the troops returned home and America demilitarized.

For all the ranting and raving about "strong national defense," military expenditures are nothing more than "Conservative stimulus packages."

4. Imperialism as Handmaiden to Militarism
You cannot maintain huge deficits indefinitely. Imperialism provides two vital services to those who use militarism as economic stimulus. First, we always seem to stumble into various resources. Despite our contrary pronouncements, we always take "humanitarian military action" in places with oil wells and pipelines; not poverty and real tyranny.
Second, imperialism creates national enemies. National enemies are necessary to justify out of control military spending. This was the case with Al Qaeda, and its currently the case with Iran. We have harassed them endlessly, for 60 years. When they finally strike back, feeble though they may be, we'll seize the opportunity to establish a military base on the straits of Hormuz. How convenient!

5. The Totalitarian State. Flynn adds, at some point it "becomes necessary to adopt the fifth or drop the first four." NDAA, SOPA, Patriot Act, TSA. Court decisions upholding the arbitrary revocation of the fourth and fifth amendments...An executive that can detain indefinitely and execute without trial...

Sounds like we've gone the last mile, doesn't it?

Amazing Predictions from 2002

2012-01-07T08:05:00.000-08:00

Marx-Mussolini-Toffler-Gingrich; none of these things is not like the others.

2011-12-13T10:59:00.000-08:00

Best thing about Gingrich and his idiotic infatuation with the Tofflers?

Toffler liked to call his views "futurism." And so did Mussolini supporters in Italy, before the fascists fully came to power. Futurism has always been code for the notion that some sort of global, benevolent, totalitarian utopia is the inevitable and glorious event for which humanity eagerly waits.

This same sense of inevitability, unsurprisingly, drove Marx's views. True, committed statists cannot support their philosophy with reason; they depend on the conviction that human history is marching toward their goals, and that they are the prophets of this third wave."

Historical Revisionism

2011-12-08T11:18:00.000-08:00

Great Essay by Robert Higgs on why people are hostile to those who question the official story.

Newt...seriously?

2011-12-04T18:36:00.000-08:00

I was going to write about Newt

2011-12-01T17:33:00.000-08:00

But I can't seriously fathom the idea that anyone would actually support Gingrich.

His hypocrisy, arrogance, shifting positions, support of massive central government...that he is leading in some polls is indicative of the shallowness and ignorance of the base of the GOP. The McCain/Bush/Graham/Boehner types have long depended on those who can be counted on to pull the lever for the Republicans no matter how completely they are betraying their core principles.

Gingrich, it seems, is benefiting from these same voters. And this is why we have the ever-expanding proto-fascist State that we all enjoy. This video summarizes the Newter:

The World's Shortest Economic Quiz

2011-11-14T17:51:00.001-08:00

Veteran's Day

2011-11-11T14:07:00.000-08:00

As we are awash in references to Veteran's Day, it seems appropriate to ask a few serious questions, and perhaps uncomfortable, questions. As we commemorate a holiday that was originally a remembrance of the end of a war, think about what many modern veterans are doing. They're spending this day fighting in wars with no discernible mission or purpose; one launched under false pretenses, the other having completely departed from its original intent.

Do we better honor those who have sacrificed in the past with lapel pin and facebook status displays of patriotism, or by clinging to the rights for which they have died?

Do we honor their sacrifice by remaining complacent as more are sent to fight and die for no good purpose? As they are sent "around the world seeking dragons to slay?"

Do we truly show our respect by refusing to recognize the distinction between defensive wars for the preservation of our homeland, and aggressive wars fought to expand and preserve an empire?

Do we show our appreciation for those who have died for our freedom by refusing, out of a sense of patriotism or an ignorance of history, to use that freedom to speak out against the evils of war?

Surely, many have made that ultimate sacrifice in a desire to bring war to an end; with the hope that their conflict would be the last, that their children might not have to face the cruelty of a battlefield. What dishonor we heap upon them if we refuse every effort to honor that request, or hear their message!

Veteran's Day always reminds me of Wilfred Owen, was a British soldier and poet. He began writing poetry while recovering from wounds sustained in the first World War. He returned to the trenches and was killed in an artillery barrage. His words are more poignant for this fact.

Dulce et Decorum est

Bent double, like old beggars under sacks,
Knock-kneed, coughing like hags, we cursed through sludge,
Till on the haunting flares we turned our backs,
And towards our distant rest began to trudge.
Men marched asleep. Many had lost their boots,
But limped on, blood-shod. All went lame, all blind;
Drunk with fatigue; deaf even to the hoots
Of gas-shells dropping softly behind.

Gas! GAS! Quick, boys! -- An ecstasy of fumbling
Fitting the clumsy helmets just in time,
But someone still was yelling out and stumbling
And flound'ring like a man in fire or lime. --
Dim through the misty panes and thick green light,
As under a green sea, I saw him drowning.

In all my dreams before my helpless sight
He plunges at me, guttering, choking, drowning.

If in some smothering dreams, you too could pace
Behind the wagon that we flung him in,
And watch the white eyes writhing in his face,
His hanging face, like a devil's sick of sin,
If you could hear, at every jolt, the blood
Come gargling from the froth-corrupted lungs
Bitter as the cud
Of vile, incurable sores on innocent tongues, --
My friend, you would not tell with such high zest
To children ardent for some desperate glory,
The old Lie: Dulce et decorum est
Pro patria mori.

A Watchman

2011-11-08T22:14:00.000-08:00

Lately I've been devoting a great deal of study and thought to prophecies of Ezekiel. Specifically, the great emphasis which the text places on the importance of Ezekiel's role as a watchman over his people. The text of Ezekiel 33:6 reads:

"But if the watchman sees the sword coming and does not blow the trumpet and the people are not warned, and a sword comes and takes a person from them, he is taken away in his iniquity; but his blood I will require from the watchman's hand.'"

I am not so arrogant as to compare myself, in any sweeping sense, with the prophet Ezekiel. I doubt I could have undertaken his mission with the same grim resolve; it is not my nature to accept such a tremendous amount of responsibility and adversity without question or complaint. I'm also not so poor an exegete that I feel this passage directly applies to the modern minister in precisely the same way as it did in its original context.

But I do feel the same burden, the same responsibility to serve as a watchman applies to those who would dare serve as ministers of the Gospel. And this role applies to more than those matters compartmentalized as "spiritual," to the exclusion of matters temporal. Our profession of faith must affect our worldview; if it does not, it is worthless.

Jesus proclaimed the imminence of His kingdom and denied it a worldly nature or emphasis, yet He set an example of what a life lived within the kingdom meant in His daily life; ever seeking to bless those with whom He was surrounded.

What kind of watchman would I be if I did not stand against ongoing efforts to exchange Caesar's kingdom for the kingdom of God? If I did not condemn hatred, and prejudice, and violence; even when ostensibly perpetrated in the name of God or country? If I mutely accepted the lie that any purely human institution, or nation, or government was now God's chosen people? If I accepted the lie, so often advanced, that "love your neighbors, and pray for them that persecute you" is a wonderful message for the pulpit or the schoolyard, but not for adults; certainly not for their courts or governments?

Clarence Darrow correctly wrote that "In this heroic age, given to war and conquest and violence, the precepts of peace and good will seem to have been almost submerged. The pulpit, the press, and the school unite in teaching patriotism and in proclaiming the glory and beneficence of war; and one may search literature almost in vain for one note of that “Peace on earth, and good will toward men” in which the world still professes to believe; and yet these benign precepts are supposed to be the basis of all the civilization of the western world."

What kind of herald would I be to accept this state of affairs? What kind of watchman?

To witness the storm clouds of economic calamity approach without sounding some warning, however feeble. To accede to the notion that acts of violence may be initiated without consequence or guilt as long as they're wrapped in a flag, hidden behind a badge, or for some apparently benevolent cause; this is not the task of a faithful sentinel. This is not to preclude the necessity or morality of defensive force or that exerted on behalf of an innocent victim. These may be justified, and often are. Nor is my point to deny the sacrifice or courage of those who serve their country.

But I will not accept as just the decision to use preemptive force. I will not rejoice in the death of wicked men, nor find joy in judgment, nor acquiesce in the death of the innocent. I will not concede that some human or societal definition of moral behavior justifies the destruction of a life. I will not stand for moral consistency on matters arbitrarily defined as religious or personal, while embracing a thoroughgoing relativism in matters related to collective action.

Our nation does not suffer a lack of those who accept the old lie: "dulce et decorum est, pro patria mori." We are not so overrun with pacifists that war is ever at our shores. Rather, we lack men of sufficient moral courage, especially in the pulpit and public forum, to stand firm upon their belief in one that great, universal, and enduring truth: "Blessed are the peacemakers, for they shall be called sons of God."

libertarian Christianity?

2011-11-03T06:42:00.005-07:00

I have had several discussions with people who marvel at my profession that my libertarian tendencies have developed as an outgrowth of my Christian faith.

Christians, you see, are supposed to be imbued with an unshakeable belief in American exceptionalism, the inherent goodness of the federal government, and the justice of our cause. We are supposed to recognize that blind obedience is our patriotic duty, and that unflinching patriotism is the closest thing to godliness.We are supposed to believe that reciting the pledge of allegiance and invoking God's blessings upon our military adventures necessarily grants them divine sanction. We are to construe our Lord's famous exhortation to "render unto Caesar the things which are Caesar's" as an ironclad commandment to submit to every whim and dictate of our earthly overlords without question. We are to believe that it was the Lord, not Woodrow Wilson or William F. Buckley, who commanded us to engage in endless war for the sake of our glorious republic.

We dare not question the legitimacy of America's actions, for she must necessarily be the "city on a hill" of Matthew 5:14. After all, Reagan said so, and fidelity to Reagan is one of the Christian's most sacred duties.

I reject this. I believe we are called to a higher and more fundamental law, so important and universal that it was spoken, not only by Jesus, but also by virtually every major religious leader. It is the principle that underlies biblical Christianity, and it finds expression in the libertarian non-aggression principle. It is the principle, that according to Jesus, is at the heart of God's self-revelation to mankind.

"In everything, therefore, treat people the same way you would want them to treat you, for this is the Law and the Prophets." Matthew 7:12, NASB

If you would not be stolen from, why steal? If you would not have vengeance visited upon you, do not be eager to seek vengeance on others. If you would not be arbitrarily imprisoned on a whim, how is it that you support the arbitrary imprisonment of others? Upon this "Golden Rule" hangs the message of the Law and the Prophets.

Doomsday Prophecies

2011-10-22T09:54:00.000-07:00

Harold Camping was in the news again for his revised prediction of October 21 as the "Rapture" and the end of time. Once again, his vision failed to materialize.

Stories have been told and retold about how some of Camping's followers invested their life savings in billboards and cross-country driving campaigns to spread the word about the impending doom of the Earth and all who remain therein. That his predictions were completely off base is not particularly surprising.

That they were widely condemned by Amillennialists and even many who might accept the basic tenets of the premillennial message is likewise not a huge shock. The Bible gives no clear indication about the end of time, except perhaps to emphasize its unpredictability.

Lost in all this is a larger point; it doesn't really matter when, or even if, this world is going to end. The majority of us are not going to drastically alter our lifestyle or worldview based on the predictions of some doomsday prophet. If those of us receptive to the message of Christ are disinclined to believe in Camping's predictions, how much less so are those who reside outside the realm of Christian faith altogether? Can one truly be scared or shocked into faith?

Instead, what is important is how we conduct ourselves in the days we have. As Christians, this means a daily consideration of how our lives convey the hope that we have; to face the challenges of life in the world without allowing them to consume us. The great tragedy illustrated in the Camping debacle (apart from bad exegesis) was that his disciples allowed eschatology to completely control their lives; to sever any link with their responsibilities in this world. For many of us, the challenge is the exact opposite: the affairs of this life dominate, crowding out our role as witnesses to the divine.

Our faith should invade every area of our lives, but never force us to break all worldly connections. We are called to be watchmen and witnesses, two different but complementary roles. In all things, however, the cross of Christ must predominate.

Why I'm affiliated with churches of Christ

2011-10-17T08:29:00.000-07:00

I was sent the following article recently. I don't agree with everything contained herein.

Notably, I reject the phrase "I'm Church of Christ" as incredibly sectarian. And I think sectarian-ecumentical is just a restatement of a false dichotomy in an even less satisfactory way than the traditional liberal-conservative.

http://experimentaltheology.blogspot.com/2011/10/four-reasons-why-im-church-of-christ.html

But it's definitely thought provoking; and I do endorse the four "main points" that he makes as a statement of how things have been, historically, and how they should be; namely

1. Local, autonomous congregations
2. Biblical basis for authority
3. The relative absence of flag waving (although this is, disturbingly, moving the wrong way)
4. Open communion

They were Right in 1912

2011-10-17T08:15:00.000-07:00

What's wrong with 9-9-9?

2011-10-14T07:07:00.000-07:00

Herman Cain figured he could throw the Fair Tax into a fancy new package, re-title it the 9-9-9 plan, and sell it, and himself, to the American people. To anyone who's given the subject some thought, 9-9-9 is about as appealing as the notion of Cain as president; which is to say, as appealing as lukewarm, greasy delivery pizza.

Supposedly developed by a crack team of economists. (Economists on crack?) Cain can name only one, Rich Lowrie. This plan is pretty simple on the surface. So simple, in fact, that it is rumored to be drawn from the pc game SimCity4.
Individual income tax rates would go to a flat 9%. Corporate taxes would drop to a flat 9%. A national sales tax of 9% would be tacked on to every new product you buy. For those in higher tax brackets, this undoubtedly appealing. At least on the surface. However, there are several glaring problems with 9-9-9, beyond its video game origin. Problems so severe that they would make its passage nearly impossible; and wholly regrettable.

First, Cain's plan is incredibly regressive. A consumption tax, by definition, is a regressive tax. It hits those in the lowest income brackets hardest, as they spend a much higher proportion of their income on necessities of life. Tacking 9%, in addition to local and state sales taxes would be crippling for virtually anyone who is on a tight budget. The creators of the Fair Tax tried to remedy this by including a provision that would give every family a "prebate" to cover the tax on the essentials of life. This is an imperfect plan, and has a whole host of other problems, but at least there is an attempt to ameliorate the regressive nature of the tax. The 9-9-9 plan has no such measure.

Instead, the Cain plan adds insult to injury for lower to middle income Americans, by hitting them with a flat 9% income tax. This might seem like quite the tax cut; but it would remove all deductions, save charitable giving, from the equation. Dependents, mortgage insurance...all gone. These deductions allow the vast majority of workers to lower their real tax rate significantly from their normal bracket. The capital gains tax would be abolished as well; but only about 7% of Americans pay capital gains taxes annually. Most of them among those who would benefit from 9-9-9.

Under the Cain plan, a family of four making $50,000 would pay about $2275 more per year in total taxes.

Every time a politicians proposes an across the board tax cut, Democrats tend to scream that it an attempt to give the rich tax cuts at the expense of the poor. Usually, that's just grandstanding and pandering. In this case that's exactly what the 9-9-9 plan is; it's simply a tax cut for the wealthy, kept "revenue neutral" on the backs of the poor. According to an independent analysis raises taxes on 84% of workers. And Herman Cain all but admits this, though he does his best to obscure it by emphasizing that the sales tax only applies to new goods. Like food and medicine. Try buying those things used...

I am no advocate of progressive income taxes; but it is bad policy, morally and economically, to propose a plan that is as intentionally regressive as the nonsense Cain is promoting. Cut taxes on everyone. Make the government suck in its ever expanding gut and cinch up that belt a few notches. End a few wars, cut some domestic programs; but don't overhaul the tax code specifically to cut taxes on the wealthiest by raising them on the middle class and the poor.

There is a second, practical consideration regarding Cain's plan. It is intended to be a temporary, transitional stage toward the Fair Tax, a 23% national sales tax. The Fair Tax has its own host of problems. Notably, it's just too high and it doesn't actually abolish the IRS or the Income Tax (as you'd need a Constitutional amendment to do so). However, assuming 9-9-9 were to go into effect, and the Fair Tax proved untenable. What then? You'd granted the US Congress a sales tax to go with their income tax. And a flat rate can be raised as easily as a variable rate. If you don't believe that, track the growth of sales taxes in Charleston. In the five years I've lived here, we've seen two "penny" sales tax increases. It is foolish to think that Congress, given an entirely new tax to play with, wouldn't eventually succumb to the temptation to raise it.

Perhaps Cain is believes it; I hope the majority of us are don't.

Candidates on TARP

2011-10-13T19:06:00.001-07:00

Herman Cain: Dangerous.

2011-10-12T03:09:00.000-07:00

At least Cookie Monster has a purpose in life...

2011-10-08T14:13:00.000-07:00

Obama: more warlike than Bush?

2011-09-26T11:37:00.000-07:00

It would seem so. At least lately, the president who campaigned to great effect on a platform of ending America's perpetual wars and closing illegal prisons at guantanamo and elsewhere, just gave a bunch of bunker-busting bombs to Israel, in honor of a request that the Bush administration turned down.

Presumably, this is to enable them to bomb Iran's underground nuclear facilities.

If Israel and Iran want to annihilate each other, that is a decision that rests on their conscience. Such would be folly, but it's their business. Not ours. And given our track record in the Middle East, who would be surprised if we were arming Iran, too?

The Epitome of Nonsense.

2011-09-22T10:03:00.000-07:00

There’s almost nothing accurate in this.

Without the entrepreneur’s capital, what good would those roads be?
Without the jobs he creates, who would buy those goods?
Without robbing the capitalist at every turn, how would these police and fire brigades be paid? How would “the rest of us” pay for those roads to be built? By the jobless masses? The 51% who rely on the other 49% to pay for their alleged “social contract?”

Not to mention, the capitalist does in fact have to worry about marauding bands, every single day of his life. Not just in the form of citizen mobs, from whom he may or may not be protected by the Police. (See: London, LA, Edmonton, Longview…)

But also from the marauders at the Local, State, and Federal level, who owe their purpose and continued existence to nothing more than their superior talent for robbing productivity; who glory in their insatiable hunger to feast upon the fruits of both labor and capital. They then arrogantly praise themselves for handing the excrement of their feasting to those who are neither capitalist nor laborer, but only a lesser form of parasite.

Hooray for Lotteries!

2011-09-21T13:37:00.000-07:00

Here in South Carolina, we have the “South Carolina Education Lottery,” so named because a portion of the proceeds goes to fund higher education in the state. At the local JUCO, for example, with the lottery scholarship, tuition for a full-time student is around 700 dollars per semester. I just finished a Master’s degree, where I had the distinct privilege of paying about $2500 per class, so that’s pretty cheap.

The Nature Boy says "Who needs formula?"

It is, of course, fashionable to decry lotteries as taxes on the poor and the stupid; and such they are. But that’s what makes the lottery such a fantastic and positive redistributionist scheme.

The vast majority of players are taken from the dependent classes, many of whom receive a great deal of government support ranging from food stamps to housing assistance and health insurance.

The lottery is their chance to “give back,” to use a term popular among those who conflate success with some sort of nefarious theft. They are not giving back to the disadvantaged masses, to be sure. Rather, they are giving back to the middle class, from whose labor their existence is legally, if immorally wrested.

In essence, they are funding their own future, as the lottery is surely the only way you could fool the poor into chipping in a little bit of assistance to help pay for the college education of the next generation of workers. It is an investment in their own future, as they help defray the educational costs of those who will one day enter the workforce and be saddled with the burdens imposed by the welfare state.

So I say, up with the Lottery!

I don't really endorse the lottery system so heartily. As a publicly run system, it is a disaster. I find it tragic that so many squander what little means of support they have in pursuit of the phantom dream of striking it rich. But the lottery-education connection is instructive, because, as a microcosm of a poorly-conceived government program, it reveals much about the psyche of the architects of such programs; and what most of us really, instinctively think about wealth redistribution.

Advocates of redistribution may obfuscate the issue by vilifying “the rich,” and justify their theft with such spurious arguments as “they don't need it.” But ultimately, when we broaden the scope of the redistributionist policy in question, we find that most people begin to feel a sense of revulsion, because of what the idea truly entails.

It's not just stealing from the rich to give to the poor, or stealing from the poor to give to the rich that's wrong; it's stealing. We know this instinctively, but many tend to be apathetic, at best, until they become the victim of the theft. But it is this theft, and the arbitrary and unwilling transfer of goods between individuals that forms the basis of modern government; it is both the raison d'etre and the modus operandi of the state.

And the state-run lottery system reveals many of the disgusting characteristics of this system that we find so repulsive.

We see the fraudulent ways it justifies and then enacts its collection and expenditure of money; the hypocrisy of banning raffles, online poker, and sports betting, while running the largest gambling operation in the world. And most of all, the lottery underscores the obvious truth that underlies everything else: The State does not care about you. You are a number, an entry in an accounting book. Nothing more. For all the high-minded platitudes that politicians like to spew about doing things for “the children” and raising the poor from poverty, they heartily endorse any and every revenue scheme, however immoral, even those that prey upon the most vulnerable. They would as soon tax the poor as tax the rich, if that was equally politically expedient. And in the case of lotteries, apparently, it is.

Peter Schiff not allowed to create Jobs

2011-09-21T06:55:00.000-07:00

Clearly Schiff is unaware that the government has a "jobs bill."

Big Brother is Watching You

2011-09-20T07:15:00.000-07:00

Remember how in East Germany children were encouraged to snitch on their parents?

It seems that we are fast approaching that point here.

"Homeland Security’s See Something, Say Something snitch campaign is now so pervasive that Big Sis has extended the message to coffee cups, recruiting jittery coffee drinkers to spot terrorists as part of a deal with the Maryland Transit Administration, which used DHS funds to purchase the ads.

"The message appears on the sleeve of coffee cups and reads, “If you see something, say something…Report unattended bags and unusual behavior to police or transit personnel.”

The image features a Big Brother eye motif above the lettering.

According to a spokesman, the U.S. Department of Homeland Security provided the funds to pay for the ad and the Maryland Transit Administration duly complied. The DHS has partnered with numerous public and private entities, including Wal-Mart and the NFL, to promote its See Something, Say Something campaign, the PSA’s for which feature predominantly white middle class Americans characterized as terrorists engaging in “suspicious behavior” such as talking to police officers or using video cameras."
What we really need is a "mind your own business campaign." If you see someone doing something you don't like, ask yourself this: "Is this person aggressing against someone's person or property? If the answer is no, then mind your own business.

These kinds of things fuel the "snitches get stitches" mentality that sometimes predominates, where people feel that anything is better than citizens doing the work of the gestapo for them.

Don't worry, there's a tax for that.

2011-09-19T12:50:00.000-07:00

Governments will tax anything they can get away with: Windows, Urine, Beards...all that matters is them taking your money.

Here's a partial list of some of the most absurd.

The Faces of Evil

2011-09-19T07:55:00.000-07:00

These domestic terrorists were arrested because they refused, for religious reasons, to put a dayglo orange triangle on the back of their horse drawn carts. Because if you can't see a buggy with a horse attached, you'll definitely see a small orange triangle on the back of said buggy.

We are all very fortunate to our ~~masters~~ protectors in government for taking these threats to society off the streets. I bet they even have facilities to manufacture the WMD known as raw milk, with plans to unleash it upon us...

Full story here.

(On a related note, I'm afraid the next person I hear say "they hate us for our freedom," is going to force me to violate my non-aggression principles.)

Is Social Security a Ponzi Scheme? Even Worse.

2011-09-19T06:20:00.000-07:00

This is by Robert Murphy.

Ever since Rick Perry derided Social Security as a Ponzi scheme, economists and other pundits have jumped into the fray. Progressive blogger Matt Yglesias says it's "nuts" for anyone to talk like this, because Social Security merely relies on future economic growth — just like a private pension plan. Free-market economist Alex Tabarrok responded to Yglesias with links to arch-Keynesians (and Nobel laureates) Paul Samuelson and Paul Krugman, both comparing Social Security to a "Ponzi game."
In the present article I have three aims: First, I will point out that the critics are right; to the extent that Social Security "worked," it was because of its resemblance to a classic Ponzi scheme. Second, I will show how private-sector retirement planning operates nothing like this. Third, I will defend the good name of Charles Ponzi from the scurrilous comparisons — what he did was nothing like the racket known as Social Security.

Social Security's "Ponzi Game Aspects"

Paul Krugman is a famous guy with a long record of strong opinions. It's to be expected that periodically these will come back to bite him. His usual tack is to deny that his old columns meant what their plain-word reading would indicate. For example, Krugman can't believe anybody thought this column (from 2002) should be construed as his endorsement of Greenspan trying to create a housing bubble.
When it comes to Social Security, here's what Krugman wrote in late 1996:

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).

As with his unfortunate housing-bubble article, here too Krugman has had to do damage control. After the above column floated around the Internet, Krugman tried to quell the giggling, claiming that anyone who tried to use him in support of Republican claims was playing "word games." Krugman then gave a link to this fascinating history of the original Ponzi scheme, courtesy of — the Social Security Administration! (It seems they must get this a lot.)
I was curious to see how the Social Security Administration would defend itself from the charge that it was a Ponzi scheme. Here's what they say:

In contrast to a Ponzi scheme, dependent upon an unsustainable progression, a common financial arrangement is the so-called "pay-as-you-go" system. Some private pension systems, as well as Social Security, have used this design. A pay-as-you-go system can be visualized as a pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end.…

There is a superficial analogy between pyramid or Ponzi schemes and pay-as-you-go programs in that in both money from later participants goes to pay the benefits of earlier participants. But that is where the similarity ends.…
As long as the amount of money coming in the front end of the pipe maintains a rough balance with the money paid out, the system can continue forever. There is no unsustainable progression driving the mechanism of a pay-as-you-go pension system and so it is not a pyramid or Ponzi scheme.

Contrary to the claims of Yglesias, Krugman, and the Social Security Administration, I don't think the "Ponzi scheme" charge is unfair in the slightest. When critics say Social Security is "unsustainable," they quite obviously mean that it can't keep up the current taxing and benefit schedules. Either taxes on workers will go up, promised benefits will be reduced, or some combination of the two. Krugman's 1996 column confirms that analysis, and the Social Security Administration's pipeline does too.
Up until now, retirees have been taking out more than they put in, and that can't continue — this pattern relied on finding ever more workers to join the system. In other words, it was a classic Ponzi scheme. I am not here to endorse candidate Rick Perry, but the point of his charge is obviously true: each generation can't keep taking more out of the system than it put in, once the demographics change.
The SSA's pipeline graphic is interesting. If that is ultimately what Social Security turns into, and if each generation of workers merely takes out "what it originally put in," then it means workers will earn a zero-percent (real) return on their "contributions" into the system.
Yes, that would certainly be "sustainable" in an accounting sense (at least with a stable age distribution in the population), but would it work politically? If politicians frankly told voters, "When we take $1,000 from you at age 25, don't worry, that $1,000 will be waiting for you when you're 65," would they be happy with this arrangement? Charles Ponzi too could have made his scheme more sustainable if he promised his investors a 0 percent rate of return, but then nobody would have been interested.
In fairness, Matt Yglesias points out that the pipeline method can yield a positive rate of return. If the workers at the left end of the pipe always pump in, say, 15 percent of their paycheck, then (if productivity grows over time as it normally does) 50 years later, when they are on the other end of the pipe, there will be more dollars shooting out. However, in this scenario we're back to an arrangement where each generation gets out more than it put in — what Krugman himself thought was a "Ponzi game aspect." In any event, Yglesias's framework is still vulnerable to demographic shifts.

Why Private-Sector Retirement Planning Works

The confusion in popular discussions of Social Security partly rests on the general ignorance of how an entire community can actually become richer through saving and investment. In other words, a lot of people believe (whether or not they've really thought it through carefully) that for every Sally out there who's saving $10,000 per year, there must be some Jim who's racking up $10,000 in debt. Therefore, whenever Sally starts living off her savings, people imagine that Jim must be cutting back on his own standard of living. At the communal level — so the thinking goes — everything is a wash, and we're just changing the distribution of "total output" based on which people were frugal and which were spendthrifts.
This mindset is totally wrong. I explain things methodically in chapter 10 of my introductory textbook, but here's the gist: It's possible for everyone in the entire community to "live below his means," that is, to consume less than his income and to save. The economy is then physically capable of reducing the output of consumption goods (TVs, sports cars, steak dinners, etc.) and increasing the output of investment or capital goods (drill presses, fertilizer, MRI machines, etc.). In the future, the larger quantities of various tools and equipment make the workers more productive than they otherwise would have been. That's why the standard of living can rise; the community is physically capable of cranking out more goods and services because of the past investments.
Think of it like this: During his working career, a farmer takes some of his crop every year and uses it to buy a component for a tractor. One year he buys a tire, another year he buys a steering wheel, and so on. After working for 45 years, the farmer is ready to retire. By this point, he has assembled a brand-new tractor. Now he no longer needs to use his labor to earn an income. Instead, he rents out use of the tractor to the younger workers (who otherwise would have to use their bare hands to till the soil, etc.).
From a certain viewpoint, the retired farmer would be "skimming off the top" every time he ate an ear of corn harvested after he no longer worked the fields himself. After all, that corn would be part of that year's harvest, so if the retired farmer ate it, there would be less corn available to the people who actually picked it. Yet the retired man's consumption wouldn't be financed through a "contribution" or "redistribution" from the young workers that year.
On the contrary, those young workers would be earning their full market wage (and if they were smart, they'd be saving some of it for their own retirement). The retired farmer would buy the corn on the open market, with the income he earned from renting out his tractor. There would be more corn to go around because he had spent decades assembling the tractor, and others in his cohort had built up stockpiles of fertilizer, hoes, irrigation equipment, etc.
Obviously my tale isn't realistic, but it serves to get across the essence of voluntary retirement planning. People can get out more than they put in (measured in physical terms) because of what Böhm-Bawerk called the superior physical productivity of roundabout processes. As I complained during the debates over George W. Bush's "privatization" proposals, many supposedly pro-market reformers want to get the magic of compound interest without the discipline of saving for decades.

A (Very Qualified) Defense of Charles Ponzi

Above I've explained why the "Ponzi scheme" accusation is accurate, in the context of modern political debates. However, there is a very important sense in which it is unfair — unfair to Charles Ponzi.
It's true that Ponzi engaged in fraud; his victims never would have "invested" with him, had he accurately explained the business model. Libertarians therefore agree with everybody else that Charles Ponzi was a criminal and would have to face legal consequences in any just legal order.
However, so far as we know Ponzi never threatened anybody. He didn't tell struggling young workers, "Give me 15 percent of your paycheck every week, so that I can make you a fantastic return — or else I'll send goons to kidnap you."
In this respect, Social Security isn't a Ponzi scheme after all. It's more analogous to mobsters shaking down people for protection money, because otherwise "bad things could happen."

Conclusion

The complaints about Social Security are accurate: The only reason it has enjoyed such "success" thus far is that it relied on increasing contributions from each new generation of workers. Now that the demographics have turned against the system, it is literally unsustainable. We will see increased taxes on workers, reduced payments to beneficiaries, or some combination of the two.

$25 $22

In the voluntary private sector, people can plan for their own retirement through genuine saving and investment. They don't need to extract concessions from the next generation of workers, because the retirees' prior savings allow the creation of capital goods that will provide income when their bodies no longer can do so.

Finally, in one important respect a classic Ponzi scheme is less dangerous than Social Security: It relies on fooling people into voluntarily handing over their money. Once the fraud is detected, the danger is eliminated. In contrast, American workers have no choice but to "contribute" to Social Security, whether they like the deal or not.