TUCSON, Ariz., Dec. 12, 2013 (GLOBE NEWSWIRE) -- Conservatives sometimes describe Social Security and Medicare as Ponzi or pyramid schemes. Dermatologist Richard Swint, M.D., of Paris, Texas, explores this question in the winter 2013 issue of the Journal of American Physicians and Surgeons.
Swint quotes extensively from a reply to a 1998 letter he wrote to the U.S. Postal Service inquiring about a federal law prohibiting the use of the U.S. mail in pyramid games and lotteries.
The U.S. Postal Service explains : "The basic fraud underlying a typical pyramid scheme is that every participant cannot recruit enough other people to recoup his or her investment, much less make a profit, since the pool of participants is soon exhausted."
"Lotteries depend on a large group of people losing all of their money," Swint comments, "and pyramid games are dependent on people continuing to pay into the game until the game collapses."
Social Security differs from a pyramid scheme in important respects, most importantly in that Social Security is involuntary, Swint states.
But like a pyramid scheme, it is sold as an investment. Unlike a true pension plan, Social Security is unfunded. All distributions come from new "investors"—either covered workers or taxpayers.
"Social Security as designed is unsustainable," Swint states. "It depends on early death of beneficiaries who will lose virtually all their money, like most participants in a lottery. Like a pyramid scheme, it requires constant growth of the working population....
"Workers are hoping (but are not guaranteed even a penny) that successive generations of people will pay more money into a big fund, and that the money is not spent by politicians, so that they will receive a prize of money upon retirement."
Whatever working people call Social Security (A gamble? A lottery? A pyramid scheme?), it is not illegal. Charles Ponzi and Bernard Madoff went to prison for running similar schemes. "But remember, " Swint concludes, "governments that run a lottery are immune from punishment under the law."
The Journal of American Physicians and Surgeons is published by the Association of American Physicians and Surgeons (AAPS), a national organization representing physicians in all specialties since 1943.