Don Boudreaux of Cafe Hayek had a great post on whether Social Security is a Ponzi scheme. As always, it was an entertaining read. The best part was reading that Paul Krugman himself said Social Security looks like a "Ponzi-game" back in 1996.
Flash forward to 2010 and Krugman defended Social Security as "a program that has brought dignity and decency to the lives of older Americans". Naively, Krugman left out that Social Security brings dignity and decency to older Americans at the expense of younger Americans. What type of economist has Krugman become where he forgets that there is no such thing as a free lunch.
My issue with Social Security is there must be a better way to go about saving for retirement. Back in the 1930s when Social Security was signed into law, there was no market for retirement products. Now that has all changed. Turn on the TV and how many retirement and financial planning ads do you see?
Why should I, a young adult, have ~14% of my paycheck taken from me and then paid into a system where I "may well get less than [I] put in"? That doesn't make any sense! I would much rather take that 14% and put it into a mutual fund that earns 4-8% per year and not give it to Social Security which earns me 0% interest and may not even pay back my principle! An additional benefit of having a private retirement account is that it creates an ownership culture where we all have a stake (for example via mutual funds) in the equity and debt of our local businesses, banks, and governments.
Instead of defending this program Paul Krugman, why don't you offer a solution to fix it and get me my fricken 14% back?!?! I have a house, kid's college, my Economics Masters and PhD, and retirement to save for. The government's Social Security system is making me poorer and it's NOT FAIR! Furthermore, "Ponzi-game" investment strategies are overall a terrible investment vehicle and, rightly so, have been outlawed in the private sector.
