"Social Security is an unfunded pay-as-you-go system, fundamentally flawed and analogous in design to illegal pyramid schemes. Government accounting creates the illusion of a trust fund, but in fact, excess receipts are spent immediately. The government’s own actuaries predict the system will be bankrupt by 2030, but Social Security could face financial crisis as early as 2014. Moreover, Social Security’s relatively poor rate of return makes the program an increasingly worse investment for today’s young worker. ... The system design itself is fundamentally flawed and cannot be repaired. It must instead be replaced by one derived from free markets and operated by free citizenry making individual economic decisions in their own self-interest. ... Reform is long overdue. If we fail to act soon, our children will either inherit a bankrupt system or be forced to pay an impossibly high level of taxes. Only private pensions with individual property rights to accumulate fund balances can create a secure pension system. Chile, which privatized its system in 1981, provides evidence of such a system’s effectiveness."
by:
Karl Borden
Professor of financial economics at University of Nebraska
Source:
The CATO Project on Social Security, DISMANTLING THE PYRAMID: THE WHY AND HOW OF PRIVATIZING SOCIAL SECURITY, August 14, 1995.
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Reader comments about this quote:
The founders were brilliant, they made no provision for a social security. They made clearly evident through the tenth Amendment that Social Security is absolutely unconstitutional. Besides all above reasons, the inflationary policy on funny money is but another mathematical absolute that makes social security a bankrupt concept. Its been shown by me and others here that if an individual would put the near 14 percent of salary required by SS in a simple compound interest bearing account, by retirement, they would have millions in the bank (and the government wouldn't be bankrupt) Why are ponzi schemes illegal for all except socialist governments?
 -- Mike, Norwalk     
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    Mike, peoples ignorance is beyond bliss. How many I tell it to just like you said here, but they feel there is a SS account in DC with their name on it and all that money they paid is still in their account. No one has ever put a penny in their own account. It is always paid to someone else. A real Ponzi scheme.
     -- cal, lewisville, tx     
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    The above message brought to you by: trickle down economics & the unfunded unnecessary war machine...
     -- Anonymous, Reston, VA, US     
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    The absolute truth that no politician wants to admit. Even FDR himself said SS should change to prefunded system within 30 years. His own Treasury Secretary Morgantheau was opposed to the present funding system. How long will we continue to penalize our children for this and past generations ignorance?
     -- J. Allen, Arlington, Va     
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    The present Social Security scheme is just another part of the over all Ponzi / Pyramid scheme designed to fleece the American people. It is not flawed though, in fact it's working exactly as intended.
     -- J Carlton, Calgary     
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    Anonymous from Reston, WHAT? By engaging in a feeble struggle of character assassination, is that your attempt to disparage the message? How liberal of you. Of course the war machine is unnecessary but, its very well funded. How does trickle down economics relate to the ponzi scheme that is the social security system unless, you're trying to equate the government with the criminal that takes all the money through fraudulent means and then, trickles down just enough to keep the fraud going. Hey wait, you may be on to something here, an accurately applied alternative to the other trickle down economics concept loved so much by liberals.
     -- Mike, Norwalk     
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    He doesn't know what he is talking about - not even worth commenting - and belongs behind the closed doors of the Cato Institute.
     -- RBESRQ     
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    Robert, if he knew what he was talking about, what would he say?
     -- Mike, Norwalk     
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    The truth hurts. Look, the government is made up of fellow humans -- many of which are as capable of committing crimes against us as the common thief on the street. Unchecked power results in tyranny. This is a fact: there is no Social Security fund. No funds have EVER been saved for those retiring in the future. The checks being paid to Social Security recipients come out of the General Fund -- and since there isn't any money, the government has to borrow it. What a fraud! You pay into Social Security by force thinking that they are saving it for you because you wouldn't do it yourself, all the while they are spending it! Imagine if you put away $100 a week in a bank account for 30 years that paid 10% interest -- you would be a millionaire! But no, the government did not save one nickel and now you may not even get a fraction of what you paid -- and since inflation has stolen your purchasing power, the dollar you paid in 1960 is now only worth about 5 cents. You have been ripped off!! Denial runs deep among the left. You, fools!
     -- E Archer, NYC     
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    Unfortunately all the rbesrq's and Restons are over represented in our government and our press. Until we clean that mess up we will continue down the road of self destruction. I am just 2 years from SS. I would be hard put to retire with out it but I would have been very well off at retirement if that money had not been extracted from me and I had had the wisdom to invest it all these years, regardless of the stock markets ups and downs. Even at this point I believe I would be better off if the system was scraped or totally privatized. I would rather work the rest of my life, if able to, than be beholden to a youth impoverished by the burden my generation will be putting on them. The argument that I have paid all these years and am owed my return is tempting but isnt a fair one. For years the many paid for the few and now the few, that never had any say in the matter, will be paying for the many. It is just not right.
     -- warren, olathe     
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     -- Mary, MI      
     
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