House of Eratosthenes

That thing Tom Friedman does at around 0:47 to 0:50 — you aren’t supposed to be able to do it through text on an Internet thread, but I’ve seen lots of liberals do it in exactly that forum. I expect Friedman would bristle at being called a “liberal” and that isn’t descriptive of my meaning here, so let’s use a different term. “Vapid thinkers” maybe.

What Friedman attempts to do, is prove Social Security is not a “Ponzi scheme” by showcasing the formidable level of difficulty to be involved in ever convincing Friedman that it might be one. He’s being a Thing I Know #402 guy:

We’ve got an awful lot of people walking around who can’t seem to tell the difference between supporting evidence and their own intransigence. It’s as if they’re saying, “I am inflexible and therefore correct, I know everything because I don’t let anybody tell me anything”; and I’m expected to say, in reply, “I can see your mind will never be changed even if it is proven to you that you’re wrong…so I might as well change my mind and agree with you.” Did they meet with someone else, perhaps, who intentionally or otherwise accustomed them to such deference?

What Tom Friedman is showcasing, in fact, is something completely different: That he comes from a world in which people are intellectually flaccid, to such an extent they can be persuaded to decide crucial and complex issues with a “pfffft” or a “pfshaw.”

In the world from which I come, this clip shows up under a different perspective. I see one guy has presented a logical argument and another guy has not.

I have an effective way of dealing with Thing I Know #402 people. It goes like this: “Let the record show Rick Santelli has advanced a reasonable argument that Social Security is a Ponzi scheme, and Tom Friedman has failed to present a reasonable argument that Social Security might not be one.” Just that. Let the record show — Friedman brought absolutely nothing to this little exchange but some dismissive noises and an eyeball roll, and a few moments of quality rational thought seem to naturally bring on an inference that he’s wrong. No, it’s not “effective” at changing the other person’s mind. But you can’t compress a fluid; and it helps to remind all present that there’s a big world out there, and Thing I Know #402 is for weenies who lack the maturity required to live in it.

So Mr. Friedman puts out a regular column of some kind, that people read? My goodness, that is worrisome.

Krauthammer agrees it’s a ponzi scheme, but says you’re not allowed to say it, and that Perry needs to say it without saying it to keep from getting quashed.

I know Krauthammer likes to keep his distance from the lowly Tea Party — tepidly praising it only when it succeeds in forcing an issue to to the right. I think he’s unaware of just how much of America is tired of political double-speak and would love a candidate that just tells it like it is.
- philmon | 09/12/2011 @ 08:51
“What does your question have to do with reality?”

Thomas Friedman, basically excusing himself from answering Rick’s question. His answer is “you’re crazy”
- philmon | 09/12/2011 @ 08:56
Sorry, I’m still thinking about it. So Tom’s earlier dodge, which Santelli doesn’t let him get away with, is it’s not a ponzi scheme because it’s not illegal. It may be in form and substance exactly like a ponzi scheme, but since it’s the law of the land, it’s not.

Instead of discussing the substance — that it is in form and substance a ponzi scheme and what’s wrong with ponzi schemes and why are they illegal and why, in fact, shouldn’t the same line of reasoning that this scheme is also a bad idea …. no. “It’s not illegal. Therefore it’s not a ponzi scheme. You’re crazy, I don’t need to address your question any further.”

GAAAAAHHHH!!!
- philmon | 09/12/2011 @ 09:00
Hello, Philmon. Ah, it’s not a ponzi scheme in form or substance. That’s just how it’s sold to the public, for ponzi schemes are a very easy sell (Until they explode!). And the “It’s legal” argument is also just smoke. What they mean by “It’s Legal!” is that the Government is doing it. That’s also why it’s not a ponzi scheme. If it were a PS, then there would be enforceable contracts involved, people getting paid (except for the bottom, which eats it…). Social Security doesn’t do that. It’s form and substance is one where they collect the “Investment” at gunpoint, and commit to nothing (It went to the Supreme Court years ago, the Social Security promises are not legally binding). Quite solid, and no reason for it to ever “Explode”. Just a hard sell if the “Investors” understand what’s going on and have a say, which is why we have all the lies and eye rolling.
- Robert Mitchell Jr. | 09/12/2011 @ 09:25
If you need more people putting in at the bottom to give you enough revenue flow to pay out what you promised at the top, it’s a pyramid scheme. And it was and is “sold” to the American public in general — the fact that it’s enforced at gunpoint by the government actually shows that it is “enforcable” and “legal”.

Of course, non-government Ponzi schemes are illegal, and the contracts are in the end, unenforcible.

Ponzi schemes are built by and for the people at the top of the pyramid. The fact that the” people” at the top of the pyramid is the Federal Government makes no difference in form and substance.

It does have to keep paying out enough to keep people thinking it’s going to work for them. And just because this one hasn’t completely exploded yet doesn’t mean it isn’t going to. If it weren’t on the verge of it, we wouldn’t have people (in the government as well as out of it) freaking out about it.

A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going.

How is this different than how Social Security has been run for the last 35 or so years other than the fact that it is enforced at gunpoint?

(except for the bottom, which eats it…). Social Security doesn’t do that.

That’s only because the bottom hasn’t been reached yet due to the “legal enforcement” … perpetuating the revenue stream. As I said, it’s on the verge of blowing up. Our population isn’t growing as it once did (it’s barely growing at all) which means that some people are going to have to “eat it”.

If the mob ran a ponzi scheme and sent thugs to your door to enforce it, would it not be a Ponzi scheme anymore? I mean, let’s step away from the technical details of whether and how it is or isn’t or just how it is “sold” . What’s the basic form? How does it work? I don’t really care if it’s a 4 cylinder or a V6 or if it runs on gasoline, propane, or hydrogen — it’s still an internal combustion engine.
- philmon | 09/12/2011 @ 09:56
There is something going on here which is much bigger than Ponzi schemes; the story is not whether SS is a Ponzi or not, it’s how people go about deciding it is one or isn’t one. It’s an Architect/Medicator thing; you settle these questions like an Architect, by figuring out what does what & how it’s all connected together, establishing and then applying your litmus tests — or you do it Medicator/Friedman style, contemplating the way kids contemplate in third grade, as they see this big forest of hands going up in the air and “think” whatever everyone else is thinking. Learn to follow the rules. And the rules say it isn’t a Ponzi scheme…which is why we get eyeball-rolling and “sheesh” and not an awful lot of anything else out of the esteemed columnist.

He’s medicating. Thinking like an ant. Giving off his little chemical signal about what ideas are to be accepted and what ideas are to be rejected…after dutifully receiving a similar signal, taking up his place in the hive hierarchy.

No independent thought anywhere. And a strident insistence on ridiculing anybody who applies some.
- mkfreeberg | 09/12/2011 @ 10:11
Did they meet with someone else, perhaps, who intentionally or otherwise accustomed them to such deference?

Yup: every student they ever had. Every paid lecture they ever delivered. And an army of yahoo trolls who will defend everything he says, no matter what, because he’s on their side (i.e. conservatives disagree with him, therefore he is Smart (just like them!) and every word he utters must be distilled brilliance).

I hate to keep harping on it, but I’m around education professionals all the time, and trust me on this: this is the ONLY way 99.8% of them “argue.” Students are taught that the “right” answer is whatever teacher says it is, even when it’s obviously wrong, because teacher can make your life hell with very little effort — she’s got the entire bureaucratic apparatus on her side, up to and including (in college at least) a huge diversity enforcement office complete with actual, armed police, while the poor student has… next to nothing, and in college, anyway, a crushing burden of debt that means he has to stay in school no matter what if he ever hopes to pay it off.

The higher you get in academia (and I’m sure Friedman has some kind of advanced degree; he sure sounds ignorant and condescending enough to have a PhD), the easier this becomes, so that ironically, at the highest level a “pfffft” and an eyeball roll actually counts as a legitimate argument. 20+ years of the jackbooted indoctrination we call “education” in this country makes for some might muddleheaded thinking…..
- Severian | 09/12/2011 @ 10:16
Yeah, isn’t that a sad commentary. Get high enough, one day you might be able to aspire to think like an ant or a bee. Two species from the insect realm that have become icons of low-ness. That’s the height you can hope to reach if everything works out, and you’re the best of the best.
- mkfreeberg | 09/12/2011 @ 10:25
“Uh-huh-huh …. He said Get high enough.“. – Butthead

“Yeah, yeah! Let’s get high! and stuff …. heh heh.” – Beavis
- philmon | 09/12/2011 @ 11:45
Yup, that might have been accidental on my part. Emphasis on the “might have.” 🙂

Medicating…the verb fits in all kinds of ways. Study these people for awhile, you’ll see everything they do voluntarily, in one way or another is an exercise in medicating…
- mkfreeberg | 09/12/2011 @ 11:50
Hello, Philmon. “If the mob ran a ponzi scheme and sent thugs to your door to enforce it, would it not be a Ponzi scheme anymore?”. Correct. It would not be a Ponzi scheme, anymore then Social Security is. That would be a Protection Racket, which is less ethical then a PS. You are focused on the bottom when you should be looking at the top. What are the actually, promised, payoffs of SS? Nothing. They can change the retirement date. Completely legal. They can means-test, change who gets a payoff. Completely legal. A Ponzi scheme has to collapse at some point. Two to pay off one. Social Security never has to collapse. One to pay off no one…..

Which is why the double talk is so important. It’s actually easy to opt out of SS, and the more people understand how it works, the less “Investors” there will be, and thus less skim for the house……
- Robert Mitchell Jr. | 09/12/2011 @ 11:56
I have to change channels from time to time when Liesman comes on. And that whiny little Brit.

I’m sure, some day, Mr. Santelli will be ground down enough that he makes the shift over to Fox Business News.

And that will be the day I begin to “demand it.”
.
- TMI | 09/12/2011 @ 11:57
Education, outside of the elementary and some of high school, is focused on teaching how to think in abstractions. This can be very useful.

In the hard sciences, there is (or usually is) a rigorous acknowledgement that the abstractions are abstractions, and then experiments test how true to reality the abstractions are. This is a good hand-waving definition of scientific method. And then layers of verified abstractions of verified abstractions of things give us stuff like internal combustion engines and computers.

In the soft sciences, they do the same thing, but usually leave out the experimenting/verifying part. This leads to all kinds of abstractions and abstractions built on other abstractions — all of which you can make “logical” arguments for but there is nothing to moor them to reality. Thus the theories become little more than what the fashionable abstractions du jour may be — which leads the academic, knowing the lineage of abstractions, to think that he’s smarter than everyone else and that of course this is so, while everyone else around him — looking at the historical evidence, wondering what the hell he is talking about. This only serves to “prove” to the academic what ignorant rubes everyone else is, and how exceptionally smart they are.

Which leads to no good end.
- philmon | 09/12/2011 @ 11:59
“Thing I Know #402…”
Wow, did’ja see Debbie Wasserman trying to “school” the Fox news babe, despite those pesky facts-and-stuff? Clearly the fundraiser in chief of the Dem party expects
acolytes to rehearse their pffft,eye-roll response script. I suppose it IS more elite than the Ed Shultz style of knee-jerk “Oh, Come OOOOOON!”

Ponzi Scheme-Pyramid scheme
How come (ie.)gambling is illegal , unless “the house” is the church or the State?
How come organized crime is so willing to pick up the slack?
How come “the state” of Nevada has ANY “expenses”?
Did the TPIC just sign off to permanently close Yucca Mountain, flushing US$XXXX into the hole?
Oh, right, For the Children…”
- CaptDMO | 09/12/2011 @ 12:30
Phil,

you nailed it in one. Academics these days argue in little but tautologies. Philosopher David Stove once described this type of argument as “The Gem” — with sufficient verbal padding, you can disguise the fact that you’re pulling all kinds of interesting, counter-intuitive, and not coincidentally tenure-committee-pleasing conclusions out of utter redundancies.

For instance, the postmodernist argues that since we can only describe the capital-T Truth with words, and since words are nothing but social conventions, there is no such thing as capital-T Truth.

This sounds all cosmic and mind-blowing when you’re 16 (the approximate mental and emotional age of all liberal arts professors, and not coincidentally most liberals… but I digress). In reality, though, it’s a tautology — by insisting on the (incidentally, capital-T) Truth that words are just social conventions, all they’re really saying is that “we can only describe what we are capable of describing”…. which says nothing about reality, one way or the other.

And so with pretty much everything on the lefty menu, and this is why their efforts to actually describe what their ideal looks like falls absolutely flat. “Social justice,” it turns out, is a world that is socially just. “Big business” or “global capitalism” really do run everything, because everything that happens is the result of “big business” or “global capitalism.” Their “arguments” are true by definition, since I don’t think even Noam Chomsky is going to assert that A /= A.

That supposedly very, very smart people don’t recognize this says a hell of a lot about American higher education.
- Severian | 09/12/2011 @ 12:43
In the “sheer coincidence” department…Saturday morning I posted a status update on the Hello Kitty of Blogging.

Conservative: “You guys say you’re so ‘nuanced’ but there isn’t a grain of truth to it; anytime you hear something unfriendly to the progressive agenda you just denounce it as stupid and dismiss it, like it’s a hot potato.”

Liberal: “Oh my GOD! That’s got to be the stupidest thing I’ve ever heard!”

Conservative: (goofy grin)

Someone has made the mistake of telling them about the eyeball-roll…and now, not only do they not have anything else, but they can’t stop doing it. Even for ten seconds, when specifically called on it.
- mkfreeberg | 09/12/2011 @ 12:56
What are the actually, promised, payoffs of SS? Nothing.

In the fine print. Which nobody reads Or when they do read it and understand it and say anything about it they get harumphed out of the room. It’s still advertised as something you pay into and something you will reap benefits therefrom – as seen in political campaign after political campaign. If the people voting didn’t think it was “promised”, you can bet they wouldn’t vote for it. There is an implied promise, even though it is explicitly not there if you read the fine print, effectively acts like a promise.

How is it funded? From the the formerly vastly more numerous young generations. Where does the money go? To the smaller-in-number, older generations. In structure, money comes in to a small base and is used to fund a relatively small top. Just as in a ponzi scheme, when the small base disappears or even contracts too much, the whole thing collapses.

In structure, it is the same thing. What the fueling “enhancements” are (forced participation in this case) or the drags on the system (corruption and siphening by the people “running” it) … doesn’t change the basic structure enough for me not to agree that at a glance, the blueprint would scream “ponzi scheme” to any observer who knew what one was.

I agree that it is worse than your run-of the mill ponzi scheme because there’s basically no opt-out, and if you try agents with guns will show up at your door. This is the reason it has lasted this long. But the above mechanism is about to lose the integrity of its base funding source, and the number of payouts at the top are huge due to the size of the baby boom generation. It lived by the same mechanism as a ponzi scheme, and it will die by the same mechanism.
- philmon | 09/12/2011 @ 13:09
Protection Racket

Ok. I give. I say it’s a table, you say it’s a sofa table, because it has such and such qualities. It’s still a table and retains the basic qualities of table-ness.

If your contention is that I’m calling a refrigerator (pyramid scheme) a “Frigidaire” (Ponzi scheme) when it’s really a “GE” (Protection Racket) … ok. But we’re splittin’ relatively unimportant hairs in disagreement here on something I think we clearly both agree on. It ain’t good. And it ain’t sustainable.
- philmon | 09/12/2011 @ 13:23
Hello again Philmon. Alas, Protection rackets are sustainable, as opposed to Ponzi schemes. Social Security is not going to die because of the Baby Boomers. What will happen is a change in the payouts or a change in the age requirements or means testing, etc, etc. It’s why it’ such a live issue at the moment. All the players in the game know this, and are trying to make sure that some other faction gets thrown under the bus, while not taking responsibility for the throwing…..
- Robert Mitchell Jr. | 09/12/2011 @ 17:10
So this protection racket which was run basically like a pyramid scheme for years has had it’s pyramid properties exhausted and now the people running it will have to change the game, because it isn’t going to be sellable anymore.

It was sold as everybody pays in, and everybody gets payed out, keeping it from being a welfare program. Now they will morph it into a welfare program, which will force some people to “eat it” …. which, in contrast to just letting “go bankrupt” is not the worst idea. Most conservatives I consider reasonable, I think would go this route and phase it out for younger people, encouraging personal investment instead, while we change the expectations and start turning the culture around.

I’m still not quite sure why you have so much trouble relating the current system to a ponzi or pyramid scheme – I have outlined the ways in which they are similar, and I see your objections as variations on the basic scheme. I say it barks enough like a dog to call it a dog. You obviously disagree. That’s fine with me, I don’t need you to see it my way. But that’s the way I see it.
- philmon | 09/12/2011 @ 17:50
Another way to look at the SS program is that it has reached the tipping point in its dynamic equilibrium. From now on, it is “behind the power curve” (pilot lingo).
- sammy small | 09/12/2011 @ 21:37
Any way you cut it, SS is unsustainable.

I can actually see not using the words “Ponzi scheme,” since Ponzi schemes are illegal and SS is unfortunately all too legal. As a matter of pure public relations, using the words “Ponzi scheme” give liberals yet another excuse to say “stupid wingnut haterz, don’t even know the definition of ‘Ponzi scheme!'” (But since the post which occasioned this discussion is all about how liberals are going to eyeball-roll us and say “wingnut haterz!” no matter what we do….)

If we must, let’s call it a “negative-equity algorithm” or a “demographically-unsustainable projection” or “net-negative income distribution” or something. Something that sounds, you know, Smart. With big words and stuff. ‘Cause then liberals will have to sign on to it, just to prove they have bigger brains than the wingnut haterz.

In fact, if the knuckleheads in the GOP’s so-called “leadership” would just realize that liberals are basically just junior-high kids who can’t get over placing second in the All-Valley Debate Tournament, they’d be doing quite a bit better on the public relations front… but that’s a rant for another day.
- Severian | 09/13/2011 @ 05:36
If we must, let’s call it a “negative-equity algorithm” or a “demographically-unsustainable projection” or “net-negative income distribution” or something. Something that sounds, you know, Smart.

Although it may be more technically accurate, this is why our side tends to lose over time. We suck at communication.

“negative-equity algorithm”ain’t sexy. It doesn’t catch. It sounds like we’re talking over people’s heads. And we are, really. We have to use analogies your average Joe and Jiill will understand when they hear it on the radio or on the TV while they’re grabbing another beer (and trust me, I’m not knocking grabbing another beer here! I’m all for it!)

If the government sold pot, for instance — or to use a real example, passed out heroin, it isn’t “not passing out heroin” because “passing out heroin” is illegal. The government created itself a legal loophole, pure and simple. It doesn’t change the basic structure that makes it do what it does. Plus, government has the unique power to enforce its self-defined loopholes — as long as we stand by and let them get away with it.

And adding more nicotine than occurrs naturally in tobacco to a cigarette doesn’t make it not a cigarette. It’s a cigarette on steroids. But it’s still a cigarette. (Yes, I know there aren’t any actual steroids in the cigarette, but you see how ridiculous this line of thinking can get, and quickly?)

I mean, just because I see what the “it ain’t a Ponzi scheme” people are saying, I must say that it seems to me that they are purposely missing the point of the argument. A Ponzi scheme is essentially a fraudulent pyramid scheme. I’m not saying it’s illegal. I’m saying it works pretty much the same way with a couple of enhancements — the blessing of and the coercive power of the government that runs it — and it suffers the same deficiencies. It works as long as enough people buy it (in this case, they are forced to – but that is only a variation enhancing the money source) to support the “promised” outflow to the people receiving the benefits. And the benefits are implicitly promised every election cycle even though they are explicitly not guaranteed. It does work in very much the same way and it (and by “it” I mean the way it’s been working for at least the last 35 or so years) will collapse for the same reasons.

And frankly, the implicit promise with an explicit un-promise that gets played down to the point of never mentioning it essentially makes it fraudulent. It’s more like a Ponzi scheme than you may think.

Saying it “won’t collapse” because we will change the structure is like saying I “remodeled” my house because I left at least one wall up at a time while I demolished the rest of it and rebuilt it in a different shape with different supports. When you fundamentally restructure (transform?) it, “it” isn’t “it” anymore. It’s something else.

So, ok, fine — if we dont’ want to call it a Ponzi scheme, let’s at least call it a Pyramid scheme. People get that, and they understand that once there aren’t enough people paying in at the bottom, something has to change. They won’t get “negative-equity algorithm”. And what should change is the mplicit “promise”. When nobody looks at it as a guarantee anymore (which fewer and fewer people are) — then it turns into a welfare program. Which I’d be much happier about if they’d just do it and call it that.
- philmon | 09/13/2011 @ 06:56
How about…just concede the point that at least in some ways, SS is not a Ponzi scheme. And then wax lyrically on the crucial difference: SS is pliable from the perspective of the institution, which is the government; the benefits can be modified. The “beneficiary,” on the other hand, is put in the position of waiting to be told how much to put in, putting it in, and hoping to maybe see it again someday. Similarities: With both Ponzi and SS, the structure makes it an inevitability that someone is going to get screwed, the only question is who.

Both are games of Musical Chairs, with Ponzi it’s up to you to figure out how to hover your butt over the seat & how fast to move, with SS you’re told what to do.

Ponzi schemes are honorable compared to Social Security.
- mkfreeberg | 09/13/2011 @ 07:21
That’s not an internal-combustion engine. It has a turbo charger! And it is fuel injected!

True, at least in a Ponzi scheme the sucker can make his own judgement and opt out.
- philmon | 09/13/2011 @ 07:28
Timely post from the Cato Institute.

I know it’s not his fault, but this video needs someone with a better … presence.
- philmon | 09/13/2011 @ 08:36
Left-wing plan implemented Monday equals some kind of funding “crisis” on a Tuesday.

I can’t seem to find any exceptions to this rule. Anywhere.
- mkfreeberg | 09/13/2011 @ 09:58
I quit paying any attention to Friedman after he said he admired the way China’s authoritarian rulers simply get to enact “reform” by fiat…without the bothersome need to obtain the just consent of the governed – i.e. Congress and/or the public via the ballot box. Naturally, he turns a blind eye to the human rights violations that become necessary in order to enact such “change” without going through the proper channels and procedures.

Anyone who longs for any part of a totalitarian government should no longer expect to be taken seriously. There’s a reason that dictatorships are evil by definition.
- cylarz | 09/13/2011 @ 16:07
Stossel Weighs In
- philmon | 09/14/2011 @ 06:55
And as the horse lay, dead …. Ramirez
- philmon | 09/15/2011 @ 20:20

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Friedman’s FollyMonday, September 12th, 2011

Friedman’s Folly
Monday, September 12th, 2011