Monday, December 13, 2010

What do Bernie Madoff and Social Security Have In Common? Not Much.

It seems the Right-Wing Viral Message folks enjoy calling government officials "crooks".

Here's one where they take it too far.

Why did Bernie Madoff go to prison?  To make it simple, he talked people into investing with him.  Trouble was, he didn't invest their money.  As time rolled on he simply took the money from the new investors to pay off the old investors.
Of course, they've overlooked the whole "used the money to buy mansions, yachts, and live the high life" part...
Finally there were too many old investors and not enough money from new investors coming in to keep the payments going.
Of course.  Because he spent the money on himself.  And represented an unrealistic expectations of his ability to obtain returns on his investments.  And hid his operational details from regulators.  That's why it was fraud.
Next thing you know Madoff is one of the most hated men in America and he is off to jail.
You got that right...
Some of you know this.  But not enough of you. 
Maybe.  If "you" refers to "the average right-wing email forwarder".  Their average intelligence and knowledge of world events seems pretty spotty to me...
Madoff did to his investors what the government has been doing to us for over 70 years with Social Security. 
A bold statement, my friend - actually accusing the developers of social security with fraud.  Let's see the proof.
There is no meaningful difference between the two schemes, except that one was operated by a private individual who is now in jail, and the other is operated by politicians who enjoy perks, privileges and status in spite of their actions.
Restating what you've already said isn't proof, yet.  Sure, congressmen live pretty nicely.  But any citizen has access to the operating details of the social security trust fund.  And, yet, in spite of this transparency, this emailer can provide no proof that this money has directly lined the pockets of our congressmen. 

Do you need a side-by-side comparison here?  Well here's a nifty little chart.

Takes money from investors with the promise that the money will be invested and made available to them later.
Instead of investing the money Madoff spends it on nice homes in the Hamptons and yachts.
When the time comes to pay the investors back Madoff simply uses some of the new funds from newer investors to pay back the older investors.
When Madoff's scheme is discovered all hell breaks loose.  New investors won't give him any more cash.
Bernie Madoff is in jail.
Again, seems like more of the same thing.  But the basics seem right - he said he'd invest the money, promised an impossible return, kept phony books, kept most of the money, and used new investors to pay old investors during times they wanted to cash out.  This is illegal.
Takes money from wage earners with the promise that the money will be invested in a "Trust Fund" (Lock Box) and made available later.  Instead of depositing money in a Trust Fund the politicians  transfer it to the General Revenue Fund and use it for general spending and vote buying.
All with complete transparency, to anyone who watched.  Voted into law in open congress, and signed by the president - all of whom were elected.  Democracy isn't perfect.  Bad laws happen.  (As far as whether a transfer was bad policy is a legitimate topic for reasoned debate.)  But bad laws aren't fraud -they're just bad laws.  As far as "vote buying" goes - our unnamed writer doesn't provide any specifics.  I wonder why?
When benefits for older investors become due the politicians pay them with money taken from younger and newer wage earners to pay the older geezers.
When you're a government, with the powers of an unlimited lifetime and the ability to print money, this might be okay.  As long as the end results are accounted for.  If they haven't (a debateable point, for forums other than this one) - they should be taken to task for this.  But, reasonable people disagree on this point.  And even if it is correct, bad ideas are just bad ideas.  It may be bad policy.  But it isn't outright fraud.
When Social Security runs out of money the politicians try to force the taxpayers to send them some more; or they cancel S/S to all those who paid into it.
Show me the proposed bills.  Because I don't see any.  Sure, there are some that delay benefits to future recipients - but no one talking about cancelling social security.  Except, perhaps, for asking folks to "volunteer" to put some money into private accounts.
Politicians remain in  Washington .. with fat medical and retirement benefits.
Do you want the job?  It's potentially yours.  All you have to do is get elected.

Oh, you can't win against more qualified opponents? Good.  I'm glad that they're paying enough for people to want to compete for the job.

Oh, I get it.  You're only for free enterprise when it suits you.  Gotcha.