The impression is given that a worker’s “benefits” are financed by his “contributions.” The fact is that taxes currently being collected from current workers are being used to pay benefits to persons who have retired or to their dependents and survivors. No trust fund in any meaningful sense is being accumulated. (“I am You.”)
A worker paying taxes today can derive no assurance from trust funds that he will receive benefits when he retires. Any assurance derives solely from the willingness of future taxpayers to impose taxes on themselves to finance benefits being promised by present taxpayers to ourselves. This one-sided “compact between the generations,” foisted on generations that literally cannot give their consent, may be sufficient assurance, but it certainly is a very different thing from a “trust fund.” A chain letter would be a more accurate designation.
DBx: Yes. And Social Security remains today very-much a chain-letter-like scheme.
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Pictured here is Charles Ponzi.
