"ALL CAPS IN DEFENSE OF LIBERTY IS NO VICE."

Sunday, October 08, 2006

Socialism Is A Ponzi Scheme

A government report in Spain determines that Spain will need 4 million new immigrants by the year 2020:
BARCELONA — Spain will need at least 4 million more immigrants - between 16 and 64 – by 2020, according to a study. The report, prepared by the regional government of Catalonia, looked ahead to the situation in 2020. It said the nation's relatively low birth rate was not sufficient to provide Spain with the workers it would need in the coming decades.

Project coordinator Josep Oliver, a professor of applied economics at the Autonomous University of Barcelona, said this was the minimum number of immigrants needed to keep the economy growing at the pace of the past decade.
The report also said a minimum level of social and educational policies should be maintained to ensure that as many native Spaniards as possible enter the labour force.

Oliver said immigration was "unavoidable and necessary" because "if no one else enters, there will be a significant aging of the population," and, as a result, a lack of workers, so "if we do not have them here, they will come from outside".

In calculating the number of immigrants needed, researchers factored in annual workforce growth of 2-3 percent and gross domestic product growth of 3 percent annually. "Workplaces produce the call effect" since "we need immigrants," but if a large wave of immigrants arrives it could create a "worrisome clash, given the problems seen with integration in other European countries," Oliver said.

Realistically, a country only needs to employ its own working age people. If everyone has jobs, then they can feed their families, clothe and house their families, and that's what we expect out of an economy.

So, wouldn't an economy with fewer people be easier to run? I mean, if you have fewer people then you have fewer people to employ, right? It doesn't really matter how big the pie is as long as there is enough to go around.

No, but that isn't true in a socialist economy, where a large percentage of people are living off government welfare programs of various kinds. Such an economy requires ever more workers to pay taxes in order to fund the ever growing social programs.
Here's a little blurb on Ponzi Schemes from Wikipedia:
A Ponzi scheme usually offers abnormally high short-term returns in order to entice new investors. The high returns that a Ponzi scheme advertises (and pays) require an ever-increasing flow of money from investors in order to keep the scheme going.

The system is doomed to collapse because there are little or no underlying earnings from the money received by the promoter.
Yes, and the socialist governments of Europe are going to collapse as well, if Europeans do now wake up and start voting in people who will cut taxes and welfare rolls. Ponzi schemes are against the law for good reason. They leave the lives of innocent, naive people in ruins. I wonder how long history must progess before the people awake and government run Ponzi schemes are outlawed.

[Reliapundit adds: Brilliant reporting Pastorius. I have blogged a few times on the fact that Social Security is a Ponzi Scheme, but I never realized that it also defines socialism at it's very core. Great Job!]

6 comments:

Pastorius said...

You probably planted the idea in my mind.

Gormless Norman said...

Great analogy. I always grimace when I read something about how a certain country "will need to" take in a certain number of immigrants in the next 20 years or whatever. Why? This is the same logic people use in the US for why we "need" massive illegal immigration: because they do the jobs Americans "won't do." Yeah, they do the jobs Americans won't do for 2 dollars an hour; if the job paid minimum wage, which it would if there wasn't this massive influx of dirt cheap labor, then Americans would do it.

Pastorius said...

GN,
That whole "jobs Americans won't do" meme is tired beyond belief.

All one needs to come to know that it is unadulterated bullshit is to go to the Midwest.

What do you know, there are people to haul trash, clean hotel rooms, work in fast food places, and do factory work.

Jeez, who woulda thunk it, huh?

reliapundit said...

all the mex illgl immgrnt labor i see get 10 bucks an hour

Pastorius said...

I know its anecdotal, but out here in Cali, I constantly meet hispanic people who can barely speak English who are dribing $25-30K cars. They're making a boatload of money out here.

Case in point, I tried to get some gardeners guys to redo my lawn and sprinklers. They all quoted me $3K. I asked how many people they would have in my yard, and for how long. they said two people for four days. When you add it up, both guys are making like $107 an hour.

Jersey McJones said...

The only thing that makes SSI sort of a Ponzi scheme is that the fund managers, the government, steal the money for other things and replace that money with IOUs that are debt as opposed to direct expenditures. If they didn't do that, SSI, being a generational transfer of wealth, would be flush with real money, with value growing just fine on it's own even at this time. The fund should grow flush when there are more younger people in the workforce, and shrink when when there are more elderly and infirmed and orphanned. It is a welfare program, no doubt. But there's a time and a place for everything, including capitalism and socialism.

If it were in a "lock-box," the popular expression, even just now, SSI would, again, be fine. In theory, you only need a 3-6 workers per recipient, depending on the temporal demographics. And, because it is a generational program, when times are better the fund will grow enough to cover when times are worse, as it will be when the Boomers retire. But remember, as they get old, they will die, just like everybody does eventually. What the population patterns will be when those days come is as yet unknown - but there are things we could be doing now to make that more certain and positive.

First thing - legalize the "illegals" that want to stay and bring in more realistic numbers from realistic places "legally." They'll make more money than they are now, have more kids, and help to support the people who built this great nation for them instead of just helping cheap contractors and Big Agro. Secondly - raise the payroll tax cap. The system can be rationally adjusted to it. If you lifted the cap completely, you could raise the benefits for those who stand more to "lose." After all, some people pay more into SSI than they get back, and some people get more than they paid in. It is a social program - not an investment scheme. That's why it is not a Ponzi scheme insofar as it's intended. It only becomes a scam when the managers, the government, steal from it.

JMJ