16
Immigration: Cure-all or Ponzi scheme?
Dowell Myers
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
TEXT OF STORY
Bob Moon: The Social Security system needs a new source of cash. Baby boomers are about to retire. And there aren't enough younger workers paying in to support them all. So commentator Robert Reich offered a solution on our show yesterday.
ROBERT REICH: One logical way to deal with the crisis of funding Social Security and Medicare is to have more workers per retiree. And the simplest way to do that is to allow more immigrants into the United States.
Reich says the government should encourage immigration because a flush of younger, foreign-born workers would make up for the gap we have now. This fix didn't seem like much of a fix at all to many of you.
Listener Jonathan Gyory of Winchester, Mass., sums up a bunch of letters and comments we got on our Web site.
JONATHAN Gyory: This is just a slow-acting Ponzi scheme to help maintain retirement benefits in the short term.
Gyory and other listeners complain it wouldn't solve the problem once all those immigrants themselves reach retirement age.
So we decided to consult someone who studies these things for a living. Dowell Myers is a professor of demography at the University of Southern California. Thanks for joining us.
DOWELL MYERS: My pleasure.
MOON: So is the former Labor secretary proposing what amounts to a Ponzi scheme or no?
MYERS: Well, a Ponzi scheme is a scam where there's really no actual investment and the money is just taken away, but every society invests in a younger generation so they can be better prepared to support the older generation. And that's not a Ponzi scheme. But it does base one generation's well being on another one's.
MOON: Is this a solution for Social Security, do you think?
MYERS: Well, the problem is we have so many baby boomers, and they are all going to deserve their entitlements. And we don't have relatively as many younger people. Immigrants do help. My calculations show that immigrants, though, only contribute about one-quarter of the solution. They can't solve the problem all by themselves.
MOON: Well, we've heard this idea from Professor Reich. Are there any other kinds of possible demographic solutions to fixing the system?
MYERS: Well, the easiest one would be to delay retirement. Because people live so much longer now than when we started the system. It used to be they would live only on average one year after they got entitlements and now people are pushing it out to 20 and 30 years. And given that long lifespan after 65, more of that should be made productive or else we can't balance our economy.
MOON: So what do you say about these immigrants? They are going to be getting entitlements themselves, so how do you respond to that?
MYERS: Well, immigrants get older also, but not right away. Our big problem is the next 20 years. We have a steep cliff that we have to climb with so many older folks all of the sudden, because of the baby boom, crossing age 65. We need some help just in the next 20 years. And after we get past 2030, we'll be in much better shape. But I don't know how we get there without some help.
MOON: And how urgent of a problem do you think this is?
MYERS: Well, the first baby boomer crosses age 65 next year. And so here it comes.
MOON: Dowell Myers is a professor of urban planning and demography at the University of Southern California here in Los Angeles. Thanks for giving us your analysis.
MYERS: OK, thank you.
Pages
I'm 30 years old, have earned 2 BA's (one from UC Berkeley), with a host of gainful skills and haven't been able to find steady work for a year. Much of the work available is contract, temp, or part-time. Mots people I know of my generation are struggling to find work or are working low-paid service jobs. Why do we need to import workers, when there is a scarcity of work?? The baby boomers need to buck up, retire, and stop whining about social security. Nobody's relying on reaping it's benefit at this point. They came up during prosperous times and have controlled the wealth and industry in this country for the last 40 years or so, while the next generations struggle through their 30's just to pay their rent, move out of their parent's houses, or secure steady jobs for crappy pay issued by the perpetually prosperous, foot loose and fancy-free, whiney-pants boomers!
"the easiest one [ed. solution] would be to delay retirement."
Let's assume for a second that every senior can keep their non-McJob up to the retirement without being laid off. That's another Good Job that a younger worker won't get. Won't get to make money from. Won't get to help build their career on. So, come THEIR retirement, they have more years of McJobs 'contributing' to their retirement instead of real jobs.
Sure does help Social Security costs. Sure makes the next generation into second class citizens.
Kill immigration and SS deficit in one blow: Allow migrant workers, then get a biometric ID card at the border, they have to pay FICA and Income taxes, but they can not collect any benefits, not apply for tax refunds.
Any felony crime and then the card is voided.
Cannot apply for citizenship unless they return to country of origin.
How much of the Social Security funding problem could be solved if the wage cap was removed? Even if we did not change the employer tax, if every worker paid on all their wages, just as people earning $100,000 or less do, would the problem be solved? Would it be solved if everyone paid on all their income, not just earned income? Social Security is a transfer from workers to the elderly, why not make more of it a transfer from the wealthy? Why is no one even discussing this?
Mr. Reich. Exactly what jobs are these immigrants to fill? Did the unemployment rate just drop and I missed it? Will these immigrants also put no new demands on existing, struggling social services?
I can't believe you mean this as a serious argument. What is your real motive?
The key piece of this story for me is the comment that we can "raise the age of retirement" as if the problem of millions of older workers that are now discriminated against can find productive, well-paying professional jobs at age 60 and continue to contribute to the Social Security pool. Maybe we should just put extra Social Security taxes against employers whose workforce does not match the age profile of their employees community.
Having been laid-off at age 58, I find most employers looking for workers with a college education and "Two Years" of experience. This translates into "under 30" but they can't put that in the ads. This means that the older workers are being laid-off and are choosing to go into early retirement since a job as a WalMart greeter is unacceptable.
Cure-all or Ponzi scheme? Neither. Seeing that we currently do not have a clear path from immigrant worker to citizen, the idea of a cure-all is ridiculous. That sounds like an idea being pushed by multi-national corporations that would like to see the American worker make less. A possible idea is to lower the retirement age by five years. Those that can financially retire will, opening up fulltime positions, there by lowering unemployment. The 'New'(younger)workers will supply steady funds to Social Security system and support the economy through large purchases(homes, cars, goods).
I get what professor Myers is saying about baby boomer seniors delaying retirement and being productive longer, but considering the problems we're having finding jobs for people, what exactly are seniors supposed to do? Just how many Wal-Mart greeters does one society need?
Psted to original story instead of here:
I listened to the original story last night and the response this evening. Your interviewed demographer incorrectly defined a Ponzi scheme. He said it was a scam where you receive nothing in return, while Social Security is a system where you get something for money you have put in. This went unchallenged. In fact a Ponzi scheme (Social Security) uses the money (taxes) from new investors (workers) to pay the profits (retirement benefits) of the previous investors (retirees) because the scammer (Congress) has spent the initial investments (Social Security trust fund) instead of actually investing (saving) them. A Ponzi scheme comes apart when the scammer fails to get new investors (workers) so they can no longer pay the initial investors (retirees) the profits (retirement benefits) they were guaranteed or fail to pay the high rate of return promised (change the retirement age) and they get ratted out. Unfortunately, "we the people" have no one to turn to when our own government has robbed us.
Robert Reich's "solution" is to continue to get more suckers to pay into the system. Let's prey on the ignorant immigrant with promises that they too will, in the end, have something to tide them over when they get older. Yes, the streets are paved with gold cobblestones and everyone who comes to the US can bend over, pick up a brick and become rich and I have a bridge in Brooklyn to sell you, too.
Google "definition of ponzi scheme" and you get some of these responses:
www.sec.gov/answers/ponzi.htm or
www.businessdictionary.com/definition/Ponzi-scheme.html or legal-dictionary.thefreedictionary.com/Ponzi+Scheme
Not too hard...
It is evident that most of the comments above contain some xenophobic sentiments.
Immigrants already contribute, in building your home, in farming, cooking, and serving you food, their compensation? low-wages, their contribution? making all of these goods/services cheaper for you.
So why not legalize them so that they have to be paid fair wages, & then their cost will be the same as that of anyone else, so that "fair' wage & employment competition can take place? Let's get rid of this immigrant-subsidies for businesses, and make them pay the real price of labor.
Do you think that anyone that any immigrant wants to continue being illegal? & that the thought of paying taxes will deter them from wanting to be treated like real human beings? You cannot choose where you are born, and you can't stop people from looking for better opportunities and the right to survive.
Pages
