December 27, 2008

WELL, I DIDN’T LIKE PAUL MULSHINE’S PIECE ON BLOGGING, but this piece hits a lot closer to the target:

A lot of people have been comparing the Ponzi scheme allegedly run by Madoff to the Ponzi scheme run by the U.S. government, also known as Social Security.

That’s entirely unfair.

To Madoff.

From what I can gather, Madoff at least made an attempt to invest the money he got from early investors to give them the returns he promised. Those investments failed to bring in enough money and the scheme was doomed to fail sooner or later. But if Madoff had been a more brilliant investor, it might have worked.

The federal government, on the other hand, never tried to make the Social Security system work. The feds didn’t invest the money in the market. They took the money that we gave them and lent it to themselves, promising themselves interest. To be paid by themselves.

This scheme is even more crooked than Madoff’s.

I remember John Langbein speaking at the law school a few years ago, saying that if Wall Street tried to do what Social Security does they’d all be in jail.

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