Is Texas governor and Republican presidential candidate Rick Perry a courageous and welcome truth teller for calling Social Security a Ponzi scheme, or is he being needlessly provocative instead? Or maybe you think Perry’s Ponzi comparison is just plain wrong. I favor the truth-teller option, but the debate will surely go on.
In any case, it’s certain that Perry’s Ponzi-scheme claim is in no way original. Not only have a raft of conservatives called Social Security a Ponzi scheme over the years, quite a few very respectable liberals have done so as well. It is clearly wrong either to treat the Ponzi-scheme analogy as unprecedented or to rule it altogether out of legitimate public debate. A historical tour of the use of the Ponzi-scheme metaphor will make the point.
Jonathan Last has already identified a 1967 Newsweek column by liberal economist and Nobel laureate Paul Samuelson as perhaps the earliest use of the Social Security/Ponzi-scheme comparison in public argument. Samuelson was actually drawing on the Ponzi analogy to defend Social Security. His claim was that the perpetual succession of human generations establishes the conditions for a sustainable Ponzi scheme. Regardless of whether Samuelson was the first commentator to use the Ponzi analogy, he has clearly been the most influential. Policy briefs and books churned out by conservative think tanks such as Heritage and Cato have cited Samuelson’s Ponzi column for years. This is likely how the comparison made its way into public debate.