Is Social Security a Pyramid Scheme?

Are Generational Welfare Trades Always Unjust?

Source: Isaac Quesada On Unsplash: Free Use

In a recent post, I discussed a paper I published a few days ago with several bioethicists on whether trade-offs between generations are always unjust. Since I have received numerous replies, I would like to answer the questions that have been raised and respond to the criticism against our position.

(Context: We have defended the claim that welfare trade-offs between generations are inevitable. It is thus non-sensical to claim that we should prohibit all policies that allow such a trade-off, e.g., the vaccination of children to protect the elderly.)

Today, I respond to one interesting reply to our post by James OBrien who argued that Social Security is a modern pyramid scheme.

James OBrien MD:

And Social Security is one because funds paid now go to current retirees and not into an annuity account. There is no money saved and no lockbox.

Congress and the American people who support this scam are no better than Bernie Madoff, especially in light of ballooning debt.

It's not old versus young but simply a matter of math.

In our paper, we have focused on the examples of vaccinations and COVID-19 restrictions. I will discuss these soon in a future post, but want to take this moment to reply to James.

First, I think he expresses a legitimate concern. In our paper, we have emphatically not denied that children are especially vulnerable to generational welfare-trades.

We share their concerns about the inherent dangers in policies that trade the welfare of one group against another, especially if the group has no meaningful political representation, and is therefore liable to having their interests neglected or overruled. Children are among the most, if not the most, vulnerable groups in society, and we must be on guard against threats to their welfare or rights (Earp 2019).

To guard against these threats effectively, however, we must have a clear sense of what is owed to children, morally speaking, and why. This in turn requires a coherent set of ethical principles that can withstand scrutiny without devolving into absurdity. (Veit et al. 2020)

Here, we need to recognize that our evolved human psychology itself is largely to blame. Rarely, if ever, are we able to act in a way that maximizes our long-term well-being if this comes together with a drastic reduction in current welfare. Democratic societies are not designed to tackle the problems of the future, they are designed to operate on short-term cycles in which problems of immediate concern can be addressed. Many political issues such as generational Social Security funds are, however, ill-designed to function well on a long-term basis. Sometimes, a matter that seems to be a political struggle between the 'old' and young seems to merely result as an unintended side-effect of political institutions that have been designed to tackle the short term. This can clearly be seen in the case of climate change. Let us hope that we will be able to improve our political institutions in the near future to address the political issue that have long-term consequences.

To iterate: We always engage in trade-offs. They are inevitable and not necessarily problematic. There is thus little sense to demand that doing so is immoral.