Monday, June 24, 1996 - Page updated at 12:00 AM

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Letters To The Editor

Social Security -- Not A Case Of `Market Failure'

Ross Anderson's June 19 column was excellent as far as it went. Anderson's political columns routinely make much more sense than the typical cliche-peddler. That's why I was pained to see him attribute the creation of Social Security to a "market failure."

The only people who use the phrase "market failure" are those who don't understand what markets are or dislike a particular market result. The fact is, markets cannot fail, any more than the laws of physics can fail. Markets cannot even be actively suppressed; just ask the Soviets.

By the way, the most damning thing that can be said against Social Security is that it is a Ponzi scheme. It wasn't always; for the first four years, money stolen from workers was indeed put in a trust fund for them to reclaim upon retirement but, of course, the politicians raided this and soon payoffs were financed by current intake.

Charles Ponzi developed just such a scheme 10 years prior to the New Deal. He promised investors 50 percent returns on their money, and he made good on those promises by paying old investors off with the new investors' money. As you surely know, everyone got paid except the last investors. That's why Ponzi schemes are illegal now. If only Uncle Sam had to play by the same rules as the rest of us. At least Ponzi's victims had a choice with their money. Bill Muse


Copyright (c) 1996 Seattle Times Company, All Rights Reserved.


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