SS Privatization: The $4.7 Trillion Pyramid.

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The one sure mark of a con, though, is the promise of free money. In fact, the only way the stock market is going to grow is if we the people put a lot more of our money into it. What Bush seeks to manufacture is a boom – or, more accurately, a bubble – bankrolled by the last safe pile of cash in America today. His plan is a Ponzi scheme, and in that scheme it is Social Security that is being played for the last sucker.

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Most companies now offer their employees a broad array of mutual funds instead of just their own stock. In itself this is good common-sense investing practice, and it also protects fund managers from charges of scheming. The other result of this practice is that workers’ fortunes are now tied not just to their own companies but to the market as a whole.

Which is where and how we come to both the problem and the scam. While fears regarding the solvency of Social Security are unwarranted, many corporate pensions – the ones that have been so important in bankrolling the stock-market rise of the past few decades – are themselves threatening to go bust, taking their parent companies down with them. The financial rot already has begun to seep into the airline and steel industries, and the auto sector may be next. (General Motors reports that its current pension obligations add $675 to the cost of every vehicle it produces.)

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The practice is not one that can be sustained across 40 years. It is a kind of Ponzi scheme, in which present profits are paid for by the promise of future stock-market gains. At some point retirees are going to want the money they are owed. The last few years have seen the results of these broken promises in the form of lawsuits, bankruptcy, and, ultimately, retirees being forced to live on far less than they were promised.