The Corner

Krugman Makes the Ponzi Point

Apparently, Paul Krugman once said that Social Security had a “Ponzi game aspect.” Here’s the original link, from the December/January 1996-97 issue of the Boston Review. This was dug up by Tyler Durden and picked up at Verum Serum. It’s particularly remarkable in light of this 2007 op-ed, in which Krugman attacks Sen. Barack Obama at the outset of his presidential campaign for playing into the supposed myth of a coming Ponzi-like crisis in Social Security, endorsed at the time, Krugman says, by those in-the-know in both parties. Krugman gives the examples of Chris Matthews and Tim Russert, but I actually think his more important point in 2007 is that the belief that Social Security is in danger of a Ponzi-like collapse was shared by those in both political parties, liberals and conservatives alike. That is exactly what I argued here.

But assuming this link back to Krugman in 1997 is legit, and it certainly looks that way, then even Krugman has called Social Security a Ponzi scheme — or at least something very like one. Now, let’s dig up those 2007 interviews in which Obama spoke of a Social Security “crisis.” Krugman puts this down to Obama’s attempts to position himself as a moderate for the campaign, although Krugman doesn’t seem to believe that Obama is doing this for much more than show. On that point, at least, Krugman’s on target.


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