Environmental degradation as a Ponzi scheme

What should we call policies that maximize current well-being through unsustainable environmental policies?

Governor Perry considers Social Security to be a Ponzi scheme. I am baffled by this assertion when the program’s unfunded liability out to 2080 is in the neighborhood of 1.2 percent of GDP. Apparently Perry uses the words “Ponzi scheme” to mean “any pay-as-you-go program operated by the federal government.”

Although Perry’s charge is misdirected, the idea that we can harm future generations through unsustainable policies should be taken seriously. Consider: Our current standard of living is being supported by rampant consumption of subsidized fossil fuels and other present-oriented policies that deplete the planet’s finite resource base and that impose other damage on the natural environment. We may live comfortably over the next few decades by melting the polar ice caps, eroding biodiversity, polluting the ocean, and releasing huge amounts of greenhouse gases into our atmosphere.

In my view, such unsustainable environmental policies amount to a more frightening and costly Ponzi scheme than any entitlement program. We don’t think about things that way. Maybe we should.

First unrelated programming note: Here’s my web article in the Nation on the death penalty in Texas

Second Unrelated programming note: Word to Mark Kleiman’s post here. The president was good tonight.

Author: Harold Pollack

Harold Pollack is Helen Ross Professor of Social Service Administration at the University of Chicago. He has served on three expert committees of the National Academies of Science. His recent research appears in such journals as Addiction, Journal of the American Medical Association, and American Journal of Public Health. He writes regularly on HIV prevention, crime and drug policy, health reform, and disability policy for American Prospect, tnr.com, and other news outlets. His essay, "Lessons from an Emergency Room Nightmare" was selected for the collection The Best American Medical Writing, 2009. He recently participated, with zero critical acclaim, in the University of Chicago's annual Latke-Hamentaschen debate.

15 thoughts on “Environmental degradation as a Ponzi scheme”

  1. Rick Perry is exactly the sort of “conservative” who talks as if:
    1) Humans live in The Economy, not in The Environment.
    2) “Our kids and grandkids” are more likely to run out of money than out of petroleum, because money is finite but oil isn’t.
    Sensible people can see the absurdity of those things, but so what? Perry is angling for the Stupid Vote.


  2. Perry is angling for the Stupid Vote.
    Naturally. Unfortunately, the Stupids have gained a sizable majority in this country. All one has to do is drive in traffic to see that.

    Environmental Ponzi scheme: good way to look at it! I’ll remember that one.

  3. Environmental destruction is worse than a ponzi scheme. I a ponzi scheme, you at least offer the suckers outsize returns and a choice about whether to participate; if they’re lucky about timing they may even get out with some of their skin intact. Environmental destruction is intergenerational theft: you enjoy the fruits now, and tell your grandchildren, “Sorry, we spent it all on hookers and blow, now you pay the bill.”

  4. I think the term “Ponzi scheme” has jumped the shark. Also, I don’t think it applies here.

    But, we should definitely take better care of this planet.

  5. I think the term “Ponzi scheme” has jumped the shark.

    Yes. Just as the adults in the room no longer use the phrase “the adults in the room”.
    That shark has been jumped so many times I suspect it is belly up from being whipped like a dead horse…

    But then again, if Perry wants to six-gun that phrase like Yosemite Sam, might as well have fun treating him to some “backfire”.
    And so my favorite Ponzi scheme is the one being run by those who stand to profit enormously from a Perry presidency.
    The ones who have dumped 55 million into his campaign…
    Perry’s looming kleptocracy alone, may be enough to make me open my wallet again for Obama…

  6. When it appeared that Congress might not raise the debt ceiling, President Obama said that Social Security checks would not be able to go out one day later. I’ve been paying into the system for 35 years, and Social Security can’t go one day without new (borrowed) money? I think President and Governor agree on how Social Security works, but only one is willing to put a name to it.

  7. The Social Security Administration says it’s not: http://www.ssa.gov/history/ponzi.htm

    So that settles it, right?

    It has been an annuity purchased on terms absolutely not available on the private market – my dad, born 1915, pulled a LOT more out of it than he put in, as people have families of two rather than families of five it gets less possible to give new pensioners more than they put in. Not a Ponzi scheme, and the details have always been publicly available. But, not a very good deal for today’s young people, likely. 1.2 per cent of GDP sounds like not so much, but it is about seven percent of the level of taxation which has been historically tolerated. The Bush Tax Cuts, about which there has been a huge fuss, lower government revenue by about 1.7 per cent of GDP. So it’s not nothing.

  8. President Obama said that Social Security checks would not be able to go out one day later.

    No. He did not.

    And he was making a political threat to the opposition that he might not allow transfer payments to happen to fund, and he may not allow workers in to cut and mail checks (yes, they still mail checks) to SS, VA, others.


  9. Pretty ironic.

    Wouldn’t the whole supply-side BS the current Republican crop and Tea Party zealots hold sacrosanct fit the definition of Ponzi scheme perfectly, i.e. work hard and play by the rules and you’ll enjoy a comfortable standard of living, access to health care, well-funded public infrastructure and a secure retirement? We trade our hard work for the promise of these things, even if it isn’t directly reflected in our paycheck, because we are doing work that needs to be done, and we assume that the rest of society will do its part to contribute to the collective good, to the extent that they are able. Yet the wealthy don’t end up paying their fair share because free market apologists pretend that their hard work is somehow more important than than that of the rest of us. They assume that the market is meritocratic. They deny inherent structural inequalities of capitalism and only see governmental responses as the true inequalities. (For example, denying that there is anything wrong with inherited wealth and fighting government attempts to introduce fairness into what is essentially an aristocratic dynamic)

    Yet as health care costs rise and access dwindles, infrastructure crumbles, and retirement seems ever more ethereal, they tell us this is the fault of greedy public workers, regulatory protections, and the recipients of the safety net. The idea that a police officer can expect to retire on a modest pension with access to health care, while living in a clean environment with functioning roads, libraries and parks, somehow represents everything that is wrong with society. Who does he think he is, they tell us. Because through their policies of tax cutting and deregulating, they have made his simple world seem somehow luxurious. Only by bringing him down, they tell us, will we too get to enjoy his success. If that doesn’t seem like the greatest Ponzi scheme of all time, than nothing does.

  10. > But, not a very good deal for today’s young people

    In my experience, when it’s explained to young people that the alternative is for their aged and infirm relatives to move in with them, forming a three- or four-generation household, those young people come to understand that their FICA taxes are a very good deal indeed.

  11. Because of Social Security, my intellectually disabled brother-in-law receives a $1,100 monthly benefit that allows him to live in dignity. He receives this as part of the “disabled adult child” benefit based on his father’s work history. My father-in-law died tragically young from lung cancer. At least he died knowing that his son would have his basic needs secured through this compassionate and effective program most Americans don’t even know they have.

  12. “…unsustainable environmental policies amount to a more frightening and costly Ponzi scheme than any entitlement program. We don’t think about things that way. Maybe we should.”

    Indeed we should. An excellent suggestion!

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