Charles Ponzi in a 1910 mug shot. Swindling schemes are forever known by his name.

As the world watches the unfolding debt problems in Europe and the US it is interesting to see reputable people, meaning not me, refer to pensions and other benefits as Ponzi schemes.

Plenty of people don’t know what a Ponzi scheme is, so here’s the quick wiki description.

“A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors.”

So who would dare to compare public pensions to an illegal business venture? Chrystia Freeland, global editor at large for Reuters. Here’s her piece in the New York Times explaining that the problem on both sides of the Atlantic is that our societies are getting older.

“The heart of the problem is arithmetical: The post-World War II social welfare state, created at a moment when the baby boom was still gestating, is built on a generational Ponzi scheme. As life expectancy increases and fertility declines, that population pyramid is being inverted — and in some countries, that is causing the entire economy to topple.”

But wait, there is an answer! More immigration!

“But absorbing immigrants can be tough. And that’s true not just for the traumatized Norwegians, but also in U.S. states like Arizona, which have less homogenous populations and a history of immigration.

Moreover, immigration is a zero sum game that can’t work for everyone forever. As the world’s poor countries get richer, their citizens have less reason to emigrate — and they begin to suffer their own demographic squeeze.”

Immigration is the answer being pushed by Canada. In an interview a while back I asked Prime Minister Stephen Harper about the idea of promoting bigger families as a way to deal with Canada’s looming demographic crisis, he dismissed the idea. Of course you could imagine the reaction if a Conservative politician in today’s climate ever suggested that we need bigger families.

But we do, or we need to accept massive immigration if we want to keep our social welfare state. It is tough to encourage bigger families and as Freeland points out, the ability to lure massive quantities of immigrants won’t last forever. There will be competition.

So maybe this is, as Laurence Copeland suggests, the end of the welfare state. Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs.

“We are living through the death throes of an ideal, a dream which has turned into a nightmare – it is the end of the social democratic welfare model.

I am referring to the whole panoply of benefits (entitlements, as they are called in America), labour market regulations (employment protection, minimum wage legislation, limits on the length of the working week etc. etc.) and other social democratic devices intended to inflate like airbags to protect us all from shocks from any possible direction. The whole edifice built up in Western countries to shelter us from the need to earn a living is now clearly unsustainable. We can no longer afford a regime which allowed, indeed encouraged us to live permanently beyond our means both as individuals and as a society.”

The social welfare state may be in its death throes but are we ready to give it up?