In a Ponzi Scheme current investors are paid with current “contributions”. In Social Security, current retires are paid from the taxes taken from current taxpayers. In a Ponzi Scheme and Social Security, money collected currently is not invested to product income. Finally, early participants get a huge return on their money. The first Social Security beneficiary, Ida May Fuller collected nearly $23,000 from Social Security and yet contributed only $24.75.
The only possible distinguishing factor between what Ponzi did and what Social Security does is intent and that it is not voluntary (the original Ponzi Scheme was obviously voluntary). While some would argue that the intent of Social Security was not fraudulent, many people would disagree that the intent of some of the people who established was fraudulent. The concept of a “trust fund” or “lock box” for Social Security taxes was never a reality and the money was spent on government programs as it came in. Some have argued that it is possible to die without getting any Social Security so it isn’t a Ponzi Scheme. Obviously it is possible to die without getting any return from a Ponzi Scheme too.
In short, Social Security is a Ponzi Scheme in all respects except, perhaps, the intent to be a fraudulent scheme.
The real question is: Does the argument that Social Security not fraudulent, yet has all the remaining characteristics of a Ponzi Scheme, really excuse Social Security from being a Ponzi Scheme? The answer is no, the effect is the same whether the intent was good or not.
Some relevant reading, continually updated: