Pyramid schemes?

Sadly, Karl Smith seems to agree with Matt Yglesias that 401(k)s are as much pyramid schemes as Social Security:

The core issue, that Matt hints at, is that having an equity stake in the America’s future capital is not somehow more fundamentally sound than having an equity stake in America’s future labor.

International capital flows could mitigate this somewhat by allowing American corporations to seek out opportunities in other countries the drive down in the real rate of return could be avoided. However, at the same time international labor flows could solve the Social Security problem.

Or, Americans workers could just invest more in foreign corporations. Through Social Security, I have a claim on future American payroll tax revenue, but US GDP is roughly 1/5 of world GDP. Therefore, I have internationally diversified my individual retirement savings and other investments. If investing in the world economy is a pyramid scheme, then at least it's the biggest pyramid scheme available.

Alas, the Social Security Administration has yet to diversify; it only buys treasuries. Worse, most of my Social Security taxes aren't invested at all; they're used to pay current retirees (and, to a much smaller extent, pay the disabled, widows, etc.). Thus, even if the SSA is never abolished/privatized, a huge improvement would be to slowly diversify its $2.6T accumulated surplus (the "Trust Fund"). Hey, inflation is below-target, right? The Fed could start buying the SSA's treasuries, and the SSA could start buying equities. Another huge improvement would be to transition away from pay-as-you-go, but that transition would be a huge one-time cost---probably in the form of payroll tax increases. For the moment, monetizing the Trust Fund looks like an easier sell.