The Silicon Valley startup as Ponzi scheme

Scientific American’s June issue included an article talking about Ponzi schemes, and how our economy is rife with them. One example they gave was the Silicon Valley startup: A simplified example illustrates how this process works—and how it can take on the attributes of a Ponzi. A start-up offers workers a low wage, less, in fact, than the dollar value of what a worker produces. Hence, with each worker, the firm generates some profit.