Barbados is a haven where Ponzi schemes come to die. None have ever been sustainable in their recruitment of persons from neighbouring islands. I've held this belief for well over 20 years. It is not to say that it is the only one to hold this distinction. In fact, they flourish in all manner of economies, but significantly in underprivileged communities in said economies. Barbados is rife with increasing levels of poverty at the moment, so it's obvious to me that people will take a chance on things which seem too good to be true in an effort to survive.
But Ponzi schemes continually end up in Barbados and yield the same results time and time again. Those who get in early are the ones who stand to benefit most. I also know that over the past five years, the majority of those who get in early are quite aware of and are comfortable with the devastation left in their wake. I liken this act to a form of assault—financial assault even.
Every single time one of these schemes crashes, I'm reminded of a famous scene from the film, "Butch Cassidy and the Sundance Kid". It involved both Butch and the Kid hiding on a mountainside, standing on a small cliff, with a river just below them. They were being chased by six assailants who wanted retribution for a spate of robberies committed by those two. They ironically had only two choices: 1) To flee by jumping far down into the river below, risking injury, but hopefully surviving long enough to scheme again; or 2) Gun their way out, though they were outnumbered six to two. They chose wisely with option number one.
And this is the hurtful part: time and time again these schemes fail. And those who introduce them to our shores—or are their earliest promoters and recruiters—run to the mountainside when you inevitably begin asking too many questions about when you'll receive your payout. They dive into the river, disappear for a short while, but are then back again with another "but this time it's different" scheme. However, those pyramid schemes that double as Ponzi schemes are even more diabolical. Wolves in sheep's clothing they are.
There are pyramid schemes that are not also Ponzi schemes. A pyramid scheme simply speaks to an organisational structure; loose or tight; that requires recruitment of workers or partners to promote the sale of some service or product. They may charge you a fee to become part of the organisation, but it should be clear that most of your earnings will be tied to how much of the service(s) or product(s) that you sell. You benefit more so from your recruits' sales. And even then, the Consumer Protection Act in Barbados seems to deem these as illegal.
What is definite is that Ponzi schemes are defined solely by the act of profit-making or returns on investment being financed by those persons entering in the latter stages. It means that when a Mr. Browne, for example, recruits someone for his scheme and they're continually paying in more money into the scheme over time than they make, then it means that Mr. Browne's lifestyle in the heights is being funded by their recruitment fees and not from the sale of products, services, or profits from some investment. This becomes even more likely when Mr. Browne has hundreds of recruits working directly under him. And those recruits have hundreds under them as well.
Barbados has just about a quarter of a million people in its population. Ponzi schemes can't work here in the long run because they inevitably run out of recruits and, therefore, cash flow rather quickly. So this is why that, in a perfect world, pyramid schemes make sense when they are backed by a strong product, service, or investment. Furthermore, these things must have some traction or growth potential internationally. And that growth must outpace the growth in that part of the income that is tied to recruitment. It is simply a Ponzi scheme otherwise.
Another grouse I have with those masquerading as pyramid schemes is that they never ever admit to the real downside of being involved. Typically, the onus seems to always fall on the recruit. They must work hard. They must invest hard. They must recruit hard, otherwise they are the failure. Given that these systems are flawed, then the only thing that could offer some reprieve to their existence is total disclosure of ALL downside risks (of failure).
Recruits should know exactly all of the scenarios in which their investment into the scheme can fail. Moreover, the fact that they are low on the pecking order or a late-stage entrant into the scheme should encourage the provision of the very high likelihood that the scheme will be illiquid. In other words, liquidity risks grow proportionately as more persons join a Ponzi scheme simply because there are just a finite number of people living in a jurisdiction. There is a hard limit on the number of people living on Earth for that matter. Go figure.
There are some of you that will then counter-argue with the fact that the stock market fundamentally operates this way. Aside from the fact that there should be no income generation through recruitment, you can opt for indirect exposure to a variety of stock markets around the globe through different structures. Some examples include mutual funds, insurance companies, banks, and social security schemes. But there is always someone hoping to sell an asset at a price that is far greater than its worth. Furthermore, there are financial companies that fail all the time. Investors are always encouraged by regulators and most financial entities to educate themselves about all downsides.
Financial institutions are required by law to produce investment prospectuses, which typically outline every conceivable risk that could bring about their failure or that of your particular investment. Somehow, regional social security schemes never seem to make this easily available nor trustworthy. It's still the investor's responsibility to stay vigilant, however, so the onus comes with a platform to learn from. The admission of every risk has to be in plain sight.
In grand essence, it matters not if a pyramid scheme incorporates a new, say, payment for watching or clicking on content through some social media platform through a share in the revenue generated by the content owner. Other roadblocks to sustainability would include the revenue being generated by content on the internet falls drastically every year. Moreover, content creation revenue on these platforms hardly exists in the Eastern Caribbean.
So a content creator elsewhere on YouTube is paid a maximum of just US$5,000 for 1 million views at the present moment, all supported by advertising revenue there. It is typically worse on other audiovisual platforms. Imagine having to share that small amount across a growing number of recruits in the face of that value falling year by year. It cannot sustain without recruitment revenue. I could say more, but this risk would have to be upfront in all promotional material. Most persons wouldn't bet on this long term.