I saw it getting some play on Twitter, but I think Melvile''s The Confidence Man really gets at something in the nature of scams, which is that the most effective ones ask a person to choose between his money and his optimism, that the cost of non-participation is the belief that one is living in a world of "knaves" that's ultimately not really bearable. For those of us on the sidelines, that's easy enough to countenance, but for people in the mix, players, that's just not a viable worldview, good faith has to be assumed.
This seems like a good place to shout out a similar novel, Gottfried Keller's Martin Salander--a pretty mediocre outing from an otherwise world-class writer whose best stuff is on a par with Melville--that tracks the generational curdling in Switzerland from passionate liberalism in the mid-19th century to corrupt and rapacious finance state in the 1870s. One thing Keller really nails, I think, it's that ardent liberals, like the protagonist, with their belief in progress and innovation, and how things should be, are especially vulnerable to scams for that very reason, because of that disposition that wants to go upwards, that wants more, better. That, to me, captures the specific grift of people like Musk, Holmes, and SBF and that to me is a substantive counterpoint to observation that the conservative movement is full of scammers because the movement is itself a scam.
an eloquent 'both-sides'ing' of financial grift and an axe grind claiming liberals are especially vulnerable, or rather far more predisposed to 'the specific grift' due to their liberalness. People are vulnerable to 'sure things' based on their material situation and interests (and beliefs) but connecting a hard causality to a general ideological approach vis a vis scams, is what you accused those claiming conservatism of the same. Wouldn't a more compelling argument be investigating why and how groups assume risk (or ignore it) when picking winners & losers in an emerging capital order? Even when risks entail self-destruction? We're all subject to Capital, whether we like it or not, but my bleeding heart did not cause me to ignore my inherent disgust of Musk, Holmes & SBF. Hell, maybe I'm a conservative. lol btw- bringing in Melville was excellent.
Hey man, I think you misunderstood me, I assure you we're on the same side here. There's obviously no causality between political disposition and susceptibility to scams. Scams are omnipresent at every level of society and across the political spectrum, which only makes sense: pitches are tailored to marks. (For what it's worth, conservatisms's roots in out-and-out scamming are also pretty well established by Rick Perlstein.)
Melville just came to mind in this case because that novel draws a connection, under the rubric of "confidence," between the scam and all different kinds of optimism, economic, political, personal, natural, cosmological, religious etc. In doing so, that book also really nails how painful and solitary it can feel, in a nation clamoring for progress, to be a hater, rooting for it all to fail--one of the Confidence-Man's guises is as a cosmopolitan abolitionist, and the only character who challenges him is a misanthrope backwoods man. I just meant to say that Musk, SBF, and Elizabeth Holmes (all of whom I, too, have found always repellent) are a particular kind of scammer very much of a piece with what Melville and Keller depict in their respective books, since what distinguishes them from, say, the Chinese robocalls I'm getting as I type this is that, in addition to their fraudulent products, they're pitching optimism itself to a nation built on it., politically and economically. I agree, for what it's worth, that analyzing how risk is taken on and assessed would be a much more substantive and concrete analysis.
What you say about risk is really well-taken here, of course. Some scams require taking a risk, other scams claim to be minimizing it, offering security in an insecure world--just look at all the ads for gold on Fox News. (Er, I'm just assuming that's a scam.)
I want to invoke Fukuyama's End of History description of the sheer boredom of the ascendant liberal order but that's something I hope Ganz would explore. Risk and destruction are preferred (or ignored) because existence in a (neo)liberal order (subject to one's class) is much worse even though market fundamentalism is simultaneously received as the only alternative. Perhaps a stretch or a contrast to the idea that susceptibility to scams is mainly the result of its logic pre-baked into everyday myths.
Ah, I see what you're getting at here. That's a really good point, since in lots of careers--academia, for instance--income is pegged to stage of life. The allure of some scams is that the rewards they offer can short circuit the cycle of work and reward, kind of like letting you skip a level in a video game, which is attractive precisely because it invites you to imagine what you would do with the freedom that money affords without the loss of time and the self-subjection to a social order required to get it.
Not an opinion I expect anyone to share, but definitely my favorite of the Melville novels. Has his densent, most alive poetry, and tackles the one question I find myself thinking about most often: how much should you hate the world?
The most remarkable thing about every large-scale scam I’ve ever read about is they’re barely one step removed from the sophistication of all those Nigerian princes. Madoff promised 500% better returns than his competitors. Holmes promised viable results on hundreds of tests from one drop of blood that was technically impossible and she refused to show anybody how the technology was supposed to work (proprietary!) Bankman-Fried was a twenty-something with no business experience, his company didn’t even have an accounting dept., kept no internal records on company transactions and he decided everything. Even as a near idiot, I’m hanging up the phone before my coffee gets cold. Apart from religion, nothing seems more vulnerable to Elmer Gantry-ization than venture capitalism.
Scams and frauds, particularly ones involving payouts to ministers and decision-makers have been part of capitalism since the South Sea Bubble and John Law's Mississippi Company of the early 18th, if not before. A speaker at one of the London HM conferences in either 2008 or 9, when we were discussing the 2008 subprime crisis and fallout, made a very astute point (wish I could remember who they were). That these things go in cycles. That the financial innovation, when it first comes out, sparks a bubble that ends in scandal (e.g. junk bonds and Michael Milken), but then after recovery, the innovations becomes incorporated into just another instrument (as junk bonds have been, and to a certain extent, now also structured products like CDOs & CLOs, etc). Not saying that crypto will necessarily eventually follow into this cycle (its premise/USP seems to contain an "anti-capitalism of fools" element, like digital goldbuggery, that's a bit different from junk bonds or CDOs), but its an interesting longer term pattern
Milken is an interesting case, and maybe not a great example for your claim, which seems generally correct. In Milken's case (if memory serves) he went to jail for stock parking as a favor for Boesky -- in other words for a boring crime involving boring old equities, not for anything involving junk bonds, and not even for anything directly involving deals he financed with junk bonds.
You're right, of course. But perhaps more in the way that Al Capone got busted for tax evasion, if you see what I mean. The SEC were gunning for Milken for years before Boesky finally ratted him out for something they could take him down with. And they were after him for the "highly confident letter" LBO malarkey and Drexel's reign of terror. Amusingly, in my research on the 2008 crash, I discovered that a number of the refugees from Drexel (after the SEC & NY Fed had finally broken it up) ended up in AIG Financial Products in London - the 40-odd people unit that bankrupted not only the giant AIG, but threatened to bring down the global banking system in its entirety (AIG FP had cornered the market on selling CDS to zero-rate banks balance sheet liabilities, if they went down, every major bank was insolvent, hence why Uncle Sam had to bail out AIG). So the self-described "big swinging dicks" of Drexel managed to screw the pooch more than once.
That's wild about the Drexel alums -- one wonders what Milken's own involvement in the subprime market would have been, had he not received a lifelong ban from the SEC! More broadly the general "we are the only genuinely smart people around here, so we can do as we please" attitude surely jointly characterizes the main characters of the junk bond, derivatives, and crypto phases.
But it's worth noting that the SEC's -- and, more importantly, Giuliani's -- quest against Drexel came before and arguably precipitated, rather than coming after and cleaning up, the associated market crash. It seems plain that a big part of what motivated that quest wasn't so much criminality around Drexel (though there was that) as it was the unwanted competition from what was essentially not a Wall Street but an LA shop -- the "reign of terror" consisting mostly in drawing off capital that established firms considered themselves entitled to. Consider, for instance, how much harsher the sentence against Milken was than anything Boesky (a much more straightforwardly criminal character) got. All of this makes the Capone analogy a little superficial, to my mind -- aside from the perhaps most salient fact that, in the end, Milken's core business was trading and financing through high-yield bonds, which is not and was not per se criminal (nor indeed is relying on one's market-making reputation to issue a "highly confident" letter, even if it makes the other bankers envious).
I'm surprised you think the distinction between fraud and stupidity is so difficult in this case. The company was incorporated in the Bahamas because it wasn't legal to operate that way on US soil! Literally the first step in establishing the business was to find a way around the law. Now it may be normal business for many of the financial and legal elite to occasionally fly to the Bahamas and similar jurisdictions to sign documents for other shady operations, but that doesn't make the move any less clearly illicit.
I think Sam Bankman-Fried must have had sincere ethical commitments to utilitarianism at some point. He was raised by utilitarian philosophers, and was involved in effective altruism for years before he got rich. It's unclear if he admitted that the whole thing was just an outright scam from the start.
The more likely read of that interview IMO is that he just admitted to privately being a pure utilitarian, no restrictions on what you can do for the greater good, despite saying otherwise in public. I think he probably was sincerely committed to effective altruism, was not a good person and deluded himself into thinking that spending money on self-aggrandizement was effectively altruistic, and was willing to commit fraud if he thought it was worth it.
However, it's probably a waste of effort to psychoanalyze the guy too much. There's some insight in "privatio boni" -- when you really look at a crime like this, there's ultimately nothing to it, no way it makes any sense.
We’re firmly in the decadent phase of late capitalism. The capture of one of the US’s two major political parties by a fascist/fashish movement and style of politics is, in its own deeply cursed way, itself an indicator of where we find ourselves.
Just remember, though: as flawed, incomplete, and failure-ridden as liberalism is, we’re gonna miss it when it’s gone---unless there is still a way for us to pull back from the brink and renew both our foundational commitments to liberal and democratic values, as well as improving our world via social transformation and the broadening of the scope of equality and human dignity. Perhaps there is a way, but we must fight for it. Human freedom and human rights aren’t self-executing.
This reminds me of something I read in, I think Esquire, some years back. There was a hardscrabble guy in Kentucky, who spend his adult life in scam after scam,getting in trouble with the law from time to time. Then he won some $200 million in the state lottery. He went through a year of spending willy-nilly on all the friends and relatives who came out of the woodwork when they'd heard he won. After a year of that, he kicked them all to the curb, aside from close family, moved to a gated community in Florida, and became a skillful legit investor. the writer of the story took a close look at at a few of the guy's old scams, and decided that they mostly were legit business ideas that the guy, prior to winning the lottery, didn't have the resources to carry out properly, and hence any money he talked anyone into giving him would be lost.
I saw it getting some play on Twitter, but I think Melvile''s The Confidence Man really gets at something in the nature of scams, which is that the most effective ones ask a person to choose between his money and his optimism, that the cost of non-participation is the belief that one is living in a world of "knaves" that's ultimately not really bearable. For those of us on the sidelines, that's easy enough to countenance, but for people in the mix, players, that's just not a viable worldview, good faith has to be assumed.
This seems like a good place to shout out a similar novel, Gottfried Keller's Martin Salander--a pretty mediocre outing from an otherwise world-class writer whose best stuff is on a par with Melville--that tracks the generational curdling in Switzerland from passionate liberalism in the mid-19th century to corrupt and rapacious finance state in the 1870s. One thing Keller really nails, I think, it's that ardent liberals, like the protagonist, with their belief in progress and innovation, and how things should be, are especially vulnerable to scams for that very reason, because of that disposition that wants to go upwards, that wants more, better. That, to me, captures the specific grift of people like Musk, Holmes, and SBF and that to me is a substantive counterpoint to observation that the conservative movement is full of scammers because the movement is itself a scam.
an eloquent 'both-sides'ing' of financial grift and an axe grind claiming liberals are especially vulnerable, or rather far more predisposed to 'the specific grift' due to their liberalness. People are vulnerable to 'sure things' based on their material situation and interests (and beliefs) but connecting a hard causality to a general ideological approach vis a vis scams, is what you accused those claiming conservatism of the same. Wouldn't a more compelling argument be investigating why and how groups assume risk (or ignore it) when picking winners & losers in an emerging capital order? Even when risks entail self-destruction? We're all subject to Capital, whether we like it or not, but my bleeding heart did not cause me to ignore my inherent disgust of Musk, Holmes & SBF. Hell, maybe I'm a conservative. lol btw- bringing in Melville was excellent.
Hey man, I think you misunderstood me, I assure you we're on the same side here. There's obviously no causality between political disposition and susceptibility to scams. Scams are omnipresent at every level of society and across the political spectrum, which only makes sense: pitches are tailored to marks. (For what it's worth, conservatisms's roots in out-and-out scamming are also pretty well established by Rick Perlstein.)
Melville just came to mind in this case because that novel draws a connection, under the rubric of "confidence," between the scam and all different kinds of optimism, economic, political, personal, natural, cosmological, religious etc. In doing so, that book also really nails how painful and solitary it can feel, in a nation clamoring for progress, to be a hater, rooting for it all to fail--one of the Confidence-Man's guises is as a cosmopolitan abolitionist, and the only character who challenges him is a misanthrope backwoods man. I just meant to say that Musk, SBF, and Elizabeth Holmes (all of whom I, too, have found always repellent) are a particular kind of scammer very much of a piece with what Melville and Keller depict in their respective books, since what distinguishes them from, say, the Chinese robocalls I'm getting as I type this is that, in addition to their fraudulent products, they're pitching optimism itself to a nation built on it., politically and economically. I agree, for what it's worth, that analyzing how risk is taken on and assessed would be a much more substantive and concrete analysis.
thanks for the reply expounding on the Melville / Keller connection. Enlightening.
What you say about risk is really well-taken here, of course. Some scams require taking a risk, other scams claim to be minimizing it, offering security in an insecure world--just look at all the ads for gold on Fox News. (Er, I'm just assuming that's a scam.)
I want to invoke Fukuyama's End of History description of the sheer boredom of the ascendant liberal order but that's something I hope Ganz would explore. Risk and destruction are preferred (or ignored) because existence in a (neo)liberal order (subject to one's class) is much worse even though market fundamentalism is simultaneously received as the only alternative. Perhaps a stretch or a contrast to the idea that susceptibility to scams is mainly the result of its logic pre-baked into everyday myths.
Ah, I see what you're getting at here. That's a really good point, since in lots of careers--academia, for instance--income is pegged to stage of life. The allure of some scams is that the rewards they offer can short circuit the cycle of work and reward, kind of like letting you skip a level in a video game, which is attractive precisely because it invites you to imagine what you would do with the freedom that money affords without the loss of time and the self-subjection to a social order required to get it.
I need to revisit the confidence man!
Not an opinion I expect anyone to share, but definitely my favorite of the Melville novels. Has his densent, most alive poetry, and tackles the one question I find myself thinking about most often: how much should you hate the world?
The most remarkable thing about every large-scale scam I’ve ever read about is they’re barely one step removed from the sophistication of all those Nigerian princes. Madoff promised 500% better returns than his competitors. Holmes promised viable results on hundreds of tests from one drop of blood that was technically impossible and she refused to show anybody how the technology was supposed to work (proprietary!) Bankman-Fried was a twenty-something with no business experience, his company didn’t even have an accounting dept., kept no internal records on company transactions and he decided everything. Even as a near idiot, I’m hanging up the phone before my coffee gets cold. Apart from religion, nothing seems more vulnerable to Elmer Gantry-ization than venture capitalism.
Scams and frauds, particularly ones involving payouts to ministers and decision-makers have been part of capitalism since the South Sea Bubble and John Law's Mississippi Company of the early 18th, if not before. A speaker at one of the London HM conferences in either 2008 or 9, when we were discussing the 2008 subprime crisis and fallout, made a very astute point (wish I could remember who they were). That these things go in cycles. That the financial innovation, when it first comes out, sparks a bubble that ends in scandal (e.g. junk bonds and Michael Milken), but then after recovery, the innovations becomes incorporated into just another instrument (as junk bonds have been, and to a certain extent, now also structured products like CDOs & CLOs, etc). Not saying that crypto will necessarily eventually follow into this cycle (its premise/USP seems to contain an "anti-capitalism of fools" element, like digital goldbuggery, that's a bit different from junk bonds or CDOs), but its an interesting longer term pattern
absolutely
Milken is an interesting case, and maybe not a great example for your claim, which seems generally correct. In Milken's case (if memory serves) he went to jail for stock parking as a favor for Boesky -- in other words for a boring crime involving boring old equities, not for anything involving junk bonds, and not even for anything directly involving deals he financed with junk bonds.
You're right, of course. But perhaps more in the way that Al Capone got busted for tax evasion, if you see what I mean. The SEC were gunning for Milken for years before Boesky finally ratted him out for something they could take him down with. And they were after him for the "highly confident letter" LBO malarkey and Drexel's reign of terror. Amusingly, in my research on the 2008 crash, I discovered that a number of the refugees from Drexel (after the SEC & NY Fed had finally broken it up) ended up in AIG Financial Products in London - the 40-odd people unit that bankrupted not only the giant AIG, but threatened to bring down the global banking system in its entirety (AIG FP had cornered the market on selling CDS to zero-rate banks balance sheet liabilities, if they went down, every major bank was insolvent, hence why Uncle Sam had to bail out AIG). So the self-described "big swinging dicks" of Drexel managed to screw the pooch more than once.
That's wild about the Drexel alums -- one wonders what Milken's own involvement in the subprime market would have been, had he not received a lifelong ban from the SEC! More broadly the general "we are the only genuinely smart people around here, so we can do as we please" attitude surely jointly characterizes the main characters of the junk bond, derivatives, and crypto phases.
But it's worth noting that the SEC's -- and, more importantly, Giuliani's -- quest against Drexel came before and arguably precipitated, rather than coming after and cleaning up, the associated market crash. It seems plain that a big part of what motivated that quest wasn't so much criminality around Drexel (though there was that) as it was the unwanted competition from what was essentially not a Wall Street but an LA shop -- the "reign of terror" consisting mostly in drawing off capital that established firms considered themselves entitled to. Consider, for instance, how much harsher the sentence against Milken was than anything Boesky (a much more straightforwardly criminal character) got. All of this makes the Capone analogy a little superficial, to my mind -- aside from the perhaps most salient fact that, in the end, Milken's core business was trading and financing through high-yield bonds, which is not and was not per se criminal (nor indeed is relying on one's market-making reputation to issue a "highly confident" letter, even if it makes the other bankers envious).
I'm surprised you think the distinction between fraud and stupidity is so difficult in this case. The company was incorporated in the Bahamas because it wasn't legal to operate that way on US soil! Literally the first step in establishing the business was to find a way around the law. Now it may be normal business for many of the financial and legal elite to occasionally fly to the Bahamas and similar jurisdictions to sign documents for other shady operations, but that doesn't make the move any less clearly illicit.
I think Sam Bankman-Fried must have had sincere ethical commitments to utilitarianism at some point. He was raised by utilitarian philosophers, and was involved in effective altruism for years before he got rich. It's unclear if he admitted that the whole thing was just an outright scam from the start.
The more likely read of that interview IMO is that he just admitted to privately being a pure utilitarian, no restrictions on what you can do for the greater good, despite saying otherwise in public. I think he probably was sincerely committed to effective altruism, was not a good person and deluded himself into thinking that spending money on self-aggrandizement was effectively altruistic, and was willing to commit fraud if he thought it was worth it.
However, it's probably a waste of effort to psychoanalyze the guy too much. There's some insight in "privatio boni" -- when you really look at a crime like this, there's ultimately nothing to it, no way it makes any sense.
We’re firmly in the decadent phase of late capitalism. The capture of one of the US’s two major political parties by a fascist/fashish movement and style of politics is, in its own deeply cursed way, itself an indicator of where we find ourselves.
Just remember, though: as flawed, incomplete, and failure-ridden as liberalism is, we’re gonna miss it when it’s gone---unless there is still a way for us to pull back from the brink and renew both our foundational commitments to liberal and democratic values, as well as improving our world via social transformation and the broadening of the scope of equality and human dignity. Perhaps there is a way, but we must fight for it. Human freedom and human rights aren’t self-executing.
Did you just get banned by Twitter? When I try to see what you recently tweeted, I get an "account no longer exists" message
This reminds me of something I read in, I think Esquire, some years back. There was a hardscrabble guy in Kentucky, who spend his adult life in scam after scam,getting in trouble with the law from time to time. Then he won some $200 million in the state lottery. He went through a year of spending willy-nilly on all the friends and relatives who came out of the woodwork when they'd heard he won. After a year of that, he kicked them all to the curb, aside from close family, moved to a gated community in Florida, and became a skillful legit investor. the writer of the story took a close look at at a few of the guy's old scams, and decided that they mostly were legit business ideas that the guy, prior to winning the lottery, didn't have the resources to carry out properly, and hence any money he talked anyone into giving him would be lost.