22 Comments
Nov 18, 2022Liked by John Ganz

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.

Expand full comment
Nov 19, 2022Liked by John Ganz

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.

Expand full comment
Nov 18, 2022Liked by John Ganz

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

Expand full comment
Nov 21, 2022Liked by John Ganz

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.

Expand full comment
Nov 18, 2022Liked by John Ganz

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.

Expand full comment

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.

Expand full comment

Did you just get banned by Twitter? When I try to see what you recently tweeted, I get an "account no longer exists" message

Expand full comment

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.

Expand full comment