| | For subscribers | November 8, 2023 | |
 | | Sam Bankman-Fried, who founded the FTX cryptocurrency exchange, leaving court in July.Angela Weiss/Agence France-Presse — Getty Images |
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It's tempting to cast scam artists as supervillains: they lie, cheat, and hurt innocent people while hiding in plain sight. There's something darkly compelling about watching someone discard the rules and norms that limit the rest of us, as if imperviousness to shame were a form of black magic. |
But beyond the juicy details of the wrongdoing, there's an even more interesting story, because the real skill of scammers is to sense the precise outlines of what other people yearn for. Scams are like magic mirrors for people's true desires, showing the things they cannot resist. And reading about successful ones is like getting a peek at what the mirror revealed. |
In "The Confidence Game," Maria Konnikova delves into the psychology of how scammers sense our insecurities and use them to make promises that their marks are desperate to believe. Sometimes it seems like there are no limits to that power: In one memorable anecdote from the book, a "clairvoyant" convinced a struggling divorced mother to hand over tens of thousands of dollars in cash, simply by claiming that the "exercise in letting go of wealth" would bring the professional success and loving relationships that the woman desperately desired. |
In financial frauds, the core promise is always essentially the same: profit without risk. But the details of how that promise gets packaged are telling. |
Bernie Madoff's Ponzi scheme worked on people who wanted to believe that money and status could buy safety: that if you were one of the chosen few allowed to invest with him, then your financial worries would be over, forever. |
Elizabeth Holmes offered something similar: a cargo-cult version of start-up culture for investors who did not understand technology but still wanted to share in the wealth of Silicon Valley — and to feel as brilliant as the people who had seen early promise in Apple or Google. "Bad Blood," by John Carreyrou, details how her investors were so desperate to believe in her, and, by extension, in their own good judgment, that they disregarded warnings from scientists, employees and even their own family members. |
In America, claims of meritocracy have been used to justify widening inequality in recent decades, with the consequence that being rich is often treated as a sign of intelligence and personal value, while being poor is often viewed as a personal or even moral failing. Madoff and Holmes profited by promising wealth and validation to elites who feared that not having enough of one meant they couldn't really have the other. |
Bankman-Fried, by contrast, seems to have invented himself as the fulfillment of a very different desire: success outside the bounds of powerful institutions. As Zeke Faux details in "Number Go Up," his engaging book about the rise and fall of cryptocurrency, Bankman-Fried, who was convicted last week on seven counts of fraud and conspiracy, presented himself as a boy-wonder business genius who had made billions of dollars without having to work for a boss, follow social conventions or even wear long pants. In retrospect it was a perfect pitch for cryptocurrency speculators who wanted to believe that they, too, could make a fortune without any traditional financial background or connections. |
Bankman-Fried paired that with a different persona for political and media elites, particularly on the left: that of the objectively altruistic billionaire. His public dedication to "effective altruism," a movement that calls for massive charitable giving in order to do the greatest good for the greatest number of people, implied that he was bound by apolitical standards that would supersede any partisan agenda. |
It's not hard to see the appeal: A politician, nonprofit group or media outlet taking money from a billionaire in order to pursue his priorities sounds transactional, and perhaps even corrupt. But taking money from a billionaire in order to pursue objectively correct priorities without being beholden to other political forces or market pressures suddenly seems virtuous. |
Money plus validation, it turns out, is a combination few people can resist. |
Reader responses: Books that you recommend |
The short story Them Old Cowboys Songs gave me a new insight into what love really means. A bit late in life at 63. |
The memoir is haunting, personal, upsetting and beautifully written in prose. The entire read I felt the writer was sitting next to me telling his remarkable childhood story. It's a true story about racism and white privilege, survival and the human spirit. My favorite book of the year. |
Thank you to everyone who wrote in to tell me about what you're reading. Please keep the submissions coming! |
I want to hear about your favorite things that you have read (or watched or listened to) this year. |
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