Grifters and Value Destruction
Con artists will often lean into emotional engagement and conspiracy theories in order to stop their victims from realising the massive destruction of value that is at stake
Sam Bankman-Fried with Bloods gang member 'G-Lock' (left) - This image is a work of a United States Department of Justice employee, taken or made as part of that person's official duties. As a work of the U.S. federal government, the image is in the public domain (17 U.S.C. § 101 and 105).
Value creation (or betterment) has been a running theme through recent essays on Sharpen Your Axe. Perhaps unexpectedly, the concept can also help us pull together several of the other ideas that this blog has explored, even if the connection isn’t necessarily obvious at a first glance.
Grifters - the term links together swindlers, scammers and charlatans - tend to actively destroy value. However, almost without fail, grifters borrow the clothes of those who genuinely create value for others.
For example, the promoters of bleach-drinking cults will always tell you that it is a health panacea rather than discussing the very real risk of death; crypto con artists like Sam Bankman-Fried will tell you that you are going to get hideously rich, rather than warning you that they want to steal your money; and populist politicians like Carles Puigdemont will tell you that their coup attempts are democratic in the true sense of the word, rather than ways of entrenching themselves in power while impoverishing the population by scaring away investors.
On the face of it, all these arguments are rather silly. How are bleach promoters, Bankman-Fried and Puigdemont able to get away with them? There are two main steps in the sale. The first is to appeal directly to the emotions of their victims. Maybe you are worried about your health as you get older, the lack of funds in your bank account or the status of your preferred language in a multilingual society? If so, it gives grifters an entry point. Our branch of the great apes family is notorious for rationalising our emotions, so the tactic works.
Of course, any of the narratives can easily be debunked. As a result, grifters will often disdain the views of experts, as we saw most notoriously in the runup to the Brexit referendum in the UK. Once grifters have hooked your emotions, conspiracy theories are often an important part of their narrative. The negative side (“the media/experts/doctors are all wrong”) is more important than the positive side, which is largely based on narratives spun out of intentionality bias.
If you want to sell bleach to suckers, anti-vaxxers will be your best target audience - they already discount messages from real doctors and researchers, as well as the medical establishment. Many crypto bros spin unlikely tales about how conventional currencies are about to collapse. Bankman-Fried might have fallen short of this, but his brags about having never read a book looks particularly terrible after his net wealth plummeted by $16bn almost overnight. He now faces 25 years in prison (see the picture above) and has to pay back $11bn, which is basically impossible. Meanwhile, Puigdemont and his co-conspirators try hard to sell the unlikely idea that Spain’s democratic constitution, which makes it very hard for regions like Catalonia to break away, is in some essential way fascistic.
If a grifter has hooked your emotions and managed to convince you that the experts are wrong, what will come next? The next step will almost certainly be what we have called a hedgehog-like argument, which takes one idea to its logical conclusion and ignores all contradictory evidence. Bleach promoters will tell you that everything natural is good (the detergent will be wrongly sold as natural minerals); crypto grifters will tell you that people who invest in digital assets will all become very rich; and nationalists like Puigdemont will tell you old-fashioned yarns about “nations” needing states in order to thrive.
One final element is worth repeating: grifters are rarely fully sane. They often believe (or half-believe) the tales they spin with utter certainty. This makes them more convincing to us - we are suckers for narcissists who offer us certainty in an uncertain world. We often form communities around them, which are then prone to groupthink. You can bet on extreme cognitive dissonance (an uncomfortable feeling we all experience when we think our identity is under threat) whenever members of these groups are faced with pushback from critics.
Despite the clever intuitive psychology of grifters, cons will always tend to destroy value, as mentioned at the beginning of this essay. If you drink bleach, you might die or suffer serious health setbacks. If you invest in crypto scams, you might lose your savings. And if you let populist politicians break liberal democracy, you might find yourself impoverished when investors vote with their feet . Caveat emptor!
The comments are closed, as always when we discuss the multiple failures of the Catalan independence movement. If you subscribe, though, you can hit reply to the email. I might not get to it immediately, but I will reply when I get a chance. Please note that next week’s essay will be on Sunday instead of Saturday. See you next week!
Previously on Sharpen Your Axe
Value creation (part one, part two and part three)
Bleach-drinking cults, crypto and coups
Investors (part one and part two)
Rationalising our emotions (part one and part two)
Crypto bros and the collapse of fiat currency
Utter certainty and narcissists
Groupthink and cognitive dissonance
Further Reading
The Confidence Game: Why We Fall for It… Every Time by Maria Konnikova
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