The Madoff lesson

Posted by Marc Hodak on June 29, 2009 under Scandal | Read the First Comment

Nathan Hale, a hero of the American Revolution, condemned by the British to hang as a spy in 1776, famously said that he regretted that he had “but one life to give for my country.”

Madoff’s victims, many of whom have been condemned to a life of unexpected financial struggle, probably regret that the old devil had no more than one life to give for his crimes based on his 150 year sentence.

Is there a lesson from the Madoff debacle?  I don’t know.  His crime was a catastrophe for everyone who trusted him, and on a larger scale than anything before perpetrated by a private individual.  Several ethical codes suggest a moral:

– Common sense:  Don’t put all your eggs in one basket

– Western religion:  If you do put all your eggs in one basket, make certain you know what that basket is made of

– Eastern religion:  Better not to have many eggs;  all baskets eventually fail

I don’t know if any of these are particularly helpful, but two morals–the ones most often cited in the press–are quite unhelpful:

– Fundamentalist:  Greed is evil, and must be brought under control

– Political:  The government needs more money and more power to prevent these things

The fundamentalist hypocrisy is that only certain other people are greedy.  It appeals to the vanity that you or I would never succumb to the sin of wanting more than we have, much more if given the opportunity.  In fact, greed was on both sides of the Madoff equation.  The victims experienced a certain feeling every time they opened one of the fake statements telling them how much they “made.”  That feeling was indistinguishable from greed, and it was indispensable to perpetuating the Madoff scheme.  Nevertheless, I would never say that the victims deserved what happened to them.

Madoff’s real sin was, in fact, theft.  Among the multitudes infected by the sin of greed, I believe that most of us are morally equipped to avoid perpetrating theft.

The government’s prescription, of course, is a joke.  Madoff was registered with the SEC.  They were furnished specific concerns about his legitimacy.  The clean bill of health given by the regulators simply helped Madoff reel in more victims.