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Friday, October 24, 2008

Kangaroo Court Fnord

I've seen a lot of headlines in the news lately. "The State is pursuing criminal charges against former executives at AIG/Lehman Brothers/FRE/FNM."

The CEOs have a valid complaint. The charges against them are merely a kangaroo court. A lot of money was lost in a high profile fashion. Someone must be blamed. Those CEOs didn't do anything more dishonest than any other CEOs. They merely were following "generally accepted practices". They had the bad luck of being unable to find a chair when the music stopped playing. (Of course, certain insiders control when the bust occurs.)

If you subpoena all the E-Mails of almost any corporate executive, then it is practically guaranteed that some criminal behavior will be discovered. There are so many laws that practically everyone is guilty of a crime! Corporations are so heavily regulated that it's doubtful that any CEO has strictly followed all the laws. For a high-profile bankruptcy, all it takes is an E-Mail from a subordinate saying "We may have a problem!" and then the CEO is guilty of a coverup. (For this reason, any employee who has a tendency to point out problems is *NOT WELCOME* in most/all corporations.) Almost any CEO has an obligation to publicly say "Our profits are awesome!" no matter what the actual circumstances.

The fnord is "Certain individuals went to jail. They will be replaced with other people. Therefore, everything is all right. Move along! There's nothing to see here!"

When there is a dishonest CEO or politician, the answer is "Replace them. Send the scapegoat to jail or fire him. The corrupt system must never be blamed."

Suppose a person owns a gun and shoots people. Then, the message is "The system that allows individuals the right to buy guns is broken. We must eliminate it!" If there's a crazy armed person and everyone else is unarmed, then lots of people may be killed. If some of the victims are able to defend themselves, then they could stop the criminal before many people die. Paradoxically, an unarmed population makes it easier for a single person with a gun to kill many people.

As another example, suppose a person labeled with a mental illness does not take their medication, and then commits a crime while suffering withdrawal symptoms. The message is "All people labeled with a mental illness must be forced to take their medication!"

Whenever there is a problem due to "too much freedom", the solution is to restrict freedom, and not to blame the individual that committed the crime. Whenever there is a problem due to a corrupt system, then the individuals are blamed and never the corrupt system.

Whenever you see a high-profile criminal trial of an executive or politician, the fnord is "This person got caught. Therefore, the system is not corrupt." Blaming individuals distracts blame from the corrupt system.

The blame is almost always with the corrupt system and not with any individuals who exploit that system. If you replace one politically connected insider with another politically connected insider, then that does not solve the underlying problem. The recent financial crisis was 100% caused by a corrupt monetary system and the Compound Interest Paradox.

1 comment:

Anonymous said...

Very insightful.

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