(Roughly) Daily

Posts Tagged ‘ponzi scheme

“The violence of positivity does not deprive, it saturates; it does not exclude, it exhausts”*…

Scheduling note: your correspondent is hitting the road again, so regular service will be interrupted; it should resume on Friday the 7th…

Author and psychoanalyst Josh Cohen on Byung-Chul Han’s critiques of digital capitalism…

I came across Byung-Chul Han towards the end of the previous decade, while writing a book about the pleasures and discontents of inactivity. My first researches into our culture of overwork and perpetual stimulation soon turned up Han’s The Burnout Society, first published in German in 2010. Han’s descriptions of neoliberalism’s culture of exhaustion hit me with that rare but unmistakable alloy of gratitude and resentment aroused when someone else’s thinking gives precise and fully formed expression to one’s own fumbling intuitions.

At the heart of Han’s conception of a burnout society (Müdigkeitsgesellschaft) is a new paradigm of domination. The industrial society’s worker internalises the imperative to work harder in the form of superego guilt. Sigmund Freud’s superego, a hostile overseer persecuting us from within, comes into being when the infantile psyche internalises the forbidding parent. In other words, the superego has its origin in figures external to us, so that, when it tells us what to do, it is as though we are hearing an order from someone else. The achievement society of our time, Han argues, runs not on superego guilt but ego-ideal positivity – not from a ‘you must’ but a ‘you can’. The ego-ideal is that image of our own perfection once reflected to our infantile selves by our parents’ adoring gaze. It lives in us not as a persecutory other but as a kind of higher version of oneself, a voice of relentless encouragement to do and be more.

With this triumph of positivity, the roughness of the demanding boss gives way to the smoothness (a key Han term) of the relentlessly encouraging coach. On this view, depression is the definitive malaise of the achievement society: the effect of being always made to feel that we’re running hopelessly behind our own ego-ideal, exhausting ourselves in the process.

The figure of the achievement subject gives rise to some of Han’s most vivid evocations of psychic and bodily debilitation:

The exhausted, depressive achievement-subject grinds itself down … It is tired, exhausted by itself, and at war with itself. Entirely incapable of stepping outward, of standing outside itself, of relying on the Other, on the world, it locks its jaws on itself; paradoxically, this leads the self to hollow and empty out. It wears out in a rat race it runs against itself

… Han’s critique of contemporary life centres on its fetish of transparency; the compulsion to self-exposure driven by social media and fleeting celebrity culture; the reduction of selfhood to a series of positive data-points; and the accompanying hostility to the opacity and strangeness of the human being…

… Under the rule of digital capitalism, time itself is severed from any ‘narrative or teleological tension’, that is, from any discernible purpose or meaning, and so, like the digital paintings in an immersive show, it ‘disintegrates into points which whizz around without any sense of direction.’ In such a regime of time, there is no possibility of Erfahrung, which depends on a sense of narrative continuum and duration. There is only the proliferation of its pale counterpart Erlebnis: the discrete event that ‘amuses rather than transforms’, as Han would later put it in The Palliative Society

… Because power so often involves coercion, Han argues, there has been a tendency to see them as inextricable. But it is only when power is poor in mediation, felt as alien to our own lives and interests, that it resorts to threatened or actual violence. Whereas when power is at the ‘highest point of mediation’ – when it seems to speak from a recognition of its subjects’ needs and desires – it is more likely to receive those subjects’ willing consent. One could conceive of a power, therefore, that has no sanctions at its disposal, but which is nonetheless rendered absolute by its subjects’ full identification with it.

The less it relies on the threat of punitive measures to back it up, the more power maximises itself. ‘An absolute power,’ writes Han, ‘would be one that never became apparent, never pointed to itself, one that rather blended completely into what goes without saying.’ This is precisely what happens in digital capitalism’s burnout society, where the power of capital consists not in its power to oppress but in the voluntary surrender of its subjects to their own exploitation.

Han draws on the German-American theologian Paul Tillich’s conception of power as ipsocentric, that is, as Han puts it, centred around ‘a self whose intentionality consists of willing-itself’, cultivating and bolstering its own status. God is the ultimate embodiment of power because, in the words of G W F Hegel, ‘he is the power to be Himself’. This will to persist in one’s own existence, to cling to one’s own selfhood, is the basic premise of the Western mode of being. We can discern it at work in the empty narcissism of social media and the culture of self-display in which we’re all enjoined to participate. Self-exploitation is, in a sense, a twisted variant on the Cartesian cogito: I am seen therefore I am. In making myself perpetually visible, I may empty myself out, lose the last vestiges of my interiority. But, in cleaving to the bare bones of a self-image, some form of my existence survives.

The fundamental basis of this erosion of meaningful experience, argues Han, is felt at the level of temporality. The accelerated time of digital capitalism effectively abolishes the practice of ‘contemplative lingering’. Life is felt not as a temporal continuum but as a discontinuous pile-up of sensations crowding in on each other. One of the more egregious consequences of this new temporal regime is the atomisation of social relations, as other people are reduced to interchangeable specks in the same sensory pile-up. Trust between people, grounded in both the assumption of mutual continuity and reliability, and in a sense of knowing the other as singular and distinct, is inexorably corroded: ‘Social practices such as promising, fidelity or commitment, which are temporal practices in the sense that they commit to a future and thus limit the horizon of the future, thus founding duration, are losing all their importance.’…

Consumer culture, with its compulsion for novelty and perpetual stimulation, likewise erodes the bonds of shared experience that engender meaningful narratives. The fire around which human beings would once have gathered to hear stories has been displaced by the digital screen, ‘which separates people as individual consumers.’ Time, love, art, work, narrative; these are the key zones of experience hollowed out by the disintegrative logic of digital capitalism. Each is a rich store of transformative encounter, or Ehrfahrung, which the ‘non-time’ of the present has reduced to empty instances of Erlebnis

How the “suffocating system” of digital capital creates hollowed-out lives: “The winter of civilization,” the thought of @byungchulhan.bsky.social in @aeon.co. Eminently worth reading in full.

* Byung-Chul Han, The Burnout Society

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As we analyze ambition, we might send careful birthday greeting to Charles Ponzi; he was born on this date in 1882. A con artist, he swindled his way across Canada and the U.S. in the early 1920s, promising clients a 50% profit within 45 days or 100% profit within 90 days, by buying discounted postal reply coupons in other countries and redeeming them at face value in the U.S. as a form of arbitrage.  In reality, Ponzi was paying earlier investors using the investments of later investors. While this type of fraudulent investment scheme wasn’t invented by Ponzi, it became so identified with him that it now is referred to as a “Ponzi scheme“. The scam for which he’s known ran for over a year before it collapsed, costing his “investors” $20 million (over $300 million at current value).

Ponzi schemes have grown since Ponzi’s time (Bernie Madoff‘s version is estimated to have totalled around $65 billion) and are alive and well in the U.S.

Ponzi c. 1920 (source)

“We cannot reason ourselves out of our basic irrationality. All we can do is to learn the art of being irrational in a reasonable way.”*…

Classical economists posit that investment decisions are driven by rationality — a clear-eyed evaluation of risks and rewards… but then, meme stocks.

Kwabena Donkor, an assistant professor of marketing at Stanford Graduate School of Business has just unveiled some new research that suggests that identity distorts our financial choices, leading us to overvalue investments that reinforce our sense of self…

People don’t just invest with their wallets — they invest with their identity,” says Donkor, a faculty fellow at the Stanford Institute for Economic Policy Research.

In a novel field study involving soccer fans, Donkor and several colleagues uncover evidence of how identity can skew economic thinking. The researchers ran a series of experiments focused on fans who placed nearly 40,000 bets on English Premier League matches during the 2021-22 season. Participants — nearly 800 from Kenya and 1,600 from the United Kingdom — were given a budget and asked to place bets on upcoming matches. They received winnings based on the outcomes of randomly selected games.

Most of the participants were longtime supporters of a particular team. (Manchester United was their top favorite.) They were more optimistic about their favorite teams, betting 20% more on them. They rated their teams as having a 10% to 18% higher chance of victory than other teams, even when presented with forecasts from professional oddsmakers suggesting otherwise. These results persisted even after accounting for factors such as personal beliefs and appetite for risk.

The study also finds that participants placed a lower value on gains not aligned with their identity — what the researchers referred to as an “identity tax.” Fans effectively devalued these neutral bets by 17% to 27%. For poorly performing teams, this “tax” could soar as high as 47%, reflecting a strong emotional impulse to support their favorite team even when the odds were against it

The research, detailed in a paper cowritten with Lorenz Goette of the National University of Singapore, Maximilian Müller of the Toulouse School of Economics, Eugen Dimant of the University of Pennsylvania, and Michael Kurschilgen of UniDistance Suisse, shows that identity-driven preferences explain much of the gap in bettors’ behavior. Simulations showed that distorted beliefs due to identity account for as much as 44% of the difference in fans’ betting behavior. The remainder stemmed from preferences rooted in identity itself — people were willing to sacrifice potential gains to support options that aligned with who they are…

… The study’s findings have far-reaching implications for understanding economic behavior, particularly in areas like consumer finance, brand loyalty, and even political decision-making…

… the research hints at how consumers view different products. Items that align with a person’s identity are likely to be seen as complements rather than substitutes. For example, Donkor says a consumer who identifies strongly with sustainability might view eco-friendly products as essential enhancements to their lifestyle, even if they’re similar to comparable, less expensive goods.

Ultimately, these findings could improve our thinking about the biases that influence our financial lives. As the researchers point out, acknowledging the role of identity in decision-making is one key to designing better policies, creating more effective financial products, and ultimately improving individual welfare. “If we ignore identity,” Donkor concludes, “we miss the bigger picture in decision-making.”…

Understanding the choices that we, and those around us, make: “What Soccer Fans Can Teach Us About Making Irrational Decisions,” from @SIEPR.

* Aldous Huxley

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As we ponder the price (and as a reminder that there are other kinds of irrational decisions and that sometimes returns do matter to investors), we might recall that it was on this date in 2008 that Bernard “Bernie” Madoff was arrested and charged with defrauding investment clients of as much as $65 billion. A pioneer in electronic trading and chairman of the Nasdaq stock exchange in the early 1990s, he had turned to money management. By 2008, Madoff was running a huge and growing fund that promised its investors high and stable returns… the problem: it was a Ponzi scheme, the largest known Ponzi scheme in history.

A 2008 mug shot (source)

“Those in power must spend a lot of their time laughing at us”*…

 

LittleSis— the opposite of Big Brother–is a free database of who-knows-who at the heights of business and government.

It’s a kind of “involuntary Facebook of the 1%”…

We’re a grassroots watchdog network connecting the dots between the world’s most powerful people and organizations…  We bring transparency to influential social networks by tracking the key relationships of politicians, business leaders, lobbyists, financiers, and their affiliated institutions. We help answer questions such as:

  • Who do the wealthiest Americans donate their money to?
  • Where did White House officials work before they were appointed?
  • Which lobbyists are married to politicians? Who do they lobby for?

All of this information is public, but scattered. We bring it together in one place. Our data derives from government filings, news articles, and other reputable sources. Some data sets are updated automatically; the rest is filled in by our user community.

The database is large; at this writing:

And as the explanation above suggests, it’s growing.

Readers might do well to browse.  If, as a recent Princeton study suggests, the U.S. is no longer a democracy, but an oligarchy, it’d be wise to meet the new bosses.

* Alice Walker

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As we contemplate cronyism, we might recall that it was on this date in 1884 that the brokerage firm of Grant & Ward, in which former President Ulysses S. Grant was a partner, failed under the weight of $16,725,466 worth of debts.  The firm, founded in 1881, had done well at first, bolstered by the salesmanship of Ferdinand Ward– “The Young Napoleon of Finance”– and by Grant’s name.  The former president bragged to friends that he was worth two and a half million dollars, and family members and friends poured money into the firm.  But Grant was largely disengaged from the company’s business (he later argued in his autobiography), often signing papers without reading them.  In the event, it turned out that Ward was running a Ponzi scheme (before Ponzi had given the technique its name).  Ward was eventually convicted of fraud and served six years at Sing Sing.  Grant was financially ruined, but was bailed out by William Henry Vanderbilt, who paid off Grant’s debts, and by Mark Twain, whose generous offer for Grant’s autobiography financed the ex-President’s final years.

Frederick Opper’s treatment of “Young Napoleon” Ward, published during Ward’s trial

 source

 

Written by (Roughly) Daily

May 6, 2014 at 1:01 am