Corners of the Internet #1

Matt Levine on Elizabeth Holmes, Ed West on irrational beliefs, Cory Clark on feigning victimhood, Robert Tracinski on achievement, Dominic Cummings on personnel, Kling on competition

A friend and early blog reader once told me I seemed to know all the interesting corners of the internet. In the spirit of that compliment, I thought I would experiment with a new episodic format for sharing what I find in these corners.

---

Holmes found guilty. . . for wire fraud?

Why was the founder of Theranos convicted of wire fraud against shareholders and not for giving fake diagnoses to customers using pretend blood-testing technology?

Matt Levine explains,

This is a story I often tell: When a company harms some class of people in some bad but essentially non-monetary way, it is hard to quantify the damages as money; when a company harms its shareholders, you can just see how much the stock went down. (Theranos was never public but, uh, the stock went to zero.) Ordinarily this is a story about the incentives facing plaintiffs’ lawyers: If a company has a rampant culture of sexual harassment, it is much more pleasant for plaintiffs’ lawyers to bring a securities-fraud class action (“when the sexual-harassment news came out the stock went down”) than it is for them to bring a sexual-harassment class action (“each of these 1,000 employees were victims of a pattern of sexual harassment at your company”), because the facts are neater and the plaintiffs more uniform and the damages much easier to prove and probably larger.

But this is true for prosecutors bringing wire-fraud charges too. Prosecutors do not want to bring a federal criminal case against someone who defrauded a victim out of $14.95. Even someone who defrauded 1,000 victims out of $14.95 each is tough; you have to prove the facts about each victim. Even if the fraud also involved giving those victims scary and harmful medical misdiagnoses. 

This is partly just a matter of putting big numbers in the press release, and it’s partly a matter of what’s easier to prove — remember the jury acquitted Holmes of the patient charges — but it’s also a matter of sentencing. Prosecutors want to bring big cases that get long prison sentences. There are various factors that go into a prison sentence for wire fraud, but by far the most important one is the amount of money involved. A $100 million fraud will get a long sentence. A small-money fraud on retail purchasers — even one with hundreds of victims — even one where the victims suffered not so much the out-of-pocket cost of a blood test but rather the emotional and medical problems of a bad test result — will not amount to much money and so will tend to get a shorter sentence. If the main all-purpose federal crime is wire fraud, then the law will focus on the biggest wire frauds, and the biggest wire frauds, measured by money, tend to be the ones against shareholders. (emphasis added)

As with the other citations in this series, there is much more of interest at the link.

---

Tribal Irrationality

A recurring theme on Ed West’s substack concerns how people come to hold irrational beliefs.¹ He argues that when group identity is involved, individuals can quickly (and sincerely) adopt bizarre positions:

People’s opinions tend to be tribal, and can change drastically to suit their partisan identity. New Conservative voters attracted by Brexit subsequently became more Right-wing on welfare, for instance, while Republicans, formerly pro-free trade, shifted in large numbers under the influence of tribal leader Donald Trump.

In the US there is today a huge gap in vaccine uptake between white Democrats and Republicans, but could it have gone the other way? What would have happened had the vaccine been approved in October 2020, leading to a Trump victory? Although long forgotten, the politics of Covid realigned early in 2020, and vaccine politics could have gone the other way, with leading Democrats expressing scepticism about a ‘Trump vaccine’ before the election.

White Democrats tend to be more educated, but the highly-educated are also prone to irrational beliefs – they’re just better at articulating them. In Britain scepticism towards the MMR vaccine is most concentrated among highly-educated white urban neurotics, and ethnic minorities, the two core groups within the progressive voting block. Uptake is as low as two-thirds in Hackney, and not much more in Haringey, two areas with Labour super-majorities. It’s not impossible that large numbers of white Democrats would have refused the Trump vaccine.

Tribal rivalry has threatened reasoned consideration of policy views since long before Covid. During the 1793 Yellow Fever epidemic, Jefferson’s Democratic-Republicans and Hamilton’s Federalists disagreed vehemently on both its origins and optimal remedies. But making tribal identity more salient as many prominent social movements are doing today seems likely to fan the flames of conflict further while making minds closed to reason the norm.

---

Feigning Victimhood

A Twitter follower pointed me to a piece by Cory Clark related to my recent post on elite lies.

She writes,

In general, people reward victimhood signaling. For example, one study found that participants reported greater willingness to donate to a GoFundMe page for a young woman in need of college tuition when she also mentioned her difficult upbringing, as compared to a control case in which no extra details of past suffering were provided. In many cases, such a result is morally desirable: We want people to help those who have suffered and who are in greater need. However, when it is known that people can attain benefits by projecting certain biographical information, opportunists may be incentivized to exaggerate or falsely signal their own troubles. Just as people may fake competence to attain status and benefits (e.g., by doping in sports, or using one’s smartphone during pub trivia), and fake morality to attain a good reputation (e.g., by behaving better in public contexts than in private situations), they may fake victimhood to get undeserved sympathy and compensation.

Speaking of victimhood, Robert Tracinski writes,

A few years back, sociologists Bradley Campbell and Jason Manning published an influential study in which they described three kinds of cultures, each defined by what lends people status and gives their lives meaning and value. A culture of honor is epitomized by the practice of dueling, using violence to answer a perceived insult. In a culture of dignity—think of Frederick Douglass or Martin Luther King, Jr.—one’s sense of value is primarily internal and one can patiently bear injustice without diminishing it. Campbell and Manning call our current culture one of victimhood, in which the source of status and meaning is one’s claim to oppression, suffering, and “marginalization.” Hence the obsessive ferreting out of “microaggressions,” no matter how trivial.

This describes the activist Left, but it also increasingly describes resentful American conservatives, who have adopted their own obsession with victimhood and martyrdom—an insecure fixation on the fear that somehow, somewhere the “elites” are looking down on them.

He argues that we need a culture of achievement in which work, innovation, and skill are prized and rewarded over victim status.

Dominic Cummings wants to bring this culture of achievement to government by following the principles modeled by former Singaporean Prime Minister, Lee Kuan Yew.

LKY started off assuming the natural process of politics would throw the right people up. He realised he was wrong. He switched to active recruitment. UK parties operate on the false assumption. The UK civil service is, by design and reinforced by culture and incentives, a closed caste that tries extremely hard and mostly successfully to exclude exceptional outsiders. If there is one thing that would improve No10 and the quality of UK Government more than anything, it would be a shift to active recruitment of exceptional people, quick removal of mediocrities from senior posts, and making senior positions ‘open by default’ — i.e open to applicants from outside the civil service.

It won’t be easy.

---

A world without competition?

Arnold Kling comments on my Hell post,

Given this view of human nature, there is no getting rid of competition altogether. If you were to get rid of competition in one realm, competition would emerge in another realm.

If you think that competition for wealth in a capitalist economy is bad, consider the alternatives. In particular, think about competition for money and power in an economy where markets are weak and government is strong.

Luke Burgis gives a powerful example of how removing institutional structures that allow for competition can go awry in his book Wanting. After surpassing $1B in annual sales and becoming an Amazon subsidiary, the online retailer Zappos decided to experiment with a radically flat management structure. Explicit hierarchies would be replaced with fluid, self-organizing teams without fixed roles or identities within the company.

While the vision of CEO Tony Hsieh—who forfeit his own title as part of the transition—was to deliver happiness to his employees and remove personal ego from business processes, the move instead created intense anxiety and instability within the organization as workers no longer knew how to succeed. Several top employees committed suicide.

When Zappos moved to holacracy, what disappeared aboveground—the visible roles and titles—reappeared in different ways underground. “The environment became more political,” journalist Aimee Groth, who wrote about holacracy for Quartz, told me. “People were less secure in their jobs … less clear on how they could hold on to their roles and their jobs. However, you still had a few people who had infinite power because they had a strong relationship with Tony.” There was a hidden web of desire that nobody could decipher.

While we may find human desires for status and conflict unsettling, we can’t just wish them away. Civilizing institutions, from market economies to family roles, are needed in society to promote peace and flourishing.

1. See for example, The Unbearable Whiteness of Being an Academic which notes the remarkable prevalence of obviously white professors identifying as minorities and being accepted as such.