A theory of Madoff

In the previous entry, “Madoff—quiet, modest, simple, direct, generous, thoughtful, helpful, and not greedy,” I pointed to the apparent contradiction that a colossal crook and robber like Bernard Madoff—a man who cooly defrauded his clients of $50 billion, a destroyer of wealth who wiped out the assets and the endowments of the individuals and organizations that had trusted him—exhibited so many personal virtues. But maybe there is no contradiction, because, so my theory goes, he didn’t see himself as a crook and robber at all, but as a benefactor of humanity. After all, as he saw it, no one was being hurt by his fraud, all his clients were receiving their regular dividends and were happy. And if people are happy, that’s all the matters, right? And he somehow figured that the game could go on forever. Thus Madoff, far from acting out of greed, far from behaving like the archetype of the sneaky Jewish moneyman, was behaving like Robin Hood, stealing (or, as he saw it, borrowing) from the more successful to give to the less successful. He was acting out of rachmones, the Jewish word for compassion, the favorite virtue of Jewish liberals. But as Irving Babbitt classically explained in the seminal conservative book Democracy and Leadership, compassion is as much of an expansive, greedy impulse as greed itself.

And in this regard, how is Madoff worse than, say, President Bush, who, in order to make the less successful more successful, in order to make black and Hispanic homeownership equal to white home ownership, demanded that banks give mortgages to people lacking the ability to pay them, with the banks backed up by Fannie Mae, and Fannie Mae backed up by the taxpayers?

There are certainly people who have contributed to the current financial catastrophe by behaving with wild irresponsibility out of lust for wealth. But there are also people who have contributed to the current financial catastrophe by behaving with wild irresponsibility out of rachmones. Babbitt’s profound point is that rachmones—the prototypical liberal virtue—can be as destructive and rapacious a sin as plain old cupidity.

- end of initial entry -

Anna writes:

You write: “Madoff—quiet, modest, simple, direct, generous, thoughtful, helpful, and not greedy.”

Yes, I think all of that is correct. From what I have read, I think there was a point where losses crossed his desk. Rather than disappoint his clients, or taint his well-earned reputation, he chose to cover it by dishonesty, thinking it would be only temporary and for a good cause.

Instead, that initial dishonesty took him into a cycle he never dreamed of and his business acumen and reputation allowed him to continue in a spiral that went way beyond his control.

I guess it must be difficult to put a stop to what looks like success, especially when so many people, including family, are a part of that success.

Yes, they knocked on his door and he is now devastated, as are his clients and family. And yes, he is responsible.

I contrast this with the kazillions given to banks recently, money that seems to have disappeared with no positive affect on the economy. Yet there are no knocks on any doors. Maybe Mr. Madoff should have worked at Citi.

LA replies:

Anna’s comment came in after the first paragraph of the initial entry was posted. Anna’s explanation of Madoff’s motive (“there was a point where losses crossed his desk. Rather than disappoint his clients … he chose to cover it by dishonesty, thinking it would be only temporary and for a good cause”), led me to add the second, third, and fourth paragraph of the initial entry.

Posted by Lawrence Auster at December 14, 2008 01:26 AM | Send