If we’re going to learn from the Bernie Madoff scandal it needs to be this: Some people suspected him all along. So why did people keep giving him money?
He was a true con man, because he had investors’ confidence. There are two ways to make decisions: either you have evidence to make a rational, scientific decision; or you rely on instinct and trust. The hard part is that you rarely can gather enough evidence to make a scientific decision on your own; especially in complicated, important decisions. Gadflies abound who tell us any successful corporation, drug, zoning change, or other powerful person will ruin our economy/enviroment/health, so what’s to say Madoff’s critics weren’t just jealous competitors?
Maybe we need look at how so many Jewish investors were defrauded. Being Jewish doesn’t give you any special power with money. Let me repeat this: Being Jewish doesn’t give you any special power with money. Nefarious stereotypes aside, I suspect these investors simply placed their confidence in a fellow Jew. Even more likely, they placed their confidence not just in Madoff, but in the fact that investors like themselves (in certain Jewish social circles) trusted him. People misplace trust like this constantly–how many people believe that asking a friend, neighbor or co-worker is the best way to find a plumber or a dentist? I think this is confusing general trustworthiness with whom to trust for a specific decision. You might give someone the key to your house, but should you trust them over your doctor for medical advice?
I’m not sure what would have helped Madoff’s investors, but the rest of us should remember to trust what we hear but also get the facts.