http://www.mcclatchydc.com/226/story/58111.html
"What's it like to be a pirate? In dirt-poor Somalia, pretty good."
by Shashank Bengali
December 18, 2008
McClatchy Newspapers
"The International Maritime Bureau says that at last count 42 ships have been hijacked off Somalia this year, and experts in neighboring Kenya estimate that Somali pirates have pocketed $30 million in ransoms."
http://www.nytimes.com/2008/12/12/business/12scheme.html
"Top Trader is Accused of Defrauding Clients"
by Diana B. Henriques and Zachery Kouwe
December 11, 2008
The New York Times
"But on Thursday morning, this consummate trader, Bernard L. Madoff, was arrested at his Manhattan home by federal agents who accused him of running a multibillion-dollar fraud scheme — perhaps the largest in Wall Street’s history. Regulators have not yet verified the scale of the fraud. But the criminal complaint filed against Mr. Madoff on Thursday in federal court in Manhattan reports that he estimated the losses at $50 billion."
http://economix.blogs.nytimes.com/2008/12/17/hey-ponzi-whats-your-exit-strategy-exactly/
"Hey Ponzi: What's Your Exit Strategy, Exactly?"
by Catherine Rampell
December 17, 2008
The New York Times
The article discusses the economics of Ponzi schemes, and speculates that there is no rational reason for starting one. The first comment points out a basic flaw in the author's reasoning:
"You really don’t get the exit strategy? let me explain..
Madoff is now 70 yrs old, an age that many people aren’t even fortunate enough to reach. He got to live like a multimillionaire for 40 years. He will now spend a year or two in court and then be sent to a minimum security white-collar prison (basically a free nursing home for him funded by taxpayers). Not a bad life…sounds like it was worth it"
Let's think about those numbers for a moment. Let's assume that the Somali pirates, in addition to the $30 million in random, also earned $10 million from stolen goods. In order for them to steal as much as Madoff, they would have had to keep that up for more than a millennium - they would have had to have kept up that level of income SINCE BEFORE AMERICA WAS DISCOVERED BY COLUMBUS.
And let's think about the relative consequences: house arrest and a white collar prison (as discussed by the commentor) and pursuit by some of the world's most powerful navies. I mean really - sometimes I think that, in order to discourage this sort of thing in the future, we should just take people who commit crimes like Madoff out back and shoot them. He's done far more harm than these damn pirates.
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2 comments:
Presumably to deter would-be Ponzi-ers, you wouldn't want to take Madoff out back and shoot him; you'd want to very publicly execute him in an excruciatingly painful and graphic manner. Similarly, to deter pirates, you'd sink the oil tanker, killing all pirates on board.
We won't draw and quarter Madoff because it'd be cruel and unusual. We won't sink the oil tanker because of the financial and ecological repercussions (not to mention the presence of the innocent crew still on board).
If crime didn't pay, there'd be very few criminals. The cost of making crime not pay is often too high for civilized society.
On the other hand, maybe we should send the navy after Madoff. Imagine him opening his front door to be confronted by the Enterprise on his front lawn.
On the one hand, you're right: there are reasons we don't draw and quarter people. But we do do things like sentence them to life in prison (and different kinds of prison, as well).
On the other hand, I think the point I was trying to make still stands: it's really odd the different amounts of money we spend on these different problems, and the different punishments we mete out. The point is that Madoff is likely to have a much lighter punishment than any caught pirate, and that we are likely to spend far more on trying to catch pirates than trying to catch Madoffs. So why is that, considering than (economically speaking) what Madoff did is more than a thousand times worse?
(Imagine him opening his front door to be confronted by Captain Picard on his front lawn)
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