THE BIZOP NEWS

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J.R. Yellow Kid Weil - Con Man the noted con criminal, had this observation about confidence crimes.

"This desire to get something for nothing has been very costly to many people who have dealt with me and other con men.  But I have found this is the way it works. The average person, in my estimation, is ninety-nine percent animal and one percent human.  The ninety-nine percent that is animal causes very little trouble.  But the one per cent that is human causes all our woes.  When people learn -as I doubt they will- that they can't get something for nothing, crime will diminish and we shall all live in greater harmony."

Something for Nothing.

George Aklerof, a Nobel Prize Winner, and Robert Shiller, who probably will win the Nobel Prize, disagree with the Yellow Kid and argue for animal spirits in their new book, Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

These two accomplished economists think that the swindler has got it backwards. It is the animal spirits and not the human part which cause all the trouble.

"The first task of the book is to explain the role of psychology in the macroeconomy, and in answering these eight questions. Keynes called this the role of people's Animal Spirits.

The first part of the book describes five different Animal Spirits.

They are: confidence, fairness, corruption and bad faith, money illusion and stories. The second part of the book describes how these animal spirits play a key role in the answer to these eight macroeconomic questions."

Let's do a quick comparison between the con criminal and the economist for their explanation on why snake oil sells - 1% human or animal spirit?

First, the economists:

"But unregulated capitalism also produces snake oil that does not cure our ills.

It may even find it profitable to produce the desire for the snake oil itself.

In fact that is one major reason for the Food and Drug Administration in the United States. It protects us against buying snake oil medicine.

The book is full of stories, and one of the stories is relevant to this. William Rockefeller, the father of John D. Rockelfeller the first, in the 19th Century would tour the US Middlewest in his buggy.

And when he reached a new town he would go to the Town Square, give a talk and distribute flyers saying that Dr. Rockefeller wasin town.

He had the miraculous cures.

Then he would repair to the best hotel suite in town and sell his wears to those who came for the cure to their ills.

Indeed, the contrast William Rockefeller and his son is apt. William was selling snake oil, and represented one side of capitalism, whereas in contrast John D. sold real oil, which really did satisfy people's wants, and represents the productive side of capitalism."

Not a bad little story, except for the story about the role between the FDA and consumer protection.

What does the con criminal explain about the selling of snake oil, specifically on the selling of Meriwether's Elixir?

"I cannot truthfully say whether anyone who took the Elixir ever got rid of a tapeworm or not.  As a matter of fact, I doubt if very many peope had tapeworm, though nearly all imagined that they did.  For in that period, we had a tapeworm fad.  Everyone who was undernourished, anemic, or suffered from some form of malnutrition, was firmly convinced that a parasitic tapeworm was eating away at his substance."

The Elixir was 30% alcohol.

The con criminal describes his job as the shill thusly,

"I heard about Meriwether's Elixier.  I bought a bottle of it.  I didn't think it would do me much good, but everything was lost, anyhow.  So I took it. Before I finished the bottle, my tapeworm had been eliminated.  I was able to walk again. I got my strength back.  Soon, I began to recover.  I felt so much better that I was able to do twice as much work.  My crops were extra good. The mortage was paid off.

And I owe it all to Meriwether's Elixir.  I am going to give it to my two kids. I'd buy it, even if it was five dollars a bottle."

"Sir", would be Doc Meriwether's tremulous reply, "you have stirred me deeply. you have made me feel that I had done something worth while for humanity. As a token of my regard, let me present you with two bottles -absolutely free." 

Sales were brisk after that "bit of play acting."

The economist's story sounds flat - miracle cures were sold.  Uh, and how did that work?

The con criminal's story resonates, even if you weren't tempted by miracle cures. There are probably nine or ten different compliance techniques crammed together in the Yellow Kid's shill.  Very effective.

If you want to see and understand the compliance tricks behind fraud, you have to read J.R. Yellow Kid Weil - Con Man.  I highly recommend it.