The voices of Tax Policy Center's researchers and staff
A review of books on Bernie Madoff in a recent Sunday Washington Post caught my eye because it reminded me of a high school friend. The review describes an assignment given to Madoff and his high school classmates in the 1950s to read a book of his choosing and make an oral report in class. Bernie didn’t get a book read, and when his turn came in class invented and described a non-existent book. When asked to produce the book, he explained he didn’t have it because he had already returned it to the library! And, although some of his classmates were suspicious, no one turned him in. Thus began the career of the great fraudster.
My high school friend (I’ll call him Nerd) pulled a similar stunt. He, Jock (another friend), and I were taking an English-history honors class and were asked to read two books on 19th century European imperialism that we’d later have to write reviews of in class. The night before the class, Nerd called me in a panic, saying he had only had time to read one book. I grumbled a bit, but agreed to describe one of my books to him. A week later when the exams were returned, Jock got a grade of 90, I got a 95 and Nerd got a 97. Happy enough with my grade, I was still a little irritated that Nerd scored better than me after I helped him, so I told Jock the story later, only to have him burst out laughing. You’re wrong, he said, Nerd hadn’t read any book. He had called Jock the night before the exam, given him the same sob story he gave me and got the same result. We both had to admire the miscreant’s chutzpah.
This wasn’t Nerd’s only imaginative way to cheat. Another teacher routinely gave multiple choice exams but scrambled the answers so that choice 1 translated into A on one exam book and translated into C in the exam book on the adjoining desk. Supposedly, that kept kids from copying off each other. But Nerd developed a scheme with the guy sitting next to him where they would tap their feet under the table to communicate, thereby foiling the “cheat proof” system.
Nerd was no dummy and did not need to cheat. He graduated from high school with honors and from a very fine engineering school and then went to work for a large computer manufacturer, which paid for his graduate education. But in spite of his impeccable credentials, he was anti-establishment and a bit of a rebel. Rules and systems were made to be broken. He took a perverse delight in out-smarting authority and wanted others to know how clever he was. And as a goody two shoes who followed the rules and these days spends hours worrying if my tax return is accurate, I secretly admire that attitude, if not his exploits.
In our over-bureaucratized society--with all its complex, mind-boggling and often silly rules and regulations—who doesn’t feel at least some sympathy for the rule-breaker? The next time I am forced to complete some silly and incomprehensible tax form or struggle to recall one of the dozens of passwords I use, I’ll be thinking about how Nerd is probably out-smarting all these systems, gleefully hacking his way into some protected account, not because he wants to steal from anyone, but just to prove he can do it.
Was Bernie Madoff basically a more notorious version of Nerd? In the end, was the satisfaction of knowing he had tricked lots of rich and supposedly smart people into investing in nothing and out-witted a complex system of accounting rules and federal regulations that is supposed to prevent fraud worth more than the money to him? Make no mistake about it, Bernie did huge damage, ruined the finances of many individuals, and wrecked some worthwhile charitable institutions. And he fully deserves the stiff sentence imposed on him. But the way he got away with fooling so many investors and evading the grip of regulators for so many years still appeals to an anti-establishment streak in many of us, even though the results in this case were appalling.
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