Donald Trump’s Ponzi Scheme

Donald Trump’s Ponzi Scheme June 18, 2020

If you are looking for a new novel to read, may I recommend Emily St. John Mandel’s The Glass Hotel. Mandel is a bit of a phenomenon these days because of her 2014 novel, Station Eleven, about a vicious pandemic known as the Georgia Flu that sweeps the globe with astonishing speed (most of those infected are dead within a day or two), killing more than 99 percent of the Earth’s population. Not surprisingly, the eerily prophetic aspects of Station Eleven have grabbed people’s attention during the past few months. Mandel has noted, tongue-in-cheek, that Covid-19 might have been very good for the launch of her new novel—if she weren’t locked down with her husband and daughter in Manhattan, as we all have been in our various locations, unable to go on the planned book tour because of Covid-19.

A colleague from the English department and I have ended our “Apocalypse” colloquium each of the last three spring semesters with Station Eleven. Words like “surreal” and “bizarre” hardly suffice when trying to describe what it was like to finish studying various apocalyptic texts, films, and podcasts with thirty-two sophomores by spending the last two weeks of April reading and discussing a novel about a global pandemic while actually living in a world thoroughly disrupted by a global pandemic. But even during our previous two spring semesters teaching our “Apocalypse” colloquium, my colleague and I have agreed that Station Eleven is our favorite of the dozen or more texts we use, not just because of how well it serves as a capstone to the semester, but also because it is the best piece of literature on the syllabus. Emily St. John Mandel is simply a wonderful writer.

Were it not for my appreciation and admiration for Station Eleven, I never would have picked up The Glass Hotel. The brief plot description and the blurbs on the dust jacket did not hook me.  But Mandel’s brilliance is on full display—character development, creative wandering through different time periods, and occasional psychological insights regularly appear throughout the novel. She has a remarkable ability to work complex philosophical topics into her characters’ words and actions that few novelists, past or present, possess. These insights and explorations, in several ways, are directly relevant to the unsettled and disturbing world we are currently living in.

One of the central narrative threads in The Glass Hotel is the creation, then collapse several decades later, of a Ponzi scheme by Jonathan Alkaitis, a financial crime that Mandel describes in the “Acknowledgements” as modeled on Bernie Madoff’s Ponzi scheme, which collapsed in January 2008, and for which Madoff is spending the rest of his life in prison. As the story unfolds, Mandel gives us glimpses into the motivations, blindness, self-righteousness, and evasions of the scheme’s creator, its willing perpetrators, those who lost their life’s savings, and uninvolved observers—all of which are on daily display in our own lives.

Many of those taken in by the Ponzi scheme, for instance, turned their retirement funds and savings over to Alkaitis without fully understanding what they were doing. Alkaitis, a charismatic and effective salesperson, sucked investors in with vague promises and general descriptions of a successful investing track record, including numbers and charts that were completely fabricated. Few, if any, ever dug deeper, turning their thousands, or even millions, over without insisting on more information. Even in the face of warning signs that became more and more frequent and difficult to miss, investors trusted Alkaitis. Why? One of these investors explains that he didn’t want to appear uninformed or dumb when he didn’t understand Alkaitis’ investment strategy. As Mandel describes, “One of our signature flaws as a species: we will risk almost anything to avoid looking stupid.”

Going forward, I suspect that every time I hear or read various explanations from people who voted for Donald Trump in 2016 justifying why they will do so again this November, I will remember Mandel’s insight. In many cases, the people who are most insistent on “staying the course” with the President are doing so even though his policies, actions, attitudes—everything about him—are contrary to their interests. Why is someone who took a flyer on an outsider in 2016 so reticent to admit that they were wrong and that they’ve learned better? To avoid the embarrassment of having to admit that they made a mistake. There are many worse things than making a mistake, of course, but as Mandel observes, it is a typical human failing to avoid looking stupid at all costs.

Other characters in the novel, for various reasons, did not invest in Alkaitis’ scheme; predictably, they are highly judgmental and self-righteous concerning those who lost their investments and savings. “How could you have been so stupid?” one man wonders upon having learned that his best friend just lost everything. A brief Twitter exchange I read yesterday provides a current illustration.

  • Why do never-Trumpers consider all Trump supporters to be stupid?
  • It’s not just never-Trumpers who think that. Anyone with a functioning brain thinks that all Trump supporters are stupid.

Which, of course, doesn’t build any bridges (you know, those things that we used to construct in order to connect two different sides of something). Nothing entrenches a person in their efforts to avoid the appearance of stupidity and generates more defensiveness than being told that others think they are stupid. Which provides at least a partial answer to an important question Mandel asks: “Why are the righteous so often irritating?”

Then there are those who worked for Alkaitis for years with full knowledge that they were participating in and facilitating a financial crime of massive proportions. They are called “The Office Chorus” in The Glass House; each of them has, over time, found ways to ignore, to pretend and, primarily, to compartmentalize and redefine. As one of Alkaitis’ employees explains before hearing the terms of her prison sentence in court, “It’s possible to both know and not know something.” This is not just a semantical ruse. It’s something that virtually everyone becomes very good at over a lifetime. It is currently on daily display as former White House employees seek to explain, either in an interview or in a memoir, why they continued to participate in and to facilitate immoral, often illegal, activities for weeks, months, and sometimes years on end. It is on daily display as dozens of Republican elected officials claim to have nothing to say about the President’s most recent outrage on Twitter by saying “I didn’t see it” or “I never read his tweets.”

Finally, there is Alkaitis himself. Locked away for the rest of his life in a “white collar prison,” haunted by the literal ghosts of those whose lives he destroyed, he has a very difficult time admitting the extent of his guilt and responsibility. As Mandel describes,

It’s possible to know you’re a criminal, a liar, a man of weak moral character, and yet not know it, in the sense of feeling that your punishment is somehow undeserved, that despite the cold facts you’re deserving of warmth and some kind of special treatment. You can know that you are guilty of an enormous crime . . . you can know all of this and yet still somehow feel you’ve been wronged when your judgment arrives.

It takes no imagination at all to imagine this as a description of Donald Trump himself.

The world we are living in does not fit the classic definition of a Ponzi scheme, but each of us—on our worst days, at least—can undoubtedly find ourselves psychologically and morally in the descriptions above. The good news, if there is any, is that we can do better. Alkaitis’ Ponzi scheme is brought down by the efforts of one woman, over the stretch of many years, who saw the scheme for what it was from the start, refused to be fooled, and did not stop until Alkaitis and his crimes were fully revealed. Don’t be afraid. Don’t pontificate. Don’t lie, to others or (especially) to yourself. We have the opportunity in front of us to be our best and to make it count. We can’t afford to blow it.

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