A formative incident for me happened when I was 25 while travelling through Turkey with a backpack.
The British owner of the Istanbul hostel where I was staying warned me to buy only Persian rugs that had a minimum number of knots per square inch of 100. I ventured out, looked around, and purchased a rug.
Upon returning, I showed it to the hostel owner. He examined the reverse side, paused and said, ‘Why didn’t you get one with a decent knot count, like I suggested?’
I stormed back to the carpet seller, irate with having been misled. I was resolved to get my money back and report him somewhere. When I arrived, he met me with courteous deference.
Some 15 minutes later, I walked out of his store still carrying the original carpet I’d purchased and, inexplicably, another one under my arm.
He used my return to his shop to sell me a second rug, this one a small ornamental thing to hang on a wall. I discovered later it too had a low knot count.
I did get something valuable out of the experience … a moment of clarity. There are some people in the world who are much much cleverer than I am, and not all of them use that intelligence with benevolence.
It is an unnerving concept when you think about it. A person you are conversing or dealing with may be thinking on a higher plane, possibly knowing what thoughts are in your head and how to exploit those thoughts. I guess this is the base fear of Artificial Intelligence (AI) – perhaps it is smarter than us…
And an important question in life, especially for young people heading out of home into the world: How do you protect yourself against these people?
Fraudster Bernie Madoff had an ingenious way of getting money, often extracting life savings from people who did not know him.
One strategy had Madoff joining tight-knit New York country clubs where his presence was subject to hushed and admired discussion.
Club members learned that he achieved a consistent 10-12 per cent return each year, despite market conditions. Members would build up the courage, and when the chance came, plead with Bernie to accept them as his client. They wanted the privilege of being ‘with’ Bernie.
His manipulative genius led him to initially refuse their request, letting them down. In doing so, of course, he fired their desire. Later on, he’d let them know a client opening had arisen and the money would flow.
When his Ponzi scheme was finally exposed and unwound, the losses to investors was estimated at $65 billion (in 2008 dollars). Madoff was sentenced to 150 years in jail at the age of 82.
Then we have the tried and tested process of setting up a marketplace for elite sexual services, where wealthy men liaise and sleep with young female models.
These potential men require an absolute guarantee of privacy and non-exposure due to fear of family and society opprobrium for their activities.
What the young women get out of this arrangement often falls along the lines of accommodation, world travel, all their bills paid, and the opportunity to liaise with very rich and powerful men. This has come with a hope, albeit naïve, that some of this wealth may accrue to them. Maybe these billionaires might divorce their wife and marry them…?
The key cleverness was in bringing these two groups together in a voluntary way, including overcoming an obvious barrier that rich men are typically highly intelligent and would be very aware and attuned to risk of blackmail. Still, it happens every day all around the world.
Then we have the immoral genius trading in sexual favours. One such example is former film producer Harvey Weinstein who is accused of convincing ambitious and beautiful actresses to give him erotic massages.
The fact that no one talked publicly about it for so long is a testament to his cleverness in creating the incentives necessary for silence.
To be balanced, there is an issue of who used who in at least some cases. It is likely, in my opinion, that some ambitious actresses – on learning of Weinstein’s reputation – sought out and seduced him to attain dream roles in films. It is unlikely the immorality flowed in one direction.
I once received simple yet useful advice from a former banker. He’d spent much of his career at the coalface of regional bank branches but also did a long stint at a finance company specialising in the sorts of lending which was deemed too risky for its owner.
Those who have worked in risky lending develop a good nose for the cunning and unethical, they’ve heard and seen everything as customers hustle for loans then do everything to wriggle out of repaying them.
While his comments related mainly to protecting money, they have more general application.
First, if what you are being promised sounds too good to be true, then most certainly it is. Be especially careful of ‘free’ things.
Second, when your gut tells you something is wrong, don’t ignore it, and act immediately to resolve the source of that unease.
Third, the only people in the world who are truly on your side are … your parents. So, make a habit of getting their input before signing things and sending money.
His last point is fascinating. If you’ve lost money or had a bad experience, make a full police report and document everything in detail. Then write it off, and never think of it again. He’d seen too many people’s lives consumed by rage and ruined over a $40,000 scam.
I guess the dilemma for young people heading into the world is how to protect themselves with principles like these, yet still get the experiences and benefits of risk-taking and adventure.
Bankers know a lot about minimising risk, but probably not much about creating adventure.
Nick Hossack is a public policy consultant. He is former policy director at the Australian Bankers’ Association and former adviser to Prime Minister John Howard.
