Friday, June 27, 2014

Viewer Mail: When Smart People do Stupid Things

More viewer mail


Sorry not to have written more blog entries, but for the last two weeks we have been rehabilitating a condo, our last investment property, in preparation for renting it.

A reader writes:
"I have a very reasonable coworker that I hold in very high regard. She's been nagging me for months about joining [an MLM scheme].   "It was endorsed by [Pompous Reality Television Star]!" "If people weren't stupid, they'd save money doing this AND have a passive income stream!" "I've always wanted to own my own business, and now I'm going to be rich."

She knows me and my general cynicism regarding MLM, but she's willing to put our friendship on the line. I log into this thing, and I hear the same polished stuff I've heard about timeshare presentations, vitamin marketing, etc. I have flashbacks to Amway. I smell a rat. I hear shills in the audience.

I find lots of poorly written criticism for and against, but no real analysis. Lots of anecdotes hinting around [MLM scheme] (sort of like having a friend snap your picture as you walk by a celebrity or politician), but no authoritative analysis.

Do you have any thoughts? Am I missing something? Could I actually be too stupid to understand this? My brother didn't talk to me for two years when I told him he was involved in a MLM scam. He eventually saw the light. Could my respectable, practical, analytical, engineer-friend just have a case of the vapors?"

Yes, even smart people do stupid things.  In fact, they do them all the time.

I recounted how a friend of mine, who had not only an Electrical Engineering Degree, but a Law Degree as well, got duped into a "tax protester" scam, and ended up in trouble with both the IRS and the State Tax authorities.   He should have known better, but he didn't.

And I recounted how a college chum of mine, who was an Engineering student, got caught up in a chain letter scam where you were supposed to mail gold Krugerrands to people on a list.  He should have known better, but he didn't.

And then there is Chelsea Clinton's father-in-law, who was a former Congressman, got suckered into a number of Nigerian 419 scams - and then stole money from other people to fund the scams.  He served five years in Federal prison.  He should have known better, but he didn't.

Smart people do dumb things - all the time - and the common denominator is this:  They think they can get something-for-nothing.   Yea, they should know better, but they don't.  They think that hard work and saving money is for chumps and that all the "smart people" take shortcuts to riches and wealth.  So they sign up for these odious deals and then get ripped off, time and time again.

And yes, people with college degrees and even advanced degrees fall for this - which goes to show that a college degree is pretty worthless, if the accompanying wisdom doesn't come with it.   If you doubt this, go to an "OWS" protest sometime.  All those folks have college degrees, but are as dumb as toast.

Why is your friend pressuring you to join this MLM scheme?  Simple.  In order to get ahead in an MLM scheme, you have to sign up more and more "distributors" or some such nonsense, in a pyramidal fashion.  So your "friend" is pressuring you to sign up, to make more money for themselves.  In other words, your "friend" wants to make money off of you.

Find new friends.   You can't make money in MLM schemes.  And friends who try to con you into such schemes are not friends.