What is fraud?
Random and stupid thoughts.

The financial twits are full of the latest "whistleblowing", exposing bad accounting practices at GE and Disney.

Is this fraud? Not really. It doesn't steal money from anyone. It might give a wrong impression to big investors, but big investors can afford to form their own impressions using objective data. If hedge funds aren't doing their own checking before spending a few billion, too fucking bad.

How about Tesla? When Elon promises full autonomy but can't possibly deliver because full autonomy is physically impossible, is that fraud? Not really. The cultists are happy to spend the extra money because they're not really buying a car. They're buying Gaian indulgences with wheels. Spending more for an indulgence buys more glory and salvation. The real harm is the partial autonomy itself, because it deprives drivers of skill. If the cultists were paying for FSD and receiving nothing, they'd be better off.

Let's take it down to a much lower level. Last year I had a contractor build a sidewalk from the porch to the street, partly because I'm getting too old to shovel snow off grass, and partly for a pointless and misplaced sense of neighborhood pride. I ordered the sidewalk plus porch repair, but the contractor never did the porch repair. Is that fraud? Not really. It's just an overpriced sidewalk. I still got the easier shoveling and the pride.

The only case where you can unambiguously define fraud is payment in advance for work not done. Most such cases are small and not worth the trouble of prosecuting. Some are understood to be charity, not purchase.

What's worth prosecuting? Paying for benefit and receiving actual harm.

I mentioned two "frauds" yesterday in the context of early radio: JB Brinkley's goat glands and Aimee MacPherson's religious cult. Aimee was performing a positive service for her customers. Prayer gives confidence, and prayer accompanied by a talisman is even better. Confidence is a great healer. Brinkley was giving confidence, but he was also doing real harm. Surgery is always harmful, and only worth doing when the benefits are likely to be much greater than the harm. His surgery was sloppy and inexpert.

= = = = =

Later note: I wasn't really trying to fit this into a subject, just rambling... but it does fit the theme of economics as a verb.

Labels: skill-estate

  ¶ 7:33 AM