economics

Dan Davies, Lying for Money: How Legendary Frauds Reveal the Workings of the World. US edition (Scribner: New York and London, 2018)

Lying for Money is one part a monograph by someone who has studied and taught a problem for decades, and one part an extended blog post. It is also a bleak book. Davies thinks that fraud grows out of the cost of verifying facts and the techniques by which managers simplify the world to make it comprehensible (legible in James C. Scott’s terms). The cost of auditing or checking references appears every day, but the cost of discovering that one of your nurses never completed high school and one of your suppliers disappeared overseas with your money only comes up occasionally, so people tend to take fewer and fewer precautions until they suffer for it. Whereas some fictional fraudsters target the psychology of individuals, Davies’ fraudersters target the psychology of institutions and cultural expectations about what is trustworthy and authoritative. Very few large frauds are the fraudster’s only attempt: many get out of prison for one fraud and are trusted with other people’s money a few years later. (I would be interested to hear more on why fraudsters are often the victims of other fraudsters, and sometimes throw in money to keep the illusion alive when they could just take it and run).¹