It is fitting that Boris Johnson’s premiership should be in doubt so soon after Elizabeth Holmes has been found guilty of defrauding investors, because both show us how easily people are fooled. Inspired by them, here are some tips for any would-be con artist. Exploit wishful thinking. Experiments by Guy Mayraz have shown just how easy it is to induce this. People want to believe there’s been a great medical breakthrough, or that an obscure mining company has discovered huge mineral deposits, or that they’ve met “the one” who won’t cheat on them. Ms Holmes preyed on this: people wanted to believe there was a new Steve Jobs, and the wish was father to the belief. Similarly, Johnson’s supporters in 2019 thought you could get Brexit done by sunny optimism rather than hard bargaining. And,
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It is fitting that Boris Johnson’s premiership should be in doubt so soon after Elizabeth Holmes has been found guilty of defrauding investors, because both show us how easily people are fooled.
Inspired by them, here are some tips for any would-be con artist.
Exploit wishful thinking. Experiments by Guy Mayraz have shown just how easy it is to induce this. People want to believe there’s been a great medical breakthrough, or that an obscure mining company has discovered huge mineral deposits, or that they’ve met “the one” who won’t cheat on them.
Ms Holmes preyed on this: people wanted to believe there was a new Steve Jobs, and the wish was father to the belief. Similarly, Johnson’s supporters in 2019 thought you could get Brexit done by sunny optimism rather than hard bargaining. And, writes Robert Hutton, ministers are now defending him in the “hope that, when Johnson is finally removed from office, the stink won’t linger on them or their party.”
FOMO is your friend. This is clearly the case for Prime Ministers or would-be PMs: MPs will support you in the hope of winning office themselves, and journalists will do so for fear of being frozen out and denied scoops. But it also worked for Ms Holmes. Private equity investors not wanting to miss the next unicorn pile into start-ups, sometimes without adequate research. Fear of missing out drive stock market bubbles, and it also enables fraud.
Be glamorous. “Investors are attracted to stocks that have emotional ‘glitter’” says Alok Kumar. We’re also attracted to people who glitter. We’re apt to trust good-looking ones even if they don’t deserve it – a fact Ms Holmes used on Henry Kissinger.
Of course, Johnson doesn’t have physical attraction on his side. But his schtick of raffish charm, bumbling good humour and optimism appeals to some. You’d rather go for a drink with him than Theresa May, even if you would have to buy it yourself.
Like attracts like. Affinity frauds are good business, because it’s easier to win the trust of people who think you are one of them. Bernie Madoff, for example, sold his Ponzi scheme to people like himself - affluent, respectable-looking Jews.
Similarly, Ms Holmes appealed to the rich because she was from a “good family”. One investor “says he thought Holmes would come by medical talent naturally because her grandparents had their name on a hospital.”
Hence the power of the “Boris” brand. Calling him by his first name creates an impression that he’s your mate. And you trust your mates, don’t you?
Have a story. Vanity Fair reports:
Holmes also paid indefatigable attention to her company’s story, its “narrative.” Theranos was not simply endeavoring to make a product that sold off the shelves and lined investors’ pockets; rather, it was attempting something far more poignant. In interviews, Holmes reiterated that Theranos’s proprietary technology could take a pinprick’s worth of blood, extracted from the tip of a finger, instead of intravenously, and test for hundreds of diseases—a remarkable innovation that was going to save millions of lives and, in a phrase she often repeated, “change the world.
Narratives matter. People believe them more than they should. And better still, as Robert Shiller shows in Narrative Economics, some of them go viral. People will do your work for you, by repeating your story.
Johnson also has used this trick. “Get Brexit done” and “levelling up” are stories – albeit ones we have to fill in ourselves.
Exploit deference. We have, wrote Adam Smith, a “disposition to admire, and almost to worship, the rich and the powerful.” You don’t have to be very rich or powerful to get such admiration. Some experiments in 1968 showed that drivers were less likely (pdf) to honk their horns in impatience at expensive cars than at cheap ones, for example.
This gives the fraudster his chance. If you pretend to be a bank official or policeman, somebody will hand over their account details to you out of deference.
And it’s part of the secret of Holmes and Johnson: journalists at least defer to bosses and Prime Ministers. The corridors of power turn venality into virtue and stupidity to wisdom.
Be different. In a superlative paper (pdf) the late Werner Troesken showed how snake oil salesmen thrived for centuries in part by differentiating their products. Disenchantment with some quack remedies therefore merely fuelled demand for others.
Ms Holmes exploited this. Merely by being a woman she stood out in male-dominated Silicon Valley.
And it’s part of Johnson’s success too. Tom McTague has written:
Johnson is nothing like the other prime ministers I’ve covered. Tony Blair and David Cameron were polished and formidable. Gordon Brown and Theresa May were rigid, fearful, cautious. Johnson might as well be another species.
That’s his appeal. In differentiating himself from both the cold fish Theresa May and from the technocratic style of New Labour, people disillusioned with both of those thus turned to him.
Now, in writing all this I’m not suggesting that you become fraudsters. For one thing, it’s difficult to pull off these tricks, especially if you are from the wrong background. For another fraudsters, like other businessmen, need not just personal skills but the right opportunities too. And for another, I've missed out some necessary advice - how to have an exit strategy and avoid getting caught.
Instead, what I’m trying to do is solve a puzzle raised in the Times recently by Matthew Parris. He describes how “scores of individuals” have had their reputations ruined because “they got themselves mixed up with a superlative confidence trickster”. What he doesn’t do is say why so many people fell for Johnson. It’s not because they are stupid. Isaac Newton and Jonathan Swift both lost money in the South Sea bubble which tells us that even brilliant men can fall for cons. Instead, it’s because there are so many ways to trick even intelligent people.