The Generation of Fraud

Transient Hope and Permanent Failure in the Post-9/11 Era

Part 1: A Shared Script

“Our biggest single project, sadly and inadvertently, of course, may have been the development of mass corruption”[1] ~ Ryan Crocker, Fmr Ambassador to Afghanistan, Afghanistan Papers

By now, we have all seen the nightmarish photos of violence, panic, and execution coming out of post-withdrawal Afghanistan. Years before, photos of identical horror under American rule trickled across my twitter feed. Rarely, if ever, were they covered in established outlets. Back then, I simply didn’t understand the unparalleled outrage running through the anti-war movement. They possessed a moral vitriol for the political establishment that advocates for domestic issues simply couldn’t match. Now, I get it.

This past month’s events revealed to all that Afghanistan was a fraud. Nation building was a fraud. Ashraf Ghani and the civilian “government” was a fraud. The supposedly trained 300,000 troops were a fraud[2]. Our military, governmental and media apparatus sold a fraud to the American people. There was simply no other explanation for the total capitulation of US-backed forces in Afghanistan in a matter of weeks, a fraction of even the most doom-ridden prediction among either the intelligence or pundit class. The vast majority of American generals, politicians and media had obscured the cost of war until now. When the bill came due for their crimes, they blamed the antidote — the withdrawal — for the atrocity. In truth, there is no way of separating the mistakes in Afghanistan in the past few weeks from the continuous stream of mistakes coming from the U.S. foreign policy blob, who I term the failure class, since the war began.

Historically, this is a generational turning point. Maybe it overturns the military hierarchy and finds competent leaders to put in charge. Maybe it creates a populist reaction that scrubs out corruption in our own government. Maybe it spurs a cultural shift that inspires journalists to put prestige, access, and self-interest to the side in the pursuit of truth. None of these are likely to happen because this is at least the fourth generational tragedy since 9/11.

The terms “conspiracy theory” and “disinformation” are now in vogue. The thing that these terms best describe may be the first generational tragedy. Prior to the Iraq war, over ninety percent of Americans believed Saddam Hussein’s regime possessed weapons of mass destruction[3]. This was not based on any substantive evidence and in hindsight was unequivocally false. The population of the third-largest nation on earth did not come to believe such an absurd, baseless idea from social media influencers, Russian agents or unfettered internet conversations. Instead, they were the last link in a network of unthinking trust, which passed falsehoods down from intelligence operatives to politicians to established media to each and every one of us. As it turned out, the intelligence community were frauds seeking to produce results at the expense of accuracy. The politicians were frauds who didn’t exercise one iota of oversight when their agencies were politically useful. The media were frauds who spoke lies for power instead of speaking truth to power. And we, the People, bought in hook, line, and sinker. In the end, neither the intelligence officials, the politicians, nor the media who had each perpetrated part of this fraud paid any price. We were left holding the bag.

A much more conventional scheme was run up until the 2008 financial crisis. To me, there is no better way to describe it than the systematic, ubiquitous underestimating of risk throughout the established financial system. Brought on by subprime mortgages given delusional overratings in a hyperconnected financial system, the 2008 crisis ended with millions of us gullible Americans losing jobs, homes, savings, or all three at once. Surely this time, at least the most flagrant fraudsters would be caught. 

We got one of them. One. 

The debate rages on to why so many of those responsible for the crisis walked, but prosecutorial incompetence is almost certainly a major reason. “The [Justice] department began to focus on reaching settlements rather than seeking prison sentences, which over time unintentionally deprived its ranks of the experience needed to win trials against the most formidable law firms”[4]. Weak laws to begin with and the pursuit of settlements compounded this problem. At the end of the day, the costs were paid by the ordinary men and women of our country.

Now to more recent news. Certainly, the American response to COVID-19 holds many frauds within it. But to me, the one that exposes the most concentrated failure of all is the early-stage approval of coronavirus testing, or lack thereof. From a Science Magazine article from February 28, 2020:

The World Health Organization (WHO) has shipped testing kits to 57 countries. China had five commercial tests on the market 1 month ago and can now do up to 1.6 million tests a week; South Korea has tested 65,000 people so far. The U. S. Centers for Disease Control and Prevention (CDC), in contrast, has done only 459 tests since the epidemic began. The rollout of a CDC-designed test kit to state and local labs has become a fiasco because it contained a faulty reagent. Labs around the country eager to test more suspected cases—and test them faster—have been unable to do so. No commercial or state labs have the approval to use their own tests.[5]

First, in January, the CDC centralized the process, mandating that each test be done at a single facility in Atlanta until a time-consuming verification process was complete. Even then, each test must still be provided by the CDC. On February fourth, it demanded that any outside tests receive an emergency use authorization, which meant weeks of delay, at the very least. A week later, labs across the country reported that the tests provided by the CDC were faulty. They failed on the negative control, which essentially means that the tests detected COVID even when no sample was taken at all. This was a failure that could have easily been avoided. It was a failure that was avoided by dozens of countries in the developed and developing world. 

The cost we paid for this is in no way insignificant. “By varying the success rate of contact tracing per index case, the relative number of hospital admissions ranged from 35% to 60% of the base case scenario without CTS”[6]. If the same holds true for deaths, which typically correlates directly with hospitalizations, this accounts for somewhere between one third and over a half of those who died in the early pandemic. Another sets the number even higher, at “between 47% and 70% of mortality”[7].

The reason why I find this response so contemptible is that almost every single angle for critique is justified. Should greater investment and higher standards have been given to the CDC to ensure they got their test right? Should the process have been left open to the free market? Should we have just accepted the tests being distributed worldwide, which we already knew worked, instead of having to develop an American version? 

Every single one of these alternatives would have turned out better. America was left lagging behind China, South Korea, Italy, the UK, New Zealand, Australia, Taiwan, and likely dozens of other countries on a matter of biotechnology, a field our nation leads the world in. In an ironic twist of fate, it was America that had to sit around twiddling their thumbs while the rest of the world got their hands on the latest technology. The one thing that America purported to do better than anywhere else, innovate, was lost. Once again, this was a generational tragedy. 

It is truly difficult to imagine a complex, multivariable situation where changing any of the factors in any direction would be an improvement. Not even the first two crises fall into this category. But here we are, at the pinnacle of failure. So it isn’t wild at all to say that this may be the worst fraud yet. The CDC lied about the effectiveness of its own test while stifling all others. Not a single high-level official at the CDC resigned over this deadly set of decisions. The CDC has provided no evidence of change, no evidence that the next time a technical challenge presents itself, it will choose something other than the worst possible confluence of failures. 

Part 2: The Anatomy of a Fraud

All four of these scandals followed a similar script: a three-part tragedy starring us. 

First, hucksters would wield prestige and authority, presenting a confident narrative without the evidence or metrics to back it up. A large portion of American establishment media would repeat the baseless claims, lacking any due diligence. The majority of the country would buy in, believing in good faith that those with access and secret knowledge would not betray our trust. 

Second, careers would be advanced and cash would be made, all while canaries in the coal mine cried out for help. Perhaps parts of the population or the political class would gain awareness of the problem and campaign on fixing it. Those holding the institutional means to do so conveniently never noticed. 

Finally, reality would catch up with us and it was time for consequences. Consequences for the public, of course, whether you bought into the fraud or not. The perpetrators would not face consequences. In fact, they wouldn’t even need to sneak into the dead of night to escape with their profits. There was no need. The heads of the institutions at fault could only be held accountable by … the heads of the institutions at fault. They would not only keep their wealth and connections, but more often than not their positions and images too.

This was the story of Iraq. It was the story of 2008. It was the story of test-and-trace. And unless we do something about it, it will be the story of Afghanistan. 

Generational fraud after generational fraud does not come without consequences. A political system is only functional so long as there is an option which voters can trust. When a script of deception is set and the populus is (understandably) rife with cynicism of institutions writ large, it becomes harder to convince them of every policy, every leader, and every news story. 

To make matters worse, media and government again and again found themselves at the scene of the crime in each of these generational tragedies. In the defense of individuals in both, neither media nor government were uniformly in support of these tragedies. There were exceptions, the few canaries in the coal mine that did speak out. Unfortunately, the institutions which housed these dissenters did not heed their warnings, nor did they promote them once they had been vindicated. More often than not, they were retaliated against, smeared, and shunned, never regaining the positions they held prior to speaking truth to power.

In 1951, students at Swarthmore college were led into rooms in groups of eight. Two pictures were shown to each group. The first depicted a single straight line, while the second showed three lines of clearly different lengths, one matching the first picture. One by one, the students were asked to identify the matching line. Unbeknownst to the eighth student, the first seven students were instructed to intentionally choose the wrong line in concert. Overwhelmingly, the eighth student chose to side with the consensus, even when it meant choosing the incorrect answer. This genre of experiment, known as the Asch conformity experiment, remains one of the most consistently replicated results in psychology, with approximately 75% of subjects choosing to conform with the crowd. 

Like the unsuspecting students, established figures with careers on the line opted again and again to side with the dominant narrative, going as far as to shamelessly attack those ultimately revealed to be correct. Again and again, no cost was paid for groupthink. Again and again, the lesson was taught: don’t stray from the herd, or you will suffer. Again and again, generational frauds struck and not once were mistakes corrected. What lesson was the public supposed to learn from this unrelenting pattern? 

Like nature, politics abhors a vacuum. As David Fuller put it with a reference to Chesterton, “when men cease to trust institutions, they will trust anyone”. In these circumstances, it is nearly inevitable that a desire for populism will fester, waiting for a leader to come along. A charismatic leader promising resolute change can, in the best of times, be a solution. More often than not, he or she is simply another fraud.

Part 3: A Fraud Within a Fraud

In 2015, Donald Trump announced he would run for president. As we all know by now, he would ultimately win the Republican nomination, then the presidency. It is difficult to argue that the events of the past two decades did not play a leading role in his victory. If there was one topic that Trump knew in and out, it was fraud. By his own attestations, he had witnessed it and had been surrounded by it as a businessman. It takes no stretch of the imagination to believe he partook in it, at least once or twice. 

I don’t have the space to judge the entirety of his term, but the most relevant events for this story all occurred while he was preparing (or not) to leave office. In the long night following the election on November 3rd, Trump addressed a crowd of supporters: “frankly, we did win this election”. As the vote totals became more clear, outlets, including right-leaning Fox News, began to call the election for Biden, and it looked to me like the old lady had sung, a very different scene was playing out for Trump’s most hardcore supporters. In their view, the election had been stolen. From the viral twitter thread by Darryl Cooper, explaining the point of view of Stop-the-Steal supporters he knew: 

[1.] They watched the press behave like animals for four years. Tens of millions of people will always see Kavanaugh as a gang rapist, based on nothing, because of CNN. And CNN seems proud of that. They led a lynch mob against a high school kid. They cheered on a summer of riots. They always claimed the media had liberal bias, fine, whatever. They still thought the press would admit truth if they were cornered. Now they don't. It's a different thing to watch them invent stories whole cloth in order to destroy regular lives and spark mass violence.

…

[2.] Time Mag told us that during the 2020 riots, there were weekly conference calls involving, among others, leaders of the protests, the local officials who refused to stop them, and media people who framed them for political effect. In Ukraine we call that a color revolution.

…

[3.] Media & Tech did everything to make things worse. Everything about the election was strange - the changes to procedure, unprecedented mail-in voting, the delays, etc - but rather than admit that and make everything transparent, they banned discussion of it (even in DMs!)[8]

The script had been written by decades of betrayal. First came the narrative, sold to the country by the very same people who sold the narratives of WMDs, of the end of volatility, of CDC competence, and of Afghan nation-building. Then came the brazen partisan advancement. Last came the moment where everything was exposed, or so it seemed. Instead of presenting any type of reconciliation or outreach, social media, government and establishment media chose to double down on appeals to authority which they had long lost the right to use. 

It didn’t matter that a fraud of that scale would certainly produce multiple smoking guns and orders of magnitude more evidence. It didn’t matter that dozens of patriotic Trump-appointed judges ruled against them. Amid the frenzy of a script of fraud, it didn’t matter that the evidence to prove a fraud was nowhere to be found. 

There is, of course, another way to read this. First came the narrative, sold to the country by a leading expert in fraud, President Donald J. Trump, a wielder of enormous political and media influence among the right-wing. He then made it very explicit what he wanted: to hold onto office; to hold onto power. And long after the dust was settled, Trump would still keep his hold over the Republican base. 

Critics of Trump can heap blame until the end of time, but I would likely have a more productive time screaming into the void.  Instead, let’s strike those within our reach. It is an important fact of history that there was no shortage of voices across the political spectrum rejecting the Stop the Steal narrative. Far leftists such as Ben Shapiro[9], National Review[10], and then Republican Senate Majority Leader Mitch McConnell[11] not only stated that Joe Biden won, but presented much of the same evidence for his victory. The alternative argument was reaching the vast majority of Stop the Steal believers. Not only that, but Stop the Steal was fundamentally a prophecy. Had the media apparatus treated this like any other issue, Stop the Steal would have likely gone the way of Mike Lindell, or of countless eschatological doomsayers of the past, bleeding followers after the date was pushed from Jan.6 to Jan.20 to March.4 to “some time in August”, which might have been last week, to “some time in September”. Instead, politicization, personally attacking adherents, and imposing censorship changed the nature of the issue from a dispute to a fight. A dispute is won by evidence, but a fight is only won when the adversary is unable or unwilling to fight any longer. Of course, the furthest gone extremists and grifters would always remain loyal to the narrative, but for the vast majority who continue to support Trump, it didn’t have to be this way. 

There is undoubtedly an immediate charismatic boost upon yelling the word “fraud”, or its synonyms, as loudly as possible in this day and age. It is an accusation not only of the present, but of the past. The strength of that continuity is where it draws its power - it provides the feeling of understanding and context for everything happening around the world, whether it’s correct or not. Then, the strongest narrative tool to take gullible new buyers on a ride is precisely the accusation of fraud in and of itself. In fact, the bigger the accusation is, the more powerful and seductive the narrative of fraud is. 

Part 4: The Way Forward

In the end, the only way to regain trust is continuous, honest service. If there are no more generational frauds in the next twenty years, trust will recover. In a way, it is that simple. 

Up to this point, I’ve used the terms “generational fraud” and “generational tragedy” interchangeably. This is because each such event in the post-9/11 era has been both. When thinking about future events, the distinction is vital. It is simple to avoid generational frauds: simply accurately report data. If we admitted we were entering Iraq for our own interests, it may still have been a tragedy, but it would not have been a fraud. If we admitted upfront that the Afghan government would collapse, that it was rife with corruption and that nation-building had failed, it would be a similarly tragic non-fraud. The other two tragedies would have been avoided completely with proper reporting. 

If the policy change is so simple, why has generational fraud struck so frequently in the common day? To put in as few words as possible: fraud works. Lying, misreporting, and manipulating information is profitable, career-advancing, and too often comes at no risk to the perpetrator. The last part is most important, as it is what enables all else. Those with skin in the game, whose fortunes are tied inseparably to the consequences of their actions, can only attain a position if they have shown competence in the past. As Nassim Nicholas Taleb, who has written an entire book titled Skin in the Game puts it:

Incompetent pilots, those who cannot learn from experience, or don’t mind taking risks they don’t understand, may kill many. But they will themselves end up at the bottom of, say, the Bermuda Triangle, and cease to represent a threat to others and mankind. Not here.

So we end up populating what we call the intelligentsia with people who are delusional, literally mentally deranged, simply because they never have to pay for the consequences of their actions, repeating modernist slogans stripped of all depth.[12]

In this moment, the third phase of the generational fraud in Afghanistan, it is possible for one man to break the cycle. President Joe Biden can put skin in the game for those most responsible: the permanent failure class which has the audacity to call themselves generals.

When faced with evidence of fraud, there are three options for the heads of institutional power to present to the public while they try to fix the problem in the backend: 

1. Provide contrary evidence to justify past decisions 

2. Make a display of improving the institution, possibly sacrificing power or scapegoating some officials

3. Build institutional barriers to further shelter heads from accountability

So far, politicians have been excellent at doing the third and decent at the first. But the effectiveness of these solutions depend on a substantive change in the backend, so that the failure does not recur, or at the very least is not as severe, in the future. A change in personnel is the only consequence that forces this change to occur, either via a shift in incentives, or like in Taleb’s example, the firing or death of delusional pilots until only you can expect a competent one in the cockpit. 

Then, the way forward is to hold first and foremost the principle of skin in the game in any political decision. Skin in the game must be the single leading factor behind every vote, political donation, media subscription, and political hiring decision. Skin in the game must transcend culture war, partisanship and even policy. Because without skin in the game, it is likely that whichever issue you support will not only be a failure, but a fraud.

Perhaps not many Americans are willing to listen to this message. Perhaps moralizing over religious partisanship, identity markers, and hypocrisy will be more alluring than ending this generational chain of frauds. Perhaps they will need to be dragged kicking and screaming away from the distractions which have led us to this moment in time. But perhaps I’m more optimistic than that. 

Whenever I look at startups, scientific breakthroughs, or small business, I see Americans who value more than anything the miracle of trust in one another. I see those who are most willing to put skin in the game. I see those who understand that this miracle is too precious to sabotage for greed and self-interest. It is my choice to believe that this is where America’s heart lies.

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