After The Hockey Stick Illusion by Andrew Montford (about Stephen McIntyre’s criticisms of Michael Mann’s hockey-stick graph), I read No One Would Listen by Harry Markopolos (sent to me by the publisher), about the Madoff case. They have plenty in common.
Size. According to Elizabeth Kolbert and New Yorker fact checkers, “thousands of scientists at hundreds of universities in dozens of countries” are sure that humans are disastrously warming the Earth. Madoff stole about $60 billion from thousands of investors. Helped by dozens of hedge-fund managers.
Hans Christian Andersen. The lesson of The Hockey Stick Illusion was that of The Emperor’s New Clothes, as I said. Markopolos mentions that story at least twice.
Failure at the top. In The Hockey Stick Illusion, Nature magazine and the National Academy of Sciences dismiss McIntyre’s criticisms. In No One Would Listen, the Wall Street Journal was given the story and, for three years, failed to do anything with it. They covered it only after Madoff confessed.
Regulatory failure. Science is said to be “self-regulating,” meaning that mistakes will be noticed and fixed by other scientists. Unfortunately for that homily, McIntyre wasn’t a scientist. In No One Would Listen, the no one of the title means no one at the SEC (Securities and Exchange Commission). After hearing Markopolos’s story, a congressman says the SEC “couldn’t find steak at an Outback”.
“It cannot be”. Just as Kolbert believes that a “hoax” of such size isn’t possible, many people told Markopolos that what he was claiming wasn’t possible. One of the best stories in No One Would Listen is about a colleague of Markopolos’s named Frank Casey, who helped Markopolos investigate Madoff. Casey’s job is selling financial products. After a sales call at an insurance company, the prospective customer, after declining to buy anything, asks Casey about Madoff. Casey is stunned. It felt like a random sales call. Casey tells him what he knows. It takes a half hour. Then the insurance executive explains his question. He recently married into “an extremely wealth Jewish family.” Madoff was at his wedding. After the wedding, Madoff took him aside and said he’d get him “set up” (meaning invested in Madoff). The insurance executive, after studying Madoff’s claimed returns, thought something was fishy and refused to invest. This got him in trouble with his father-in-law. “It’s your job as my son-in-law to take care of my daughter, and you should be putting your money with Bernie,” the father-in-law said over and over. His refusal to invest with Madoff is causing serious friction, he tells Casey, andÂ begs Casey to put what he said in writing so that he can convince his father-in-law to withdraw his money.Â Casey writes a long email. The insurance exec brings it to his father-in-law and reads it out loud. “It can’t be,” says his father-in-law. “Bernie wouldn’t do this to me.” The father-in-law does nothing. They lose everything.