The Roosterfish Economy
09.10.2018

One could be forgiven for thinking that a bunch of gangsters and grifters had installed themselves in the White House. Consider, for instance, the headline-grabbing example of President Trump’s former lawyer, Michael Cohen, who recently pled guilty to campaign-finance violations and tax fraud, and implicated the president in doing so. Following Trump’s inauguration, Cohen also reportedly scooped up handsome consulting fees—$600,000 here, $1.2 million there—by selling himself as an Oval Office insider to major corporations.

We are shocked, shocked by such revelations, yet the truth is that grifterism is increasingly widespread, even accepted, at all levels of American society.

A few months ago, New York magazine published an exposé about a con artist who, under the assumed name Anna Delvey, managed to infiltrate fashionable society and become a fixture on the international party circuit. It took years for her house of cards to collapse and the full extent of her criminal activities to be revealed: more than $160,000 worth of bad checks, a fraudulent $100,000 credit line, forged wire-transfer receipts, and unpaid bills at posh hotels.

Few would say Delvey’s new digs, on Rikers Island, are undeserved. But Americans’ love of scoundrels also dictates that her sordid tale be adapted for television by no less than Shonda Rhimes, a middlebrow purveyor of guilty-pleasure TV par excellence. What dramatic stories of individual offenders risk obscuring is just how widespread today is the practice of gaming the system. From exploiting loopholes to committing outright fraud, grifters profit from—and, in their sheer amoral self-interest, reflect—the collapse of the American dream.

Take Elizabeth Holmes, CEO of disgraced health-care startup Theranos. Her bogus vision for how to revolutionize blood testing was so captivating that it earned her company a $10-billion valuation—and more than a few glowing media profiles. Driven to become the first billionaire female tech founder, Holmes lied to investors, intimidated staff, harassed whistleblowers, and tried to kill the damning stories that eventually brought her down. Her company is now widely seen as the largest case of corporate fraud since Enron. (The film version, starring Jennifer Lawrence, is already in the works.)

Indeed, such enterprising young women may be the heroines late capitalism deserves.

Most of us will never be in a position to blow taxpayer money on fancy fountain pens or impersonate a Saudi prince. But my own social circle offers up plenty of minor examples: the woman who attended graduate school abroad while collecting unemployment in New York, the dog owner who got her pet classified as an emotional support animal so that she could bring him into restaurants.

Their offenses seem trivial, though, compared to that of the ex-Vogue staffer recently arrested and charged with selling her boss’s property and running up $53,564 in unauthorized purchases on her boss’s credit card. Grifterism, her behavior seems to say, just makes sense.

Indeed, such enterprising young women may be the heroines late capitalism deserves. (Delvey even managed to con the man famous for prosecuting Jordan Belfort, the Wolf of Wall Street.) In decaying societies, a great deal of energy is expended not on genuine economic or cultural activity—of the kind that got the 20th century dubbed the “American century”—but on ways to beat or cheat the system, to grab for oneself a larger slice of a smaller pie.

The crypto industry, which began as an end-run around a fraudulent financial system, is not immune. I know this better than most, having spent years reporting and writing How Money Got Free, a book covering the Wild West years of bitcoin. Last summer I wrote for Fortune about the initial coin offering craze, in which technologists sold millions of dollars worth of digital tokens to crowdfund their ventures, getting fabulously rich in the process—with the crowd left holding the bag.

In April, the Securities and Exchange Commission busted a startup whose founders allegedly raised more than $32 million in an ICO by inventing fictitious executives for their venture and claiming fraudulently to be working on a cryptocurrency debit card with Visa and MasterCard. While cryptocurrencies and their related technology, blockchain, show immense promise, the industry is rife with scams, along with outsized egos, outlandish hype, mismanagement, and cyber theft.

I have come to think of such malfeasance and system-gaming as “the Roosterfish economy,” after the one-armed grifter of that name in Southern novelist William Gay’s The Lost Country. The wily Roosterfish swindles rubes all over Tennessee, posing variously as a house painter, an exterminator and a door-to-door Bible salesman. Sometimes, feigning hardship, he simply begs.

And, just as Anna Delvey mingled with the rich and famous, the Roosterfish economy mimics and intersects with the ordinary one more than we’d like to admit. On Twitter, many tech leaders, including Vitalik Buterin and Vinny Lingham, are now plagued by impersonators, who copy their names and profile pictures and reply to their every tweet with a too-good-to-be-true offer, such as: “Send 1 eth to X address and get 10 eth back!”

A fool is born every minute, and no doubt some credulous followers of these worthies have been swindled out of their hard-earned crypto. Despite an outcry, Twitter has yet to find a solution. When Ethereum’s Steve Jobs is forced to change his name on a major social-media platform—to “Vitalik Non-giver of Ether”—in an effort to warn people, the scammers are obviously in the ascendant. And they have now infested Telegram and Instagram as well.

If these are the Roosterfish economy’s bottom-feeders, how much more pernicious is the influence of its elites? The Atlantic claims that an aristocracy of “the 9.9 percent” has ensconced itself at the top of American society, undermining the meritocratic ideal. “If the system can be gamed,” wrote the article’s author, Matthew Stewart, “well then, our ability to game the system has become the new test of merit.”

The damage such system-gaming does is more than economic; it is epistemological, undermining what we believe to be true about the hierarchies of merit inhabited by our colleagues and neighbors, not to mention our nation’s lawmakers and leaders. As Roosterfish explains in Gay’s novel, his name “ain’t nothin but a fancy way of sayin cocksucker.”

My generation’s growing cynicism about success—and support for socialism—comes from the perceived illegitimacy of so many hierarchies in place today. A recent GQ profile of showrunner Dan Harmon summarized the nihilistic philosophy of his hit show Rick & Morty this way: “We’re all just fumbling around in the dark here. Grab whatever you can.” Among millennials, Rick & Morty ended its third season as the most popular comedy on television.

We expect Russia and China to play dirty—one in nine members of Russia’s largest parliamentary body were found to have earned diplomas using plagiarized work, while Chinese theft of American intellectual property costs the U.S. economy as much as $600 billion each year—but the free world is supposed to be better than that. Call it hubris, but we like to think we’re living under the rule of law, not the law of the jungle.

My father, a small-business owner and former Air Force man, would never dream of cheating on his taxes. My mother, though perennially overworked and underpaid, refuses to filch so much as an office pen. They are good, upstanding people. But in the Roosterfish economy, I fear, they are the suckers.

Some fraudsters do get their just desserts. Delvey, whose real name is Anna Sorokin, sits in prison. Fozia Ali, a Somali woman who helped steal as much as $100 million of Minnesota taxpayers’ money in a massive daycare scam, pled guilty in March 2018 and is serving time.

There are still plenty of honest, hardworking Americans and immigrants, of the sort you hear praised in presidential homilies. My father, a small-business owner and former Air Force man, would never dream of cheating on his taxes. My mother, though perennially overworked and underpaid, refuses to filch so much as an office pen. They are good, upstanding people.

But in the Roosterfish economy, I fear, they are the suckers.

What is the solution? Regulators and law enforcement have roles to play. The SEC and other agencies are getting tough on ICO scams. Three major crypto exchanges—Bitstamp, Bittrex, and BitFlyer—have joined with the Winklevosses’ Gemini exchange to form the Virtual Commodity Association, a self-regulatory organization that aims to establish best practices, fight price manipulation, and provide “an additional layer of oversight” for crypto-asset markets.

And yet, however well-meaning such efforts are, new regulations often simply pave the way for new forms of exploitation. Some forms of rent-seeking and system-gaming—such as the Minnesota daycare scam, which abused the state’s social-welfare apparatus—even arise as a direct result of government involvement or incompetence.

Perhaps blockchain technology really can bring greater transparency and efficiency to business and government; perhaps the centers of power can be decentralized. But society is still waiting for the hype men of the “blockchain revolution” to deliver on the hype.

A lasting solution may come only through something as improbable, and as hard to achieve, as a moral transformation of the country. Such a sea change might start by curtailing the social acceptance of cheating and fakery, swiftly and severely punishing fraud, and enshrining respect for ethical standards ahead of the markers of success.

Just as nothing can bring you peace but the triumph of principles, according to Emerson, so it may be that nothing can reform the Roosterfish economy but a revolution of character.

Until then, those with the cheat codes to life will continue to thrive.