Slog - Comments on The Era of Fraud http://slog.thestranger.com/2008/03/the_era_of_fraud The deadly, fraudulent, heparin sold by a Chinese manufacturer to Baxter shares much with the deadly, fraudulent, wheat gluten and gluttonous, fraudulent, financial crisis. These frauds are not accidents, slips of care, but rather deliberate attempts to game tests of quality, to turn garbage into gold. The toxic wheat gluten was doped with melamine, in a brilliant gambit to fix the protein content tests and make filler look like high quality protein. Overcompensated financial wizards, thanks to deregulation, managed to sell aggregates of dubious mortgages as high quality investments, cleverly bypassing all of the financial tests. In the case of... Copyright 2008 Mon, 24 Mar 2008 12:55:28 -0800 Tue, 25 Mar 2008 09:15:08 -0800 http://www.movabletype.org/?v=3.34 http://blogs.law.harvard.edu/tech/rss Comment by Justin broken link

]]> Justin http://slog.thestranger.com/2008/03/the_era_of_fraud#c977455 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977455 Science Mon, 24 Mar 2008 13:03:19 -0800 Comment by Will in Seattle One of the genetics researchers I was talking to at the 50th anniversary of Medical Genetics at the UW pointed out the major problem he and his Chinese research lab (he's Scottish, by the way) have is the quality and sourcing of any pharmaceuticals or any materials.

The only way they can be sure what they get is really what it's supposed to be is to follow it every step of the way from the source to the lab, because cheating and other fraudulent practices are endemic in current Chinese supply chains.

]]> Will in Seattle http://slog.thestranger.com/2008/03/the_era_of_fraud#c977459 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977459 Science Mon, 24 Mar 2008 13:07:29 -0800 Comment by John Chinese corruption is the prorblem, nothing else.

]]> John http://slog.thestranger.com/2008/03/the_era_of_fraud#c977466 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977466 Science Mon, 24 Mar 2008 13:12:01 -0800 Comment by tsm This kind of fraud is hardly unique to this era; adulteration, for example, had a long history in Victorian England and the US. If anything, an era when it does not exist is an anomaly.

]]> tsm http://slog.thestranger.com/2008/03/the_era_of_fraud#c977468 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977468 Science Mon, 24 Mar 2008 13:13:40 -0800 Comment by Megan Nicely done analogy.

]]> Megan http://slog.thestranger.com/2008/03/the_era_of_fraud#c977470 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977470 Science Mon, 24 Mar 2008 13:16:14 -0800 Comment by monkey Good post.

]]> monkey http://slog.thestranger.com/2008/03/the_era_of_fraud#c977472 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977472 Science Mon, 24 Mar 2008 13:18:07 -0800 Comment by boyd main Nice post

]]> boyd main http://slog.thestranger.com/2008/03/the_era_of_fraud#c977494 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977494 Science Mon, 24 Mar 2008 13:45:26 -0800 Comment by nbc The Heparin scandal disturbs me a great deal. But let's not forget that American companies sell broken shit to China too. I've seen it happen firsthand with consumer electronics that didn't pass QA for the American market. Capitalism requires the rule of law; when there's minimal downside to cheating, people cheat.

]]> nbc http://slog.thestranger.com/2008/03/the_era_of_fraud#c977498 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977498 Science Mon, 24 Mar 2008 13:48:52 -0800 Comment by NapoleonXIV You're beginning to sound like Charles, towards the end there.

]]> NapoleonXIV http://slog.thestranger.com/2008/03/the_era_of_fraud#c977499 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977499 Science Mon, 24 Mar 2008 13:49:00 -0800 Comment by Jonathan Golob @8. You put your finger on it. Laws and regulation are the only way to force solutions rather than frauds.

@1. Thank-you. I've corrected the link.

]]> Jonathan Golob http://slog.thestranger.com/2008/03/the_era_of_fraud#c977503 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977503 Science Mon, 24 Mar 2008 13:55:31 -0800 Comment by flamingbanjo The modern mania for deregulation, promoted under the sweet-sounding aegis of 'free-trade' ("see, it's got 'free' right there in the name! Who could be against freedom?") seems to inevitably lead to a Yankee-Trader style, caveat-emptor marketplace. It does not require an overarching, malevolent conspiracy to bring about effects like this, just an atmosphere like the one you describe, where the upside of unethical behavior outweighs the downside. Laissez-faire regulatory approaches seem to inevitably breed many little conspiracies, of factory managers substituting melamine, builders substituting substandard concrete, bonds traders substituting junk bonds. It doesn't require malice, just greed and a profound lack of foresight. The malicious effects take care of themselves.

The idea that government oversight of business is nothing but an unnecessary hindrance is such transparent bullshit that it's amazing how thoroughly it has taken root in the public consciousness. With story after story of the disastrous effects of this approach breaking on a daily basis, it boggles the mind that media reporting on these undlessly unfolding crises so rarely bothers to put two and two together.

]]> flamingbanjo http://slog.thestranger.com/2008/03/the_era_of_fraud#c977529 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977529 Science Mon, 24 Mar 2008 14:13:00 -0800 Comment by Bellevue Ave the problem with government oversight as it is and presumably would be in the future is that is so fundamentally conflicted about what it's job is as regulators. When the government finally gets a mandate from those that elect people to positions rather than who funds campaigns, maybe regulation will be sufficiently and practically applied.

It isn't enough to say more regulation is required if the net effect doesnt change.

]]> Bellevue Ave http://slog.thestranger.com/2008/03/the_era_of_fraud#c977605 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977605 Science Mon, 24 Mar 2008 14:43:08 -0800 Comment by Will in Seattle Exactly, @11. But you also need competence, something that GOP appointees never have and never will.

]]> Will in Seattle http://slog.thestranger.com/2008/03/the_era_of_fraud#c977665 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977665 Science Mon, 24 Mar 2008 15:19:03 -0800 Comment by Bellevue Ave i think regulation actually needs some teeth. more regulation of handslaps isn't actually encouraging anyone to stop fraudulent behavior, it merely makes it a cost of doing business. if regulation had the balls to penalize people in ways that mattered to the person and the business, we might see less of it.

]]> Bellevue Ave http://slog.thestranger.com/2008/03/the_era_of_fraud#c977673 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977673 Science Mon, 24 Mar 2008 15:23:44 -0800 Comment by Jonathan Golob Two distinct issues exist here, the failure of the Hobbesian capitalistic state (embodied by contemporary China) to efficiently produce legitimate products--as the most corrupt have such an advantage--and the inability to regulate the impossible into existence.

The world, with declining natural resources, needs to become six times as productive in a decade or two; it's not clear this is possible. It certainly won't happen in a regulation-free war of all against all. The only chance is with some rules to weed out the most heinously corrupt.

Nor would it happen if you simply demand the impossible--like asking all new cars to be powered by perpetual motion engines.

]]> Jonathan Golob http://slog.thestranger.com/2008/03/the_era_of_fraud#c977710 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977710 Science Mon, 24 Mar 2008 15:57:05 -0800 Comment by Bellevue Ave is it impossible to ask for people to enforce rules in existence before creating new ones they would subsequently half- assedly enforce?

]]> Bellevue Ave http://slog.thestranger.com/2008/03/the_era_of_fraud#c977719 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977719 Science Mon, 24 Mar 2008 16:01:03 -0800 Comment by bakfiets I'd guess that the rules are necessary, but not sufficient to get where you want to go re corruption. Culture is the ultimate arbeiter of behavior, not law. Law exists merely to protect the culture from being damaged. Our long lasting state of lawlessness and lack of real justice (in the financial and commercial realm) has damaged our culture such that dishonesty seems normal - the culture has been bent for so long that it's now stuck that way.


Changing the laws is necessary, but it may take some time for the culture to respond. And as Bellevue points out you need a willing enforcement arm, and the Bush admin has been running around with a scythe whacking away at that part, too...

]]> bakfiets http://slog.thestranger.com/2008/03/the_era_of_fraud#c977798 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977798 Science Mon, 24 Mar 2008 17:04:08 -0800 Comment by Bellevue Ave The issue of culure is an intteresting one I think there might be merit with that, but i'd also point out that the government hasn't provided any answers into shaping the incentives to not be skewed towards causing calamity.

Like Realtors for instance. Should an agent that sells a product that is subsidized by the government be held accountable if they use deception to encourage sales (I hate NAR for all the lying and phoniness they spout)? Or Mortgage Brokers? or appraisers? one of the problematic obstacles to squashing the bubble before it started was that local governments benefitted from these inflated prices and appraisals through property taxes...

Its like eexpecting a warden to stop prisoners from fighting when he makes money by orchestraring fights.

]]> Bellevue Ave http://slog.thestranger.com/2008/03/the_era_of_fraud#c977816 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977816 Science Mon, 24 Mar 2008 17:30:27 -0800 Comment by Bellevue Ave you know what should really piss all of you off? the bear stearns shit. http://market-ticker.denninger.net/2008/03/insanity-of-bear-stearns-jpm-continues.html

]]> Bellevue Ave http://slog.thestranger.com/2008/03/the_era_of_fraud#c977902 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977902 Science Mon, 24 Mar 2008 22:00:55 -0800 Comment by Greg Charles is beating off to this post right now.

]]> Greg http://slog.thestranger.com/2008/03/the_era_of_fraud#c977937 http://slog.thestranger.com/2008/03/the_era_of_fraud#c977937 Science Tue, 25 Mar 2008 00:07:58 -0800 Comment by Barry #4

Do you mean that coke was not 100 per cent pure? God, the guy lied to me.

]]> Barry http://slog.thestranger.com/2008/03/the_era_of_fraud#c978020 http://slog.thestranger.com/2008/03/the_era_of_fraud#c978020 Science Tue, 25 Mar 2008 09:15:08 -0800