Comment by wredcoll
6 hours ago
Look, this is a mostly reasonable, if slightly vague, article about investigating fraud and mechanisms by which you do so.
What it lacks is any concrete suggestion as to what should change, beyond some vague allusions that perhaps racial/ethnic profiling should make a comeback.
The real problem here though is that the entire article ignores the duty[1] the government owes its citizens.
It's "fine"[2] if stripe or visa or whoever flips a coin and if it's tails they decide this person isn't allowed to be a customer of their company. The company loses any profit they might have made and life goes on.
It's considerably more problematic when the government refuses to serve a citizen (or even worse, levies an accusation).
There's some famous quotes about how many innocent people are appropriate to harm in the pursuit of the guilty but I'll leave those up to the reader.
[1] duty feels like too weak of a word here. Obligation? Requirement? The only reason the government even exists is to benefit the citizens.
[2] it becomes rapidly less fine when the company essentially has a monopoly over a system requires to participate in modern life, but that's a different topic...
> beyond some vague allusions that perhaps racial/ethnic profiling should make a comeback.
It suggests nothing of the sort, and in fact explicitly attempts to establish that none of this is intrinsic to any affinity group. The point isn't that the fraudsters in this case were of a particular ethnicity; it's that they shared an ethnicity, which enables the kind of internal social trust that fraud rings require.
Further, it suggests many clear heuristics that are nothing to do with ethnicity. The suggestions are clear and explicit; they just happen to involve occasionally denying services without proof of already-committed fraud, which you apparently consider unacceptable. But here is an experienced person telling you from expertise, with abundant citations and evidence, that nothing else really works, and furthermore that this is common knowledge in a well established industry specifically devoted to the problem.
This article isn't vague at all. It references various sources, and uses precise language (if you can recognize it) to convey its message. Yes, innocent until proven guilty, but the fact that the government has "lesser" educated Fraud analysts, chooses to ask for reimbursement of overbilling, and many more nuanced topics talked about in the article is not vague.
It's very indirect. The message is "the government is soft on fraud, partially because of liberal values", but the author does everything possible to not actually say it.
I don't think that's indirect at all. It's pretty clearly what did in fact happen in Minnesota. I don't read the author as claiming it's endemic to liberal values, any more than the isomorphic pathologies are endemic to the finance industry (which Patrick also writes about), or the defense industry. Again: it's easy to find Democratic sources saying the same thing.
Why is it so difficult for people to acknowledge that Minnesota fucked this up badly? What is that going to cost us? The attempts to downplay it seem pretty delusive.
So what is supposed to change based on that? Pay more for better fraud investigators? Accept a lower burden of proof like stripe et al do? What's the take away here?
If you want a TLDR; style take-away, the last paragraph is a good place to start:
>"Responsible actors in civil society have a mandate to aggressively detect and interdict fraud. If they do not, they cede the field to irresponsible demagogues. They will not be careful in their conclusions. They will not be gentle in their proposals. They will not carefully weigh consequences upon the innocent. But they will be telling a truth that the great and the good are not.
The public will believe them, because the public believes its lying eyes."
7 replies →
McKenzie uses paraphrases to avoid writing certain keywords. For example, he never writes "DOGE" or "Elon Musk" in this article. Instead, he writes "We had a poorly-calibrated federal initiative led by a charismatic tech entrepreneur."
If you've been reading the news then you can decode these paraphrases, but they do make his articles significantly harder to read.
I'm tempted to ask an LLM to replace them with more straightforward references.
It references sources that don’t claim what it says they do. Notably the Minnesota report alleging 50% fraud does not say that.
> [2] it becomes rapidly less fine when the company essentially has a monopoly over a system requires to participate in modern life, but that's a different topic...
That's the real thing here. Concentrated power is scary-- whether it's the federal government, Visa/Mastercard, Google, etc.
At least power concentrated under the control of a government might be held accountable to the people. With private, concentrated power: fat chance.
I'm working on making it a thing, but my theory is that power can't be destroyed, merely transferred, and in most cases I'd rather have the power be vested in a democratic government.
Suppose an asteroid strikes the Earth and all human life becomes extinct. What power, specifically, has been transferred, and to where?
The best option is it being decentralized and diffuse and operating through market mechanisms.
If that leads to bad outcomes, then government is a next best choice.
(Of course, all the special cases, natural monopoly, etc etc etc-- government has a role in addressing the bad outcomes associated with those).
He literally writes about how the claims of racism and profiling were in bad faith, intended to frighten the state investigators, and that this is known from email communications revealed in discovery on some of these prosecutions where the fraud participants discuss the strategies they will employ to maximize the impact of their bad faith allegations of racism and racial profiling. There is no ambiguity here so I don’t understand why you still want to carry water for these fraudsters.
I've called the phenomenon of private corporations refusing service the "Maoists in the Risk Department" in the past.
The reason why risk departments all inevitably reinvent Maoism is because the only effective enforcement mechanism they have is to refuse service. Fraudsters are fundamentally illegible to businesses of this size. And as the article stated, recidivism rates in fraud are high enough that someone caught doing fraud should never be given the time of day ever again. So the easiest strategy is to pick some heuristics that catch recidivist fraudsters and keep them a jealously guarded secret.
This calculus falls apart for the government. If someone rips the government off, they can arrest them, compel the production of documents from every third party they've interacted with, and throw them in jail where they won't be able to rip anyone else off for decades. Obviously, if we gave the Risk Department Maoists these same permissions, we'd be living under tyranny.
Well, more tyranny than we already live under.
But at the same time, the fact that we have these legal powers makes Risk Maoism largely obsolete. We don't need to repeatedly reinvestigate the same people for the same crime "just in case".
> The reason why risk departments all inevitably reinvent Maoism is because the only effective enforcement mechanism they have is to refuse service.
How is it Maoist to refuse service???
> This calculus falls apart for the government.
It really doesn't. The judicial process is expensive and jail time isn't at all proportional to the amount defrauded (especially not when there is no political appetite for locking up a disproportionately "racialized" set of culprits, never mind the facts); nor does it solve the problem of recovering those funds. Further, the projections on the amount of fraud uncovered make it seem rather likely that a high percentage of those responsible are going free.
> We don't need to repeatedly reinvestigate the same people for the same crime "just in case".
The entire point of the system you're calling "Risk Maoism" is that it does not involve reinvestigation; it involves a presumption that reinvestigation would be a waste of time.
My take is that we lack granular punishments.
Right now we have either some form of fine, and while this can be incredibly painful, usually is not, then we go straight to like multiyear prison sentences, with perhaps a few suspended sentences in between there.
I dunno, maybe a world where "you did a small bank fraud so now you have some kind of antifraud system attached to you" is genuinely worse than the one we live in now, but the idea of being able to target more specific aspects of someone rather than just prison/not prison seems interesting.
I guess we have stuff like "not allowed to use a computer for 5 years" (thanks hackers movie!), dunno how effective or practical that is.