In architecture, pyramids are
famed for their sturdiness. They’ve lasted for thousands of years despite
overgrown jungles and blasting desert sands
ripping at their foundations. They’re about as indestructible
as our buildings get. But as businesses? Not so much. A pyramid scheme beings to collapse
the moment it’s begun. Because it’s not really a pyramid. The base is flipped. And if you invert a pyramid,
you’re left with a funnel. There’s not a lot of buildings
that are shaped like a V. In 1997, Albania learned a very hard lesson
about funnels. No matter how much water you pour into them,
it doesn’t stop trickling halfway down. If something sounds too good to be true,
it probably is. Be it a beautiful woman looking to chat online,
a company that says you can retire at thirty-five, or a politician saying that he’ll make your
country great again, they’re all selling a fantasy. The world is never so simple as jingoists
would have you believe. The whiff of money, power and fame are
an intoxicating aroma, and conmen know it. For the inexperienced and desperate, the idea
of getting rich quick is an easily masked scheme. Especially once you build
a community around it. A cult by any other name. We’ve all heard their siren songs:
“Be your own boss in one easy step. The secrets they don’t want you to hear. Earn thousands per month
from the comfort of own your home.” You know, so on and so forth. They’re never all too complicated. The simpler the pitch, the better it works. They aren’t trying to convince you with facts,
they’re trying to convince you with emotion. Any analysis and it’s quickly obvious that
the only thing holding up the base is a lie. And lies make for a terrible foundation. I’d like to say that I presume you know
what a pyramid scheme is. But given just how successful they are,
and having seen my own, university-educated friends
fall victim to them, perhaps I should briefly
cover them just to be sure. Pyramid schemes come
in a number of different flavours, but they mostly tend to fall into three specific categories: Classic, Ponzi and MLM. While their tactics differ, in effect,
they’re all offering the same thing. You give someone above you money and do your
best to convince people below you to give you theirs. MLMs often call their customers salespeople, asking them to buy products they know they’ll likely never sell. And on paper, these scams create massive growth,
especially at the outset. The stated intent of the scheme is essentially
to be growing exponentially. But just like all things exponential,
the numbers required to keep that going past
the early stages are almost unfathomable. For a ponzi scheme asking each tier to find
three people below it, all it takes is thirty tiers before you’ve surpassed
the entire planet’s population. It’s like driving a car towards a wall. The only question is what speed you’re going
to be going when you crash. Yet, it seems like we’ve learned nothing
from history, because they’re still everywhere. They range from as simple as sending cash
in an envelope to as complex as buying
fake coins on the internet. Sometimes there’s no product beyond
a vague financial structure, other times you’re asked to hoard
THRIVE patches or Herbalife pills. But at their core, they’re all the same. Money funnels to the scammer,
and everyone else watches in vain
as their investments disappear into thin air. The only person left eating is
the one who fed you the lie. Pyramid schemes prey
on the ignorant and unprotected, so it should come as no surprise that they’re
most prevalent in countries with little
to no financial regulation. Unfortunately, this defines
post-revolutionary Albania. After Communism collapsed here, people were
rightly excited for a capitalist future. After fifty years under a totalitarian regime
whose dictatorial control had meant that you had no way to get ahead,
things were changing. But education was limited, especially
in free market economics, and the idea of personal wealth
was a foreign concept. Both literally and figuratively. It was the poorest nation in Europe,
and everyone felt the brunt of that weight. In the winter of 1991, as the regime fell
around them, the situation deteriorated to the point that the only thing stopping mass starvation was Italian food aid. Life was very hard. But as awful as communism was,
it wasn’t as if the switch to capitalism
somehow guaranteed them a better life. Even for those of us who’ve grown up
our whole lives in the system, avoiding scams is a larger challenge
than we’re willing to admit. Most of us expect our laws
to protect us from them. To protect our seniors as their minds
begin to wander. To protect our children before they’ve come
to know the value of a dollar. A society thrives when P. T. Barnum
is held back for that proverbial minute. So for many of us, protection against predation
is a foundation stone of a successful capitalist state. But Albanians had no protection. For people with little to no awareness
of what the free market was like, the positives of the transition
were not guaranteed. For many, it was the financial equivalent
of being thrown to the wolves. The crippling market protections of a failed
communist state became the crippling anarchy
of unchecked capitalism. Rarely is the best solution to an extreme
the introduction of the opposing extreme. While it may have been an armchair
libertarian’s paradise, for the average person
on the ground it was hell. Because once the protections were removed, the only people with enough power to take advantage were the ones who had power to begin with. As proto-capitalism swept across the nation,
ex-communist leaders, the mafia, and vulturesque foreign investors
snatched up everything. It would have taken incredible political will and
a genuine desire to do right by their people
for the transition to live up to its promises. And unfortunately Albania
had neither of those. But the promise of capitalism rang out
in the ears like a bell. In a country where people’s salary barely hit 50 dollars a month, where there were more donkey carts than cars, where there was not
a single stoplight in the entire country, Western style wealth must have seemed
like an unattainable dream. Like this secret world you knew existed,
but you could never reach. And in a situation like that,
conmen are bound to thrive. By 1996, the equivalent of 10% of the national GDP became tied up in what everyone had come to believe were unstoppable, high growth investments. Pyramids schemes. As competition increased among the scammers,
some investments began offering
up to 40% interest per month. The central bank couldn’t afford rates nearly
close to what were offered on the private market, so people naturally gravitated towards
those that promised the highest returns. And as they grew, the government hovered either
between silent or openly supportive of the schemes, which led investors to believe they were legitimized, perhaps even backed with public funds. It began to snowball. People mortgaged their homes, sold their farms,
cashed out their savings, and put their hopes
in the fantasy of unbridled growth. A resident of the capital was quoted as saying
in 1996 that the city smelled like a slaughterhouse as legions of farmers came to sell their livestock
in the hopes of joining the boom. As their power reached its zenith,
they must have seemed unstoppable. Both the ruling party and the opposition
found themselves corrupted. The Prime Minister even had his economic advisor imprisoned for telling the truth about
the oncoming collapse. The IMF warned the government that the scams
were being used to launder money out of the country, and the corrupt president shot back, accusing them
of trying to hinder Albania’s newfound success. Anyone in the country who wasn’t on board
was shouted down, accused of being communist holdouts unable to adjust to this prosperous new world. But it was a con. Massive, unchecked ponzi schemes run by mafioso
and government officials alike, milking the nation to the brink of collapse. When the car finally hit the wall in 1997,
it had nearly maxed out its speed. As the scams began to fall and it was clear what was about to happen, those in power dragged their feet, attempting to throw their support
behind the remaining scams. They were in too deep. Riots broke out. The military and police had been scammed just as much as the citizens, and they began to desert their posts. Millions of guns disappeared from armories. A full scale revolution was on the brink. Government offices were burnt to the ground,
and hundreds of protesters were beaten and arrested. Within a few months, most of the country had
slipped from the government’s control. Tens of thousands fled the nation, starting
a population decline that continues to this day. Seeing their political futures crumbling
alongside the pyramids, politicians turned the nation’s remaining guns
on those who they’d robbed into insolvency. But it was futile. The system collapsed. In the end, nearly two thousand people
lay dead in its wake. In a country of just under three million,
over a hundred and thirty thousand lost everything. As the people forced the president from his post,
an interim government was put in place and began trying to stop the hedging. Assets were frozen on the remaining pyramids,
some of the worst perpetrators were put in prison, and the country began the long road
towards recovery. But there was nothing they could do
to turn back the clock. The money was gone, and for those who’d invested, the price of this lesson came at the cost of their entire lives. Everything they’d built was washed away
in a moment of confusion and greed. The water had all funneled down the spout. And in the end, there wasn’t a drop left
for anyone else. But the point of telling this story is not
to shame the Albanians for their lack of awareness. They’re just a symbol for the rest of us. A symbol of our need for financial regulation. All of our nations are susceptible to pyramid
schemes, and no matter where you’re from, we’re all capable of being duped
by a confidence men. The higher their boat rises, the more we imagine
it deserves to be there. But this happened because the government
of Albania let it happen. Because people felt that seeing numbers rise
was the same as benefiting from a growing economy. Because it funneled money
to the people in power. Which brings me to the United States. There are many of you who will not
want to hear this next part. Most people in the middle of a confidence
scheme will fight tooth and nail to legitimize it. They’ve invested their personalities in this,
let alone their money, so even hearing that it might not be true is enough
to send them reeling. Remember that a con man won’t sell you facts,
but emotions. Because they know that you’ll fill in the
rest, and once you’re invested a penny, psychologically you’ll be invested a pound. In 2015, the United States had over 18 million people invested in MLMs, with sales of nearly 36.5 billion. That’s a full percent of the population
higher than it was in Albania. And even though these schemes exist in every country on earth, the reason I speak of America specifically is because their president is
famous for taking part in them. ACN is a multi-level marketing company
out of Concord, North Carolina. For nine years it provided Donald Trump with millions of dollars in exchange for hype and access to his name. In turn, he even went so far as to promote
their products on the Apprentice. Despite being named as a pyramid scheme by
the Montana Commissioner of Securities in 2009, and having to declare bankruptcy in 2011, he only stopped repping them when he ran for president in 2016. Ideal Health, an MLM selling multivitamins,
was also featured on the Apprentice. They too, gave him millions of dollars. Only instead of them searching him out,
he found them. In the late 2000’s, Donald Trump was specifically
looking for an MLM to sell his name to. And within a year of them meeting,
Ideal Health was renamed The Trump Network. It specifically targeted those who had been
hurt most by the financial crisis. Trump said it wasn’t be a pyramid scheme
because it had a product. But if you remember from before,
that’s just pyramid number three. The only version currently legal in America. And within his cabinet it only gets worse. Betsy DeVos, Trump’s Secretary of Education, is married to the owner of America’s largest MLM, Amway. With 9.5 billion worth of product pushed each year,
it’s the 29th largest privately held company
in the United States. Director of HUD Ben Carson, much like the president before him, also served as a frontman
for an MLM called Mannatech. Carl Icahn, who was Trump’s advisor on federal regulations, owns 24% of Herbalife, one of the largest pyramids in the world today. And of course this isn’t just limited
to Republicans. Since 2017, 48 members of Congress, 14 Democrat
and 34 Republican, have been working to pass a bill that provides further protections from
litigation for operators of pyramid schemes. In true conman fashion, they’ve named it
the “Anti-Pyramid Promotional Scheme Act”. But it only gives them more power. This is bigger than the president. It’s a symbol of our complacency. A symbol of our ability to be conned. Confidence men are given that name for a reason. They create cults around themselves. Cults of wealth. Cults of personality. Cults of confidence. And in turn, we open our wallets to them. We vote for them. It was no different in Albania. They felt they were making their country great again too,
right up until they didn’t. If we don’t believe that the government’s
job is to protect us from these conmen, it won’t. If we don’t force them to put regulations
in place that stop scams, they won’t. We’re not immune to the examples of Albania. One of first orders Donald Trump made as president
was to remove a law that stopped financial planners from having to manage retirement funds in their client’s best interest. The elderly have always been an easy mark,
and the money trapped in retirements is massive. Their stated reason was that it would
increase the economy. But don’t forget that on paper Albania prospered
right up until the moment it collapsed. That’s how cons work. I’m not anti-capitalist. Far from it. I firmly believe in the individual nature
of society, and our ability to write our own stories. But there’s a limit to all things. Extremists almost never realize
they’re extreme. Cultists almost never realize
they’re in a cult. The answer to unchecked communism is not
unchecked capitalism. Increasing the speed that we’re driving towards
that wall only brings about destruction faster. Regulations exist to protect us from predators,
and that’s a good thing. Fight for them. Remember your role in all this. And for the love of God, don’t expect the water
to stop trickling halfway down. This is Rare Earth. Do these bunkers come with a toilet?
Probably not.