“The house of delusions is cheap to build but drafty to live in, and ready at any instant to fall.”

—Poet A.E. Housman

He was once considered a pillar of his community—a wizard and a genius. But in the end, he was simply known as a villain and a notorious crook. Financier Bernie Madoff died April 14th in prison where he was serving a 150-year sentence for his elaborate scheme of “robbing Peter to pay Paul.” Otherwise known as a Ponzi scheme (named after Charles Ponzi of the 1920s), Madoff had out-ponzied Mr. Ponzi in the scope of his fraud and deception.  

Pity the Devil

The public reaction to Madoff’s death by some of those he defrauded was swift and somewhat predictable. A few said that death was too good for him. News outlets reported that the “anger lives on.” Yet, others have managed to move on (or bounce forward) from this and more heinous crimes.

I recently listened to an interview with clinical psychologist and Holocaust survivor, Edith Eger. Eger barely survived the atrocities of Auschwitz where both her parents along with countless friends were murdered. She lost the innocence of childhood and endured life-long emotional scars but still, she has said she feels little anger or hatred toward the Nazis—mostly pity. The Nazis would have been victorious if they had killed her spirit along with her family.

Although I have not been directly affected by Madoff’s deceits, and certainly believe justice was served by his imprisonment, I felt pity, rather than scorn or contempt, when I read an interview published in New York Magazine in 2011. In some ways, Bernie was no different than many of us in his self-deceptions even if the extent and impact of his deceptions were gross and crossed the line into criminality.

Magical Thinking

The quote from the interview that most struck me was, “I kept telling myself that some miracle was going to happen or that I was going to be able to work my way out of it.” How many of us have felt similarly about the holes we’ve dug for ourselves? I can remember living on credit cards at one point in my life thinking my lucky break was just around the corner. A family friend died before he worked his way out of his hole or came clean with his debts. Magical thinking kept him in the game until his body made the climb no longer possible.

The other relatable part of the Madoff interview was his acknowledgement of the agony of keeping his secret from his family and the rest of his universe. He said that he wished he had been caught sooner. Research reveals that most of us keep a dozen or more secrets at any given time. Harboring such secrets can cause us great distress; the more damaging we perceive the secret is to our self-image, the greater the suffering.

Chasing Rainbows

Madoff took responsibility for his crimes but he also hinted at the codependent relationship that exists between deceivers and those who fall prey to them. At a time when returns on investments were modest, Madoff’s firm claimed 15-18% returns. His victims were willing to believe that Madoff was a wizard who worked magic. In the early 2000s, I, too, believed—or wanted to believe—a financial planner who alleged our investments would yield 8% returns. The market collapse of 2008 was a wakeup call for many of us who succumbed to any manner of sleights of hand.

Years before Madoff’s death, composer and performer Alicia Jo Rabins wrote the screenplay, A Kaddish for Bernie Madoff. The Kaddish is an ancient Jewish prayer recited for the dead. Occasionally (but rarely) it is said for those are considered dead; i.e., those who have fallen from grace. Rabins imagined this happening for Madoff, who was Jewish.

On the day of Madoff’s death, the publication Forward reported Rabin’s sentiments: “Someone rises to power simply by telling people what they want to hear.” She said of Madoff: “His returns were statistically impossible. So the fact that so many in the financial world bought into it reflects a sort of messianism, I think — a longing for someone who can transcend the limits of life on this earth.”

The Upside of Delusions

Journalist Shankar Vedantam has released a book with an interesting take on self-deceptions, titled Useful Delusions. In his book, Vedantam points to the ways in which self-deception allow us to keep hope alive. From wanting to believe in miracle cures for fatal illnesses to the big break that will ensure financial success, a bit of delusional thinking may help us put one foot in front of the other.  

Entrepreneurs are masters at self-deception and, one could say, our society is better off for those deceptions.  A willingness to risk hard-earned money, precious time and energy to chase a dream requires trading in the microscope for rose-colored glasses. Most of our modern-day conveniences are the result of somebody or somebodies engaged in looking away from harsh realities.

Like most everything in life, moderation is key. A bit of self-delusion may be helpful but when the lines between reality and fantasy are indistinguishable, we have clearly gone too far.  To some, Bernie Madoff was the devil. To others, he was a reminder of the slippery slope of self-delusion.