The Theory and Practice of Oligarchical Collectivism

Paul Campos shares the story of a tech zillionaire who allegedly pocketed $415,726 from an insider trading scheme. Campos asks:

Why commit a serious crime for a payoff that was, for the criminal, almost literally nothing in practical terms? Keep in mind that for a Silicon Valley legend like this guy, incredibly juicy investment opportunities are never more than a thirty-second phone call away, so the call he made to make this trade probably had an opportunity cost higher than his prospective payoff from making it, even if you ignore the potential criminal liability. . . .

So maybe this really isn’t even about money. Maybe it’s about the apparently irresistible urge to get over on the System, even when the System has rewarded you with so much money that more money should mean nothing.

On the other hand, in our world more money never means nothing, because the acquisitive habit can become as compulsive as any other perverse addiction. . . .

I have a different theory. Campos is asking, Why would someone so rich throw it all away for a trivial amount of money? My take is that the guy didn’t see himself as risking anything. From the zillionaire’s point of view, insider trading isn’t really illegal, in two senses.

First, the dude probably doesn’t think that insider trading is wrong. It’s just capitalism, friends helping friends. Indeed, he could well take the position that laws against insider trading are productivity-destroying interferences with the natural laws of the market (see here, for example).

Second, he probably doesn’t think he would personally suffer serious consequences if caught. He’s a pillar of the community, and judges are reasonable people, right? And, indeed, if you follow the link to the news article, you see this:

Last month, Mr. Bechtolsheim, 68, settled the insider trading charges without admitting wrongdoing. He agreed to pay a fine of more than $900,000 and will not serve as an officer or director of a public company for five years.

For a guy with billions of dollars, a million-dollar fine ain’t much. And, sure, he can’t serve as an officer or director of a public company for five years. . . . but there are other ways he can spend his time! And I doubt he’ll be socially shunned: he’s such a successful investor! And so rich!

I’m not saying he faced zero consequences, I’m just saying that I don’t think we need an elaborate theory of greed or irresistible urges or acquisitive habits. Dude did something that in his view might have been “technically” illegal, kind of like what you might feel if you took some pens home or used the office copier for personal items or parked illegally or whatever. I think the framing of this as a risky decision doesn’t quite match where he was coming from.