UPDATE 29 June 2009
Madoff received a sentence of 150 years in prison today.
Original story 8 May 2009
The investors in Madoff’s Ponzi scheme received higher than average returns. Most of those who invested with Madoff had no idea how he was able to do it. It looked like magic. A recent episode on This American Life told the story of one father-in-law who warned his son-in-law that it was dangerous to invest so heavily with Madoff.
It wasn’t that the father-in-law had any special insight into Madoff’s formula or fraud. Rather the advice came on the common sense principle that it’s safer to diversify one’s investments so that if one sector goes bad there are other sources of wealth or revenue. The son-in-law obeyed dutifully but quite unhappily. For sixteen years the advice appeared to be very bad advice indeed. All the evidence seemed to be that Madoff had a magic formula and the son-in-law’s relatives were making a killing and pleading with him to defy his father-in-law and to re-invest in Madoff’s hedge fund.
The father-in-law’s advice seemed wrong up to the very moment that Madoff’s Ponzi scheme collapsed and Madoff was indicted.
This isn’t really about investing at all. It’s about faith. People invested in Madoff’s scheme because they believed in him and they believed in his magic. They didn’t (and don’t) know what that formula is but they believe that there was one. So they trusted—blindly.
That’s not faith. It’s what Stevie Wonder called superstition. For sixteen years all the evidence, all the pressure said “re-invest in Madoff.” Superstition said, “We don’t know how he’s doing it but he’s producing terrific returns. Look at the check he just sent me.”
The son-in-law, however, submitted to an authority and trusted that authority even when all the evidence seemed to be against it. Eventually the authority was vindicated and those who trusted in magic were decimated and those who believed a wise and good authority were, as it were, saved.
If the son-in-law was right to trust his father-in-law, how much wiser is it to trust in Jesus? Common sense is one thing, and it has the power to deliver us from perils in this life, but no common sense can deliver sinners from the wrath to come. Only Jesus, the wisdom of God, can do that.
Faith is only as good as its object. The Christian faith has a worthy object: Jesus the Christ. He was obedient. He was innocent and righteous. He was crucified, dead, and raised on the third day. He was seen by eye witnesses. He was seen ascending to glory. We have first-hand testimony of these things.
Magic and superstition come in many forms but they always disappoint, even if the illusion lasts for a time. Christ, the true object of true faith was there before Bernie Madoff and he will be there when the next wizard comes along peddling magic.
The Christian faith isn’t magic and it doesn’t ask for blind faith.