Affinity fraud

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Affinity fraud is the abuse of the trust of others with the trust stemming from sharing membership in an identifiable group be it a socio-economic, religious or ethnic group. The term is used in a legal setting but it can also be used to explain persistent groupthink among intellectual and financial castes as popularised by economist Paul Krugman.[1] The result of affinity fraud can be a loss of trust as well as money — a fate usually reserved for the praying flock — or a reinforcement of false beliefs in the teeth of contradicting evidence — mainly found among people with power and wealth.[2]

[edit] Examples

Unsuspecting members of a religious organisation are targets of fraudsters since modern religions put emphasis on the claim that identifying oneself as a believer installs positive values like honesty and goodwill into the minds of the believer. Now the fraudster can prey on the assumption shared by the believers that all who identify as such would not stoop so low as to cause any sort of harm to a fellow believer. Turns out fraud in the name of god is a big business.[3]

In intellectual and media circles affinity fraud is often perpetrated by opinion makers, scholars and ideologues in order to enforce the conformity of political and economic views. Here the common characteristics like wealth and status are not explicitly mentioned but understood as related. An overwhelming chunk of the Washington D.C. punditry and financial elite subscribe to hard money views on monetary policy and to reducing social spending. The effects these views have when enacted are measured and will convince the average person to abandon these views as they have a generally detrimental effect on societies. But among financial elites these effects are not regarded as proof because a greater emphasis is put on what is important to the elite first.[4] In practice, most beltway pundits, journalists and advocates are rich and dabble in the stocks and investment world. Since hard money and high interest rates do well for some of these investment schemes and thus well for the rich, elites push for tight money policies. The financial interests are so aligned that even when reality of fiscal and monetary contraction paints a grim picture for the general population these policies are still championed by those in power.

[edit] Footnotes

  1. http://krugman.blogs.nytimes.com/2013/02/18/goldbugs-greece-and-affinity-fraud/?_php=true&_type=blogs&_r=0
  2. http://krugman.blogs.nytimes.com/2014/09/08/the-trillion-dollar-zombie/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body
  3. https://www.youtube.com/watch?v=vUv4dDavC6U
  4. http://krugman.blogs.nytimes.com/2013/01/18/fiscal-affinity-fraud/
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