The Cheating Revolution

Never let anyone know what you’re thinking

It is of the nature of a roller-coaster, and inherent to its function, that what goes up must come down. Its starting position is at a level at which the passengers get seated, which is necessarily low, and that is the level at which the train must later come to a halt.

The rise to the initial height from which the train is released on its up-and-down journey is a laborious grind. The passengers can hear and feel it: click-click-click-click-click-click, and so on. They are ratcheted up to the highest point of the route, upon which they are released, with the potential energy acquired through the new altitude over the old altitude being transformed into kinetic energy by gravity’s draw. That kinetic energy is then translated back into potential energy as the train rises, ready for its fresh descent. One element—friction—dictates that the initial height from which the train is launched can never be re-attained, not without the renewed help of a ratchet. The ride is an exhilarating one, but it is not a good metaphor for business.

We are constantly told that what business needs is predictability. It needs to know what its procurement will cost in the future, what interest it will pay on its borrowings, how much its payroll expenditure is going to be, when supplies will be delivered, and, for some, what its management bonuses will be, to name but a few of the predictable elements of commerce. Business does not like roller-coasters, because the downward sections of the ride may well give them a bit of a thrill, but the uphill slow-downs can have them wondering if they will ever reach the summit from which the next rush of adrenalin will be generated.

What is clear is that what we are told business wants is not really what business wants. What business really wants is an edge over the competition. And there are myriad ways in which it procures it.

1. Cabals, or antitrust arrangements: on the basis that one business selling equivalent products at a cheaper price than its competitors will assure it a large portion of the product’s market, all the sellers agree to sell at the same price, so that there is no cheaper price that customers can go to. This lowers the height of the summits on their roller-coaster ride, and ups the price at which they all sell. But they can do more than that.

2. Concentrations, amalgamations, mergers: these don’t constitute arrangements with competitors, these are means to eliminate competitors. Now an extra ratchet is introduced to get them to the summit faster.

3. Of course, with fewer competitors, there are less places where customers can buy their products. But there are also fewer places where people can work, so there is downward pressure on wages, and wages are the single biggest cost to a company (in retail, it’s about 40 per cent of outgoings). But if you’re the only place people can work, then you can pressure wages. And what if clever workers invent something? Then it belongs to the company, even if their job is not to invent things.

So the predictability that businesses need is not predictability about outside conditions, it is predictability in the way in which business can squeeze the two ends of the roller-coaster of which they are the train: the customers who buy their products, and the workers who produce them. That is what they want to be predictable, because things like interest rates and who’s in government and tariffs and all that are not so very unknown to them.

In the 1974 movie The Godfather Part II, Michael Corleone, played by Al Pacino, has a falling-out with his brother, Fredo, played by John Cazale. In a reference to the federal hearings surrounding true-life mobster Joe Valachi’s confessions in 1963, Michael is quizzed at a Senate hearing on whether he ever ordered killings to be done by his soldiers. He denies it, and, in a further development, we see how truthful he is.

During a get-together for mob members and influential gentlemen like U.S. senators and judges, which starts at a Folies-Bergère-style night club, Fredo is introduced to Johnny Ola, they shake hands and state that they haven’t met before. The party moves on to a sleazy joint showing stage sex acts, and one senator asks Fredo how he knew the place existed. Fredo lets slip that Johnny Ola had told him about the joint, thus revealing that the two had not met for the first time earlier in the evening. Michael now knows Fredo has betrayed him.

Back in Lake Tahoe, Michael turns Fredo out of the house, but recognises the need for him to remain in contact with their mother, who also lives with Michael, although he imposes conditions for him to do so. After Fredo leaves, Michael tells his trusted bodyguard, “I don’t want anything to happen to Fredo whilst our mother is alive.” That is clearly an instruction, to a trusted fellow, not to harm the person in question.

Some time later, their mother dies and a wake is held prior to her burial. Michael embraces his brother Fredo and, as he does so, he gives his bodyguard a significant look over Fredo’s left shoulder. The bodyguard later assassinates Fredo, as ordered: mother is by then dead.

Diplomacy is shrouded in technical language that conveys certain messages without being explicit. And government can do the same as well. It says what it will do, and then doesn’t do it, which sends subliminal messages to close advisers who sell the real information to corporations for high consultancy fees. They get insider information, and use it. The recent mini-roller-coasters of U.S. tariffs and cryptocurrency investment are clear examples—now’s the time to get rich isn’t even half as subtle as Michael Corleone’s significant glances.

Business doesn’t want predictability. It is gambling on unpredictable events that are a dead certainty. That’s what business wants: it wants an inside track on unpredictability, because it is that which makes the big winnings. The regular predictability that everyone knows about and which takes a large element of risk-taking to bear fruit was the scenario of the early industrialists. Chocolate-maker Mars failed in Tacoma before succeeding in Minnesota; Ford failed in many ventures before he developed the production line—and the financing arrangements in conjunction with the banks—that saw his model T take off. Early entrepreneurs really did have to risk their all for success. (TV viewers may remember the vagaries of The Onedin Line, a series that looked at the inception, and sometimes tempestuous saga, of a Victorian shipping company.)

Nowadays, success doesn’t come from shrewd ideas and management, it comes from cheating. Cheating customers on price and luring them into giving data that can then be valorised, cheating workers in terms of forbidding unions and theft of their wages, cheating the system in terms of getting their interests represented at the heart of government, cheating everyone by gaining insider information, of one sort or another, in order to slice outgoings and maximise income and thus secure gargantuan bonuses. It is the essence of gambling that either the gambler or the party running the book can equally win: after all a horse cannot win and lose a race at the same time. But business has its finger on the roulette wheel. It lives by the mantra that a contract is a meeting of the minds, whilst refusing to allow its contract partners to know what the heck is going on.

If the year 1800 saw the dawn of the Industrial Revolution, whose worst aspects led to Factories Acts and extensive regulation and enforcement, then in today’s world we have the Cheating Revolution, in which business is deregulated and unenforced, with vague promises to self-regulate (which is synonymous with no regulation), and cheating becomes a government-endorsed path to economic growth.

There’s cheating by governments as well. Some of it is pernicious, like bombing Gaza. Some of it is cute, like China’s promotion of fentanyl production, as a sort of revenge for the 19th century Opium Wars. Patents get reverse-engineered or simply copied without licence, or companies like Apple move production to China, which gives the Chinese an excellent means of conducting industrial espionage (with Apple seemingly under the impression that exploiting Chinese workers is fair, but China educating its workforce to reproduce Apple products just isn’t cricket …). If the Industrial Revolution was all about who was the better innovator, the Cheating Revolution is really all about who is the better cheat. And he who cannot cheat simply needs to be a better shot with a bigger gun.

Welcome to predictability. “Never let anyone know what you’re thinking,” Michael says to Vincent Mancini in The Godfather Part III. Good advice: Vincent becomes Michael’s successor. But this bit of prescient dialogue from The Godfather II takes the biscuit. Hyman Roth, the head of the Kosher Mob in Miami and Havana, tells Michael Corleone this about operating in Batista’s Cuba:

“Here we are—protected, without the FBI and the enforcement agencies breathing down our necks. Ninety miles away, partnership with a friendly government. Ninety miles—it’s nothing. Just one small step, looking for having a man who wants to be president and having the cash to make it possible. Michael, we’re bigger than U.S. Steel.”

Image: Lee Strasberg, as Hyman Roth, with Al Pacino, as Michael Corleone, in The Godfather II.