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November 14, 2011

The Cult of Personal Loyalty: A Moral Ponzi Scheme


Once Upon A Time, there was The Mission: Preach the Gospel (the church). Educate Pennsylvanians (Penn State). Run an investment house (Bernie Madoff). Win the Tour de France (Lance Armstrong).

Sometimes the Organization loses sight of the Mission. Politics and money provide incentives to drift. Short-term goals provide seductive motivation. While the mission statement plaque is still hanging in the lobby, now the organization is really about maintaining power; it has been corrupted.

One way of maintaining power in a human system is developing a cult of personal loyalty, in which the individual's loyalty to the (CEO, Coach, Manager, Bishop) is prized more than accomplishing the Mission.
Feb. 2 1943, The Christian Science Monitor   link


"Many of President (Franklin D.) Roosevelt's best friends and well-wishers have often asked why he is so seemingly obtuse to unethical or improper appointments, business or lobbying activities, etc.. when they come from his own immediate circle, and so vigilant on numerous other far less important matters? What is this Achilles heel, anyway?

"The answer, it always seemed to me, lies in Mr. Roosevelt's continual and deep demand for personal loyalty. I would almost call his political faith the 'cult of personal loyalty.' From his friends, associates and staff he expects and returns a feudal bond. Manifestations of personal loyalty have marked his whole political career . . . Labour Secretary Perkins, Harold L. Ickes, Harry L. Hopkins. Thomas G. Corcoran, and many another.. . as long as these people continued to give fervent loyalty, as long as they kept their faith of their feudal bond, they could, in effect, do no wrong. Loyalty was enough for the President.       Edwin D. Canhom


A cult of personal loyalty requires perceived power, the promise of future benefits, and a claim to special insight. As the cult grows beyond a few participants, it can permit indulgences to the select few. Subsequent arrivals to the loyalty cult suspend their moral judgement for the promise of (and the proximity to) power; the early arrivals enjoy the most direct benefits of conspiracy. It's a moral Ponzi scheme.

When you have a situation where people are loyal to you personally and are invested in your success (as opposed to the original Mission) you can get away with a few things, and with time the scope of what you choose to get away with becomes larger. Eventually, you might be charged with a crime but the judge setting your bail will be tied to the cult of personal loyalty.

The corrupt monster takes on a momentum of its own. In any incremental moment ΔT the tendency is to keep the momentum moving - nobody wants to stand in front of the Machine. Go along and get along. I'm just doing my job. I got kids to feed. You can't beat {PennState, the Feds, Wall Street, the Church}.

Over time, the cult grows in numbers and the indulgences become more extreme. As the Ponzi scheme tolerates ongoing injustice it becomes less legitimate and increasingly hollow. No system is without constraints; there's a tipping point at which the vulgar indulgences for the core beneficiaries start to become unacceptable to the outer participants, at least at the current benefit level.

When protecting the {Firm, Facility, Program, Coach, Boss, Bishop} perversely morphs into tolerance, acceptance, and then protecting the unacceptable; when maintenance of power takes precedence over basic justice and operational effectiveness, the moral legitimacy of the institution is lost and the consent of the people will be withdrawn.


There is a great thing about Americans that is too often forgotten: we will tolerate authority and power only as long as it enjoys the consent of the people.

Without the consent of the people, power will not last.


When the corrupt organization goes too far and loses the consent of the people, it crashes like a wave moving across a shoal; the peak is no longer supported by the base, the moral Ponzi scheme crashes, and we see that the Emperor-manqué has no clothes and that something is rotten in Podunk. Sometimes we imprison the ringleaders, if only to assuage the dissonance of the collaborators.

The most grieviously injured are the innocent victims of the terrible wrong-doing; the boys of Happy Valley, the families foreclosed and evicted, etc.

Cults of personal loyalty and moral Ponzi schemes promise more than they can deliver. You can't swindle an honest man, and the people that buy into the scheme generally have themselves to blame. The only winners in a Ponzi scheme are the people who get in and get out early enough to leave the wreckage to the suckers.

The small tragedies, generally self-imposed, include the newcomers to the Ponzi scheme who think that they can delay the crash by defending the perpetrators; the naive True Believers who invested their identities in the sham; and the unfortunate last participant who didn't get the memo, still actively jawboning for a cold, dead mafia.


Perhaps the most twisted charade is the charismatic salesman who creates the Cult of Loyalty, blends his own identity with the moral Ponzi scheme, and then believes his own hype.

When the tipping point is reached and the cult of personal loyalty is breached, many sordid details will come to light. Those who are not caught will stay low and hope to retain influence; No, not me, I was never a {Sandusky donor, Party Member, Enron trader}. Human nature is to ride the wave.
  • Can the Sandusky scandal be the only secret?
  • Is there an Attorney General who didn't prosecute, who maybe didn't want to be running for Governor as the guy that charged Paterno-Sandusky? Did he become governor, was he placed on the Board of Trustees and did he then fire Paterno, hoping to deflect any attention from himself?
  • What of the curious case of Ray Gricar, the missing District Attorney?


More than the questions being asked, what's going to be interesting is the level at which they choose to stop asking questions.

Milan Jundera said it: The struggle of man against power is the struggle of memory against forgetting.

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