Ignoring the Red Flags: Madoff and Materialism



Around the year 2005 it seemed that one of the the most respectable securities firms around was Bernard L. Madoff Investment Securities LLC. It was run by Bernie Madoff, who at that time seemed to have the finest credentials. He was the former chairman of NASDAQ, one of America's largest securities trading establishments. Around 2005 the word around the upper class elite was that many smart upper-crust people were investing their money with Madoff's company. His investors “included banks, hedge funds, charities, universities, and wealthy individuals who have disclosed about $41 billion invested with Bernard L. Madoff Investment Securities LLC,” according to a wikipedia.org page. According to the same page, famous people investing with Madoff included “Steven Spielberg, Jeffrey Katzenberg, actors Kevin Bacon, Kyra Sedgwick, John Malkovich... Zsa Zsa Gabor, Mortimer Zuckerman, Baseball Hall of Fame pitcher Sandy Koufax, the Wilpon family (owners of the New York Mets), broadcaster Larry King and World Trade Center developer Larry Silverstein.” For years, it seemed like you could make more money investing with Madoff's firm than with any other securities firm.

But in 2008 it was discovered that Bernie Madoff's company was guilty of a massive 64-billion-dollar fraud. Madoff was running a gigantic Ponzi scheme, a scheme in which investments can seem to do well as long as the investors don't all ask for their money back, in which case they will find they have actually suffered massive losses. It was the largest Ponzi scheme in history. Madoff plead guilty, and was sentenced to 150 years in prison. Investors lost tens of billions of dollars because of the fraud.

Long before the fraud became public, there were many red flags regarding Madoff's company: warning signs that people should have paid attention to, but ignored. In the year 2000 a financial analyst named Harry Markopolos had done research on Madoff's company, and concluded “that Madoff's numbers didn't add up.” He told the Securities Exchange Commission that it was mathematically impossible for Madoff's to be getting the returns it claimed using the strategies it claimed to use. But the SEC ignored his warnings, including a 2005 17-page memo which listed 29 red flags or warning signs, and which had the title “The World's Largest Hedge Fund is a Fraud.” Markopolos approached the Wall Street Journal in 2005 with his claims that Madoff's company was a fraud, but the Wall Street Journal ignored him.

It seemed that the “social proof” involving Madoff's company was so great that people ignored the red flags. Social proof is when people regard something as well-established or proven or sensible based on the number of people who support it, the depth of their commitment, and the prestige of the most prestigious supporters. Given all of the wealthy, famous investors who had given so many billions to Bernie Madoff, his company had tons of “social proof.” But its financial claims were bunk. When investors got quarterly statements listing their investment returns, they were being told outrageous falsehoods.

Now let us consider modern-day materialism, the belief system that reigns in today's universities. Materialism consists of unproven tenets such as the claim that life and biological species arose accidentally, the belief that there are no souls or spirits, and the belief that human mental phenomena (such as consciousness and memory) can be explained entirely by the brain. We may ask: is modern-day materialism its own system of institutional falsehood rather similar to the Madoff scheme, and is it a kind of scheme of misleading baloney in which people are year after year fed false information that cannot be true because the math just doesn't add up? Does materialism have its own red flags just as bad as existed for the Madoff company, red flags that are being ignored because of an abundance of “social proof” leading people to think, “It's too big to be wrong?”

Let us consider five cases in which the math just doesn't work for materialism (which includes the idea that mental activity such as recollection is caused purely by brain activity, and that life and humans arose purely because of accidental natural processes).

  1. Materialists claim that life originated from non-life, when there was some lucky combination of non-living chemicals that caused something living to appear. Scientific research has shown that even the simplest living microorganisms require more than 100 proteins. But a protein is a combination of hundreds of amino acids arranged in just the right way to achieve a functional effect. It has been estimated that the probability of even a single complex functional protein appearing by chance (from a random combination of its amino acids) is less than 1 in 10 to the seventieth power  -- more unlikely than  you guessing correctly the 10-digit social security numbers of seven consecutive strangers you met. It seems, therefore, that if mere chance is involved, we would not expect life to naturally appear from chance combinations of chemicals at any time in the history of the universe.
  2. Materialists claim that mankind originated from random mutations and natural selection. We know that there have been about 100 billion humans who have lived since 8000 BC. The total number of humans or human ancestors who lived between 300,000 BC and 8000 BC is less than 3 billion, and probably less than 1 billion. There has been little impressive human evolution during the 100 billion lifetimes since 8000 BC, with the biggest examples being only minor things like lactose tolerance or better breathing for some humans living in high altitudes. But according to materialist accounts, between 300,000 BC and 8000 BC there was an enormous amount of evolution that led to the origin of speaking humans and humans capable of math, art, architecture, agriculture, science and philosophy. This requires we believe that during less than 3 billion lives there occurred vastly more helpful  evolution than occurred during 100 billion lives. But the mathematics of random mutations make such a thing exceptionally unlikely – as unlikely as a country getting 30 tornadoes in one year, and then only 1 tornado in the next 60 years. Calculations of the "waiting time" period needed for only a tiny fraction of the random mutations needed to account for hominid changes presumed to have occurred between 300,000 BC and 8000 BC suggest that it would actually have required very many millions of years for such mutations -- billions of years, in fact (to use the figure in this table for  a string of only 5 nucleotides). 
  3. Materialists claim that memories are stored in the human brain, and materialist neuroscientists typically tell us that memories are stored in tiny brain components called synapses. But we know that these synapses are made up of proteins that have short lifetimes. The average lifetime of a synapse protein is only about two weeks. But old people can accurately remember experiences they had more than 50 years ago, or things they learned more than 50 years ago. This length of time (50 years) is some 1000 times longer than the two weeks that is the average lifetime of synapse proteins. So it seems that if memories are stored in the brain, they should not even last for  a thousandth of the maximum length of time that humans can remember things.
  4. Humans such as actors who play Hamlet or Muslims who memorize all of their holy book can remember vast amounts of information with complete accuracy. But we know that synapses and neurons are very noisy.  A scientific paper states, "Several recent studies have documented the unreliability of central nervous system synapses: typically, a postsynaptic response is produced less than half of the time when a presynaptic nerve impulse arrives at a synapse." Another scientific paper says, "In the cortex, individual synapses seem to be extremely unreliable: the probability of transmitter release in response to a single action potential can be as low as 0.1 or lower."  So synapses in the cortex often transmit signals with a likelihood of between 10% and 50%. If we do an estimate of how well humans should be able to remember based on the amount of noise in neurons and synapses, taking into account the need for a brain signal to travel through multiple synapses, we must conclude that if memories are stored in brains, we should not be able to remember with more than 1% accuracy. But Hamlet actors and Wagnerian tenors remember very large amounts of stored information with 100% accuracy.
  5. When people talk about the speed of brain signals, we typically hear an estimate of about 100 meters per second. But that is not a reliable estimate of the speed of brain signals, and is only how fast a brain signal may travel when moving across the fastest tiny parts of the brain (what are called myelinated axons).  A realistic estimate of the speed of brain signals would have to take into account the relatively slow speed of signal transmission through dendrites (estimated at only .5 meter per second), the very strong slowing factor of what are called synaptic delays (having a strong cumulative delaying effect), and another very strong slowing factor caused by what is called synaptic fatigue (a refractory period in which a synapse will often have to rest before firing again).  When you realistically take into account all of these factors,  as I have done at length in this post,  the math ends up showing that brain signals should not be able to travel in the cortex at much more than a snail's pace of about 1 or 2 centimeters per second.  But humans can remember very obscure memories instantly, such as when a quiz show contestant instantly identifies a randomly chosen name or place -- much, much faster, it would seem, than would be possible if our recall involved relatively slow brain signals moving about in our brains. 
In all of these cases, it seems that for materialism the math just doesn't add up. So there are lots of red flags suggesting materialism is feeding us falsehoods. But such red flags are being mainly ignored, just as happened in the Madoff case. Maybe it's for the same reason that it took so long for people to see what was wrong in the Madoff case: because there was an abundance of “social proof.” Just as the Madoff company had lots of "social proof" in the form of its prestigious investors, modern-day materialism has lots of "social proof," in the form of prestigious professors who support it.

Just as a Madoff investor may have reasoned that the Madoff company was “too big to be a sham,” someone today may reason that institutional academic materialism is “too big to be bunk.” But nothing is too big to be bunk or too big to be a sham.