The Wizard of Lies: Movie Review
By Logan Watts, PhD
*Spoiler alert: This blog post contains info that might spoil the movie for you if you haven’t seen it yet!
It should come as no surprise that a movie called “The Wizard of Lies” is loaded with ethical implications. With a title that is undoubtedly a play off of “The Wizard of Oz”, the title foreshadows a character who is broadly trusted and revered as wise and powerful but ultimately turns out to be a fraud. The movie is based on the true story of the downfall of Bernie Madoff, a savvy investment tycoon played by Robert De Niro. Bernie Madoff is now infamous for running his multi-billion-dollar investment firm as a giant Ponzi scheme. A Ponzi scheme works like this. New investments are always required to cover any shortfall caused by prior investments. As long as new money is always coming in, the shortfall can be covered.
During the financial crisis of 2008, investors got spooked and started to pull their investments out. As a result, there wasn’t enough cash on hand to pay earlier investors back. In the end, Madoff lost some $65 billion. This money belonged not only to big fish; lots of small investors’ retirement accounts evaporated as well. In the end, Madoff was sentenced to 150 years in prison. In addition, all ties to his remaining family members—the people he claimed to build the empire for—were destroyed.
Throughout the film, Madoff rattles off a number of rationalizations, or excuses, for his crimes. For example, when he first started the scheme decades earlier, Madoff said he thought it would only be a short amount of time before he made enough money to manage the investments legitimately. Unfortunately for Madoff, unethical behavior such as deceit has a tendency to escalate until it’s discovered. There’s a reason lies are metaphorically referred to as webs. Over time, the web becomes too complex to sustain without getting caught. In providing this rationalization, Madoff reveals an important decision-making bias—an unrealistic optimism for the future.
Madoff also blamed the brokenness of the financial system. Following this line of thought, the assumption is that a healthy financial system would have never allowed such a scheme to thrive so long. In the real world, it’s impossible to have rules against every type of unethical behavior. That’s why we count on people to grow up and eventually become adults who understand that being an adult is more than just following the laws of society. Being an adult is about acting in a way that supports the good of everyone, or at least trying to.
Finally, Madoff even blamed “greedy investors” for not doing their due diligence before trusting him with their assets. Of all rationalizations, this one is particularly sad. Rather than accepting personal responsibility for the consequence of his crimes, he blamed his victims.
All three excuses listed here reveal Madoff’s decision-making biases. With each excuse, he attempted to shift responsibility for his behavior onto some external force—an unrealistic image of the future, a broken system, the flaws of his victims. We would be foolish to assume that Madoff is a monster or a uniquely “evil” person. The same capacity for biased decision-making lies in each of us.
The Ethics Advantage Team