What Will Become of the Word “Ponzi”?

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When Bernard Madoff described his investment business as a ‘giant Ponzi scheme’, he gave a somewhat obscure phrase, used to describe a swindle that pays early investors using money from later investors, a huge boost. That day in December, the word Ponzi leapt into the public conscience and seemed to become contagious.

For a while everyone was using the word. Ponzi, Ponzi, Ponzi, it bounced around sounding like a slightly deflated ball. I couldn’t surf the web, read a newspaper, or have a conversation on the street corner without someone saying Ponzi. And since Madoff’s confession, many more Ponzi schemes have been laid bare by the bad economy. The billionaire Allen Sanford, Madoff’s neighbor Donald Young and a Tennessee financial adviser and are among the many that have been accused of running Ponzi schemes. But when the economy recovers and the accusations dry up, what will become of the word Ponzi? Will it continue to thrive?

imagedb4In search of answers, I look to Richard Dawkins. In his seminal work, The Selfish Gene, Dawkins coined the term ‘meme’ (rhymes with cream) to convey cultural ideas that transmit between people. A meme can evolve in a process much like natural selection. Ideas, like genes, replicate when moving from one mind to another. For example, if I hear a new phrase, I might write it in an email to a friend. The email could be forwarded to a group and the phrase passed around Twitter, only to spread further and, depending on its strength and usefulness, change and proliferate.

Aaron Lynch built upon Dawkins’ theory by suggesting that a meme can elicit behavior from its human host that will help to spread the idea. A flu that makes me sneeze, for example, will spread to you more easily than a flu that does not cause spray. This leads me to wonder if we can test phrases or words with meme theory to judge the likelihood of their continued use. What might make the word Ponzi proliferate?

According to Dawkins, there are three conditions that are necessary for evolution to occur 1) variation, or the introduction of new change 2) heredity or replication, or the capacity to create copies 3) fitness, or the opportunity to be more or less suited to the environment.

As the word Ponzi has not been in the public conscience for very long, it makes sense to test the conditions for evolution on an established example. On August 31, 1997, the day Princess Diana died, a word was thrust into our lives with a comparable force: Paparazzi.

1. Variation, or the introduction of new change.

Paparazzi is an eponym, a name derived from a person, from the character named Paparazzo, a news photographer, in the 1960 film La Dolce Vita directed by Federico Fellini. The word came to be commonly used in the plural, paparazzi, as freelance photographers searching for sensational stories often travel in clusters. A single photographer may now be called a ‘pap’ for short, while the act of having your photograph taken by such a person is called ‘getting papped.’

2. Heredity or replication, or the capacity to create copies.

Paparazzi, which sounds like a sneeze when shouted, spread as it became a convenient response in the absence of a definitive answer. Who was responsible for Diana’s death? Paparazzi. How could this happen to someone so full of life? Paparazzi. How did we come to this? Paparazzi.

3. Fitness, or the opportunity to be more or less suited to the environment.

Diana’s death was a defining moment in our relationship with celebrity. As the shock wore off, it became apparent that Diana had sometimes courted the attention of the media. Instead of a simple parasite and host relationship between the celebrities and the press, a more complex, symbiotic relationship came to light. Add in the growth of interest in celebrity since 1997, fuelled by magazines, websites and blogs, and we see how the word has prospered.

What happens if we apply the same test to the word Ponzi?ponzi-schemes

1. Variation, or the introduction of new change.

Ponzi is an eponym, a name derived from a person, coined in honor of Charles Ponzi who promised clients a huge return from postal coupons. The phrase, Ponzi scheme, is already frequently shortened to Ponzi and sometimes used to describe Hedge Funds. Ponzimonium describes the large numbers of Ponzi schemes uncovered during the financial crisis of 2008-2009.

2. Heredity or replication, or the capacity to create copies.

Ponzi, which sounds like a cough when shouted, is a word that has become a convenient response in the absence of a definitive answer. Who took all my money? Ponzi. How could this happen to me? Ponzi. How did we come to this? Ponzi.

3. Fitness, or the opportunity to be more or less suited to the environment.

The uncovering of Madoff’s investment fraud was a defining moment in the financial crisis. As the shock wears off, it becomes apparent that the seized credit markets make many leveraged businesses look like Ponzi schemes. Perhaps the definition will become broader? What if a bank’s investments sour and it needs to solicit new deposits to cover old promises? Does the social security system need more young workers to pay for the old? Add in the government efforts to spend and borrow our way out of the financial crisis and what seems like our collective conviction that buying and selling each other houses will make us all rich—what do you get? Ponzi.

Yes, I’d say the future for the word Ponzi looks pretty healthy.


Claire Cameron's first novel, <emThe Line Painter, was published in 2007 by HarperCollins Canada. It won the Northern Lit Award and was nominated for an Arthur Ellis Award for best first novel. Her work has recently appeared in the New York Times, The Globe and Mail and on NPR. More from this author →