# The power of powers: schemes, scams, and panties.

Have you heard of the latest, sexist, women-only twist on the traditional chain letter? It seems that

women from San Francisco to Australia are being urged to

forward new panties to the name at the head of a list and

add their name and size to the bottom. (1)

The Mathsemantic Monitor hasn't received this particular chain letter and won't reply if he does. He doesn't happen to need the "pile of new undies" promised to "those who comply and send on letters to their friends." However, if you, dear reader, happen to get a copy of the letter that you don't need, please send it to the

Mathsemantic Monitor

c/o ETC.

to add to his collection of mathsemantic oddities.

The theory behind chain letters is that you send out letters to, say, 100 people; some of whom (say 10) continue the chain by sending out their own letters, adding 1,000 new recipients; some of whom (say now, 100, at the same 10 percent rate) repeat the process, making 10,000 more recipients; some of whom (say, 1,000) repeat the process, making 100,000 more recipients; some of whom (say, 10,000) repeat the process. Each party continuing the chain through some number of steps (five seems the usual number) is also to send you a small sum. In tabular form, such an example looks like this:
```Round Mailers Letters Drop Outs Continue On
1 1 100 90 10
2 10 1,000 900 100
3 100 10,000 9,000 1,000
4 1,000 100,000 90,000 10,000
5 10,000 1,000,000 900,000 100,000

Total 11,111 1,111,100 999,990 111,110
```

The Mathsemantic Monitor's chain-letter collection (begun in 1993) now includes the following schemes (with some duplicates), each proclaiming that it's a legal multi-level marketing plan, because either actual sales or bona fide charitable gifts are involved. The plans, their essential features, and their claims ("illustrative" payouts, not the highest mentioned) are as follows:

1. Recipes for \$2. Buy one recipe from each of the people listed in positions #1 through #5. Remove #1 from the letter, move numbers #2 though #5 up, and add your own name and your recipe name at position #5. From the list suppliers shown, order 100 or more names of new prospects and mail each a copy of the revised letter. Expect to receive about \$222,220 (a 10 percent response, 111,110 responses in all at \$2 each) in about 60 days. Send each your recipe. (2)

2. Reports for \$5. Buy one multi-level sales report from each of the people listed in positions #1 through #4. Remove the #1 person's name from the letter, move numbers #2 though #5 UP, and add your own name at position #5. From the list suppliers shown, order 200 or more names of new prospects and mail each a copy of the revised letter. Expect to receive \$55,550 (a 5 percent response, 11,110 responses in all of \$5 each). Copy and send each a report. (3)

3. Useless service for \$1. Send \$1 to each of the people listed in positions #1 through #5 with a note saying, "Please add my name to your mailing list." [This apparently has no further operational effect on anything.] Remove name #1 from the letter, move numbers #2 though #5 UP, and add your own name at position #5. From the list suppliers shown, order 200 or more names of new prospects and mail each a copy of the revised letter. Expect to receive about \$54,240 (a 7.5 percent response, 54,240 responses in all of \$1 each). Consider yourself to be in the mail order business. (4)

4. Wealth documents for \$50. Send a blank \$50 money order to get the "Treasury of Wealth Documents" (four in all, A, B, C, and D, each assigned a "security code" representing an earlier participant in the program). You will also receive a "Procedure Guide" and "Camera Ready Masters" typeset with your own "Security Code." Mail out 500 or more of the original solicitation. Rely on the packager (Wealth Masters International) to handle all the other details. Expect to receive about \$542,400 (a 3 percent response, 54,240 responses in all, from which you get \$10 each) in about twelve weeks. (5)

5. Holiday gifts for \$15. Make seven copies of pages 3 and 4 of the solicitation. Keep one, send one to KNM Ventures with \$10 to join the Holiday Unity Foundation, and send \$10 to each of five people ("your five new friends"). Each will send you one page of secret techniques to use in filling your ten-new-member quota. Send an additional \$5 to each of your original five "new friends" on December 1 as a holiday gift. Expect to receive about \$1,656,650 the first year (\$15 each from 111,110 new friends of yours). (6)

Faced with such claims, many people rely on the rule, "If it sounds too good to be true, it probably is." The rule usually works well. Unfortunately, it also steers one away from truly unusual opportunities. I still wince at a chance I lost back in the late 1940s, when, taking a break from my studies at the University of Chicago, I ran our society's office. This journal, ETC., then edited by S.I. Hayakawa, was printed by Pantagraph Printing and Stationery, whose salesman, one Ed Bryan, would drop in from time to time. During one visit he told me of a demonstration he'd witnessed of a revolutionary dry-printing process. Bryan said it couldn't compete with ordinary printing, but still might eventually amount to something. He suggested that investing in the fledgling company might make sense. I passed. A dry printing process? It struck me as too far out. You guessed it. Xerox.

Mathsemantics and alternaquential decision making often provide a way to distinguish good from bad opportunities more definitively than the broad rule allows. (7) Take chain letters, for example.

Mathsemantically and alternaquentially, chain letters raise questions about the worldly effect of a number's power, the mathematical term for how often a number is multiplied by itself, which is usually expressed as an exponent. Thus, "2 times 2 times 2" yields the third power of 2, for which the mathematical notation in exponent form is [2.sup.3], which equals 8. The main thing to remember about thinking alternaquentially is to ask, "And then?" (8)

If you use this extensional device (not yet on the "official" list), the "And then?" you'll find that powers live up to their name. I learned this first from my father's version of an old story, which I followed with poker chips on a checkerboard. It seems there was this king who offered a rich reward to a subject who had rendered an unusual service. But the offer was declined. "Oh, King, that is too much. All I need is that you pay me one cent in the first square on this checkerboard, two cents in the second, four cents in the third, and so on, just doubling like that until all the squares are filled." The King readily agreed. At first all went well: one cent, two cents, four cents, eight cents, sixteen cents, thirty-two cents, sixty-four cents, reaching one hundred twenty-eight cents in the eighth and last square of the first row. That required my stacking some of the poker chips at the side of the board.

The first square in the second row required two hundred fifty-six cents, and I ran out of poker chips. Yet the remaining seven squares in the second row and then six more rows of eight squares each -- in all, 55 of the 64 squares -- were completely untouched. I imagined how they would look if there were enough chips to continue the progression; imagined them overflowing the checkerboard, filling the room, perhaps our whole apartment. It was a powerful extensional lesson.

Yet in truth I was too young to appreciate the modesty of my imagination. I didn't grasp that it would take more than a thousand chips to satisfy the eleventh square, more than a million for the twenty-first, more than a billion for the thirty-first, and more than a trillion for the forty-first. I didn't grasp that even though counted out in pennies, the value represented by the chips required for the forty-seventh square would exceed the gross national product of all the countries in the world. Some modest request of a king!

For the record, the number of poker chips required for the sixty-fourth square would be:

9,223,372,036,854,777,856

This poker-chip example uses just the power of two, and, compared with the chain letters, it's penny-ante. Scheme #1, for example, the recipe plan, increases by the power of ten. You mail letters to 100 people, ten of whom in total then mail 1,000, a hundred of whom then in total mail 10,000, a thousand of whom in total then mail 100,000, ten thousand of whom in total then mail 1,000,000. You receive payments of \$20 (10 people at \$2 each) on the first round, \$200 on the second, \$2,000 on the third, \$20,000 on the fourth, and \$200,000 on the fifth round. There's a good reason, of course, for stopping the chain-letter claim right there. A sixth round would require mailings to 10,000,000 people to raise \$2,000,000, and a seventh round would require mailings to 100,000,000 people to raise \$20,000,000. They're aren't quite 200,000,000 adults in our country, so seven completely unduplicated rounds of this chain letter couldn't work, even theoretically, for more than one person. But let's generously assume it would work for two people.

Working backwards, then, a six-round chain on this scheme couldn't work, not even theoretically, for more than twenty people, and a five-round chain couldn't work for more than two hundred people. Yet to benefit these two hundred people would take a total of 222,220,000 mailings to that many theoretically unduplicated people, 22,222,000 of whom would have sent \$2 each. So, ignoring what economists call transaction costs (postage, paper, time, etc.), the 22,222,000 would collectively be out \$44,444,000 and the two hundred exactly that much richer.

The Mathsemantic Monitor was once the research director of a direct-mail service firm that addressed more than 250,000,000 letters a year for various clients. It was his job to pick the names. These had been compiled from virtually all the telephone books in the country, even handwritten ones used by rural mom-and-pop telephone companies. The names were recorded on about forty million IBM punch cards stacked in bins on shelves, from which they were accessed with forklift trucks. Computers make things easier today, of course. But this is still certain: There's no way to send mail to 250,000,000 Americans, let alone that many different families, without duplicating some addressees. Nor would you want to. (9)

Scheme #2 (reports for \$5) also increases by the power of ten (200 letters at a 5 percent response yields ten letters). Scheme #3 (useless service for \$1) increases by the power of 15 (200 letters at 7.5 percent). Scheme #4 (wealth documents for \$50) also increases by the power of 15 (500 letters at 3 percent, factors that mean a sixth round would require mailing 379,687,500 letters, clearly impossible). Scheme #5 (holiday gifts for \$15) increases by the power of ten.

Schemes that sound plausible but that enrich a few original people at the expense of later arrivals who are necessarily left holding their own unfilled bags are called Ponzi schemes. The name honors one Charles Ponzi, the "Boston swindler," who attracted investors by claiming he could make money from the differences in value of international postage coupons. (10) So long as later investors support payoffs, the earlier ones make money. However, a Ponzi scheme inevitably collapses for want of further investors.

Some people are now questioning whether social security in the United States is a Ponzi scheme. The social security plan sounds plausible, because it presumably returns (with interest and adjusted for inflation, one would expect) what participants put in. But the participants' contributions are not invested. Benefits are not paid from accumulated earnings, as in a private plan. Rather, the benefits are paid out of the current contributions of those in the work force. Thus, with longer lives and fewer workers per retiree, either the workers of the future face higher deductions or the retirees face lowered payments. On the other hand, unlike a Ponzi scheme, imbalances in social security develop slowly.

As general semanticists know only too well, the world seems to have an inexhaustible supply of people ready to repeat old mistakes. A particularly embarrassing example came to light in my "backyard" this past May 15 when the Foundation for New Era Philanthropy (New Era) filed suit for bankruptcy. The next day the Pennsylvania attorney general filed suit, "accusing [New Era head, John] Bennett of fraud." (11)

According to almost daily stories during June 1995 in the Philadelphia Inquirer, Bennett allegedly promised to find, within six months, charitable donors desiring, plausibly, to remain anonymous, who would match, and therefore double, the funds of non-profit institutions deposited with New Era. Apparently there were no charitable donors, only people eager to double the money of non-profit institutions. Among the headlines:

* 2 helped hundreds lose millions to charity: Two local religious leaders served as middlemen for New Era. Together they collected nearly \$20 million this year. They generally got 10 percent for arranging investments. (12)

* SEC: New Era Misused \$55 Million. (12)

* Rockefeller gave Bennett millions, got little back: A Rockefeller spokesman said \$8 million is missing. (12)

* Region's United Way may lose \$2 million invested in New Era. (13)

* Bennetts purchase of home reviewed: He wrote checks totaling \$850,000 on New Era accounts. (14)

* Reality unraveled his dream: Jack Bennett's drive to give advanced with him, until it went awry. (15)

* Where is the accountability in the New Era scandal? (15)

* Philanthropic practices of the devout foster exploitation. (15)

* Some New Era "creditors" owe money, trustee says: Some groups got back more than they invested, he said. And individuals meant to give to charity anyway. Objections are likely. (16)

* Near end, a frenzy at New Era: More than \$1 million a day was being given out. (17)

* Amount owed by New Era slashed: The foundation estimated its debt at \$551 million. The court trustee threw out \$315 million in claims. (18)

* New Era creditors choose new trustee. (19)

Media speculation has concentrated on the so-called "investors." How could they believe in anonymous donors and fall for a double-your-money-in-six-months scheme? Why did so many otherwise intelligent and well-meaning people fail to discover the fraud?

The Mathsemantic Monitor wonders more specifically about John Bennett and mathsemantic education (Bennett is reported to have graduated from Temple University in 1963 with a bachelor of science degree). (20) What can we infer from his buying a new home for \$620,000 in cash in 1994? (21) Did he really expect to live there very long? Didn't he comprehend that needing to double funds every six months (annual growth by the power of four: 4, 16, 64, 256, 1,024) meant that New Era had to fail? Inevitably? And soon?

NOTES AND REFERENCES

(1.) Newsweek, August 14, 1995, page 6, under the heading "Femail."

(2.) Received 8/23/93 and again, in a retyped version with different participants, 11/30/93.

(6.) Received 10/15/93 and again, with different participants, 10/18/93.

(7.) For an unusual example of the kind of trouble one risks by considering actions and consequences separately, rather than together--i.e., rather shall alternaquentially--see the previous article in this mathsemantic monitor series, "Looking Ahead: Why the real lesson of Vietnam eludes Robert McNarnara," ETC.: A Review of General Semantics, vol. 52, no. 3, Fall 1995.

(8.) See Edward MacNeal, "When Does Consciousness of Abstracting Matter the Most," ETC.: A Review of General Semantics, vol. 43, no.1, Spring 1986.

(9.) Even chain-letter address suppliers must recognize that some names work better than others. Could that explain why I received six such letters in just over three months (8/23/93 to 11/30/93)?

(10.) Francis Russell, "Bubble, Bubble--No Toil, No Trouble, The career of the amazing Charles Ponzi," American Heritage, vol. 24, no. 2, February, 1973. International postage coupons can be converted to postage in any participating country. The Mathsemantic Monitor, for example, has used them to increase response to surveys sent to other countries (where ordinary U.S. business reply envelopes would not be honored). Given the frequent changes in postage and currency rates, some small differences in the homeland price of coupons and their foreign postage value must occur. However, going extensional by asking "And then?" reveals that the transaction costs of handling the coupons makes them impractical "investments."

(11.) New Era is located in Radnor Township, Delaware County, Pennsylvania, where I live with my wife, who has taught Bennett's daughters at Agnes Irwin School, which made deposits of \$400,000 and \$250,000 in 1994 with New Era (that were doubled and returned) and an unreturned deposit of \$1,000,000 in 1995, yielding a shortfall of \$350,000 (Philadelphia Inquirer, June 2, 1995).

(12.) Philadelphia Inquirer, June 1, 1995.

(13.) Philadelphia Inquirer, June 2, 1995.

(14.) Philadelphia Inquirer, June 7, 1995.

(16.) Philadelphia Inquirer, June 17, 1995.

(17.) Philadelphia Inquirer, June 18, 1995.

(18.) Philadelphia Inquirer, June 23, 1995. New Era had reported its promised doubling of deposits (the "Ponzi profits") as debts, including \$7.9 million to the Academy of Natural Sciences, \$8 million to Drexel University, \$7 million to Gordon-Conwell Theological Seminary, \$8.9 million to Laity-Lodge, \$9.7 million to the Philadelphia College of Bible, \$8.3 million to Laurence S. Rockefeller, and \$8.5 million to Young Life, among many others.

(20.) Philadelphia Inquirer, June 11, 1995.

(21.) Philadelphia Inquirer, June 7, 1995.

Can humor deliver a serious message? On one hand we have playing baseball (the territory); on the other, baseball TV, statistics, film, stories, etc. (maps). In futuristic "Baseball(2250)" (ETC., Summer 1995) entrepreneurs use clones to re-enact past games, as clones represent living symbols carried to the extreme. The story below explores the idea that for language to function usefully, we must connect it with experience. As Irving Lee points out, putting language first leads to dysfunctional, un-sane behavior; while putting facts first grounds us in experience, and helps us think and act more effectively. (1) In the following tale, clone verbalizing suggests a methafor for using language (and intelligence) without experience.

The Mathsemantic Monitor, A persona of Edward MacNeal, whose Mathsemantics: Making Numbers Talk Sense, published by Viking Penguin in 1994, is now being translated into Korean.