mattnewport comments on Normal Cryonics - Less Wrong

58 Post author: Eliezer_Yudkowsky 19 January 2010 07:08PM

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Comment author: mattnewport 05 February 2010 09:11:57AM 2 points [-]

Scam is perhaps a little strong, but it does seem like a perfect Ponzi scheme. The basic idea of a Ponzi scheme is that you can pay off your existing investors with the proceeds from new investors, as long as your existing investors are happy with your annual reports of profits.

Cryonics promises an indefinitely deferred payoff - you pay into the fund now for a chance at a huge payoff sometime after you die. As long as you can sustain a positive cash-flow you never have to pay out from the fund. People won't get suspicious for quite a while - you can always claim you don't want to risk damaging your charges by subjecting them to experimental revival procedures. If you don't believe in what you're selling you'll be (permanently) dead before anybody gets suspicious. Meanwhile you will have enthusiastic customers evangelizing you based on their huge 'paper profits' - they've paid you a paltry $300 a year for the promise of eternal life.

If Bernie Madoff could get away with cooking the books for 20 years in one of the most heavily regulated industries in the US with the relative handicap (compared to cryonics) of actually having to pay out on occasion then it is at least plausible that a cryonics company could be a profitable enterprise for someone who did not believe in cryonics. Of course, if it is easy to verify that they are storing brains in liquid nitrogen it doesn't necessarily matter if it's a scam.

Comment author: ciphergoth 05 February 2010 09:19:13AM *  0 points [-]

So you'd publish honest, or at least non-fraudulent, accounts?

Comment author: mattnewport 05 February 2010 09:26:24AM *  0 points [-]

I'd publish legal accounts. If I get to play by the same accounting rules as a 'too big to fail' bank then I wouldn't call them honest accounts.

You actually don't need to do anything illegal or even that morally questionable to make good money from an insurance business. People pay you to hold their money. It's why Warren Buffet loves insurance companies:

The Power of Float

The source of our insurance funds is "float," which is money that doesn't belong to us but that we temporarily hold. Most of our float arises because (1) premiums are paid upfront though the service we provide - insurance protection - is delivered over a period that usually covers a year and; (2) loss events that occur today do not always result in our immediately paying claims, because it sometimes takes many years for losses to be reported (asbestos losses would be an example), negotiated and settled. The $20 million of float that came with our 1967 purchase (National Indemnity- NICO) has now increased - both by way of internal growth and acquisitions - to $46.1 billion.

Float is wonderful - if it doesn't come at a high price. Its cost is determined by underwriting results, meaning how the expenses and losses we will ultimately pay compare with the premiums we have received. When an underwriting profit is achieved - as has been the case at Berkshire in about half of the 38 years we have been in the insurance business - float is better than free. In such years, we are actually paid for holding other people's money.

(emphasis mine)

Cryonics seems like a pretty great source of 'float'.

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