Kenan initiative leads to Balleisen’s new book on history, ethics of fraud

When Edward J. Balleisen launched the Kenan Institute for Ethics’ Rethinking Regulation program in 2010, he was already deep into research on a history of business fraud in the United States.  Through a series of interdisciplinary conversations, research collaborations, and engagements with journalists and policy-makers made possible by Rethinking Regulation, he developed new questions and perspectives on that research.

ed balleisen-fraud book-coverThen, in early 2014, KIE sponsored a day-long manuscript workshop for Balleisen, which brought together scholars from across the Triangle and from disciplines ranging from history, political science, sociology, and economics to philosophy, neuroscience, and law, as well as North Carolina’s Deputy Attorney General for Consumer Protection. Feedback from the workshop was crucial as Balleisen crafted the final version of his newly published book, which pieces together a modern history of fraud, its far-reaching impacts on America, and the regulatory policies put in place to contain it.

In “Fraud: An American History from Barnum to Madoff,” Balleisen, an associate professor of history and public policy and vice provost for Interdisciplinary Studies at Duke, weaves stories of dishonesty and efforts to limit deceptive marketing going back to the early 19th century. He explores challenges of social trusts in a modern, capitalist economy and investigates what makes consumers and investors vulnerable to fraud.

“Fraud is a perennial problem for any capitalist society,” Balleisen said. “We tend to go through periods of generational amnesia about regulatory structures that we put in place after sufficient recognition of the costs associated with widespread fraud, but there’s always a tradeoff. To enact policies that tend to restrict opportunity for deception means inevitably restricting opportunity for competitive sales practices. In moments when economic stagnation becomes an abiding concern, policy-makers tend to pull back on the regulation of deception.”

Finding an appropriate middle ground, Balleisen noted, can be difficult in a country with a longstanding history of facilitating and promoting innovation. The freedom provided to entrepreneurial firms that offer new products, services, and ways of doing business inevitably generates cases of financial and consumer fraud, he said.

“It’s also sometimes hard for people to agree about what is fraudulent in the first place,” Balleisen said, especially in the midst of rapid changes in the business environment.

For more information about Balleisen’s book, “Fraud: An American History from Barnum to Madoff,” visit its page on the Princeton University Press website.