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Comment by frankc | Hacker News Reader

This might be the most comically wrong piece of journalism I've read in my entire life. Ackman should be given a medal for what he's doing to this snake-oil selling pyramid scheme. He has even disavowed any personal profit from his investment. He hasn't made any secret of what he's doing. Short selling is a hugely important market mechanism that allows these fraudulant companies to be sussed out. If all the lobbying is disgusting to you, be disgusted with the system that requires it, not Ackman for playing the game. You don't think Herbalife is doing the same lobbying? I almost can't believe this article was published in the New York Times and not on a late night infomercial selling false hope to the downtrodden.

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If Herbalife crashed tomorrow, I would open the champagne. I think it's exactly as exploitative as Ackman has said. I think they -- like most network marketing efforts -- are in the business of selling hope to well-meaning, desperate suckers. It's a shame that the article doesn't cover any of that.

That said, I think the article raises a legitimate concern. The ends do not justify the means. Astroturfing, dubious involvement of community leaders and government officials, large checks, letters from 'average citizens" who don't recall writing: all bullshit.

I agree that we should hate the game. But the reason we should hate it is that when people play it, they weaken the foundations of our society. If we only hate that when the wrong people do it, then we're part of the problem.

By supporting people who play the game and play it with vigor, we're not only supporting but strengthening the mechanisms on which the game is based.

Every single one of the organizations which helped in the lobbying effort all have an incentive to preserve the problem to which they themselves are the solution (credit: Clay Shirky). Lobbyists and every organization described in this story are all trying to preserve all the problems with our current system. Without those problems, they'd all be out of a job tomorrow.

The fact that there is tons of money made playing this game gives all the big players incentive to hire the services of every institution and individual that makes a living off this game.

I'm all for Ackman doing something noble, but the profit motive is only serving to strengthen all the institutions that we should be trying to dismantle in favor of a more informed populace with better means to participate directly.

If I had to choose better the existence of a scummy enterprise like Herbalife and a totally screwed up lobbying system, I would definitely choose keeping around Herbalife as the lesser of two evils.

If only Ackman had some way to hold a short position on the power institutions running Washington D.C.

If Herbalife is scum (I have no personal opinion on that subject), then honest protests, lobbying and information should be enough. Making it a profit-oriented thing discredits the entire endeavor.

Besides, if you can profit from destroying a company for noble reasons, what's to stop hedge funds from destroying innocent companies in a similar way? Although maybe that already happens a lot.

Having argued in favor of the article, let me give some props to Ackman: honest protests here aren't enough. Scams of all sorts and this one in particular work by taking advantage of the vulnerable. Part of what makes people vulnerable is a lack of political power.

Given that our government is a pay-to-play enterprise, I'm glad that somebody is paying to go after Herbalife. If people are going to destroy something for profit, I'd rather it were an exploitative company like Herbalife. Rather than, say, a perfectly good mattress manufacturer: http://www.nytimes.com/2009/10/05/business/economy/05simmons...

Notice the article attempts to curry favor for the supplement company by name-dropping minorities: "Herbalife sells vitamins through distributors...many of whom are lower-income Latinos or African-Americans."

It is as though we should immediately side with a company on the sole basis that it purports to help minorities.

Folks, not every company that purports to work with minorities is good.

Many of these supplement companies are, in fact, peddling snake oil[1]. Who their distributors are should not be a deciding factor. I think back to the old command[2], "Do not deny anyone justice in his lawsuit simply because he is poor, nor favor a person's lawsuit because he is poor."

[1]: http://www.sciencebasedmedicine.org/?cat=7 [2]: http://bit.ly/1oFfDq1

You seem really sure of yourself.

Here's the counter argument from a noted short seller:

http://brontecapital.blogspot.com/2013/07/it-was-night-befor...

http://brontecapital.blogspot.com/2013/01/notes-on-visiting-...

That was an interesting read summed up in these final lines:

"Bill Ackman a Harvard educated (magna cum laude) billionaire New York hedge fund manager bet over a billion dollars on a short position (imperilling his fund and his reputation) without checking the facts. And he did not check the facts because he was so rigid with a misplaced silver spoon that he could not stoop to sit on a subway for thirty minutes and talk with poor people for ninety minutes."

Didn't check the facts? I've seen the 200+ slide PowerPoint he made on this, he's done gobs of research.

Without spending a minute examining the facts at ground level: i.e. checking how the company, and its distributors, actually work, not merely reading the fucking financials.

How would you do that assuming that most sales don't happen through people who regularly go to a Herbalife Nutrition Center?

I have to imagine that it was tongue-in-cheek. And if it wasn't, then I don't understand, either.

What is the really evil lobbying at play here? Telling a Congresswoman that a company has bad business practices and should be investigated by the FTC? His lobbying allegedly consists of: "organiz[ing] protests, news conferences and letter-writing campaigns." This is evil?

The innuendo that interests group and congressman switch their allegiance based on who has paid the most is pretty yucky, but also not Ackman's fault. But no, the general running of a campaign to bring down a terrible company is not a bad thing at all. I was alluding to some other comments here that used the word 'disgusting'.

The innuendo that congressman switch their allegiance based on who has paid the most is also just that, and mostly a misunderstanding of how the game works. You don't donate to people who don't agree with you: you donate to ones who do agree with you, to make sure they keep getting elected. If you're a coal company, you don't need to pay Congressmen to support strip mining the mountains bare. You can find plenty who believe deep down in their heart it's the God-giving right of people to do that. You then donate to those guys, to ensure they stay in power.

Political influence is both more subtle and more shocking than the popular caricature of "bribing a Congressman." American politics is far more sophisticated than that. Here, you don't just write a check to get the decision you want, at least not typically. You do things like convince an entire state that an industry that damages their health and their land is actually a crucial part of their culture, history, and heritage, and that anyone who wants to reign it in are an existential threat to their community. That's the kind of influence that a nosey prosecutor will never be able to pin on anyone.

Of course it's Ackman's fault - he's the one bribing all those people. He's much bigger problem than people taking the bribes. He's the one trying to exploit the system for financial gain.

Of course trying to ruin a company by bribing government officials to begin a witch hunt investigation is wrong if you stand to profit billions of dollars from that witch hunt.

Given the enormous profit he'll realize if he's successful in discrediting Herbalife, I can easily discount all of his other arguments as BS. He has no credibility in the matter if billions are at stake.

Note that I'm not defending Herbalife. Maybe they are scammy company that should be investigated and regulated more by the government - by that investigation shouldn't happen because a billionaire starts buying politicians, lobbyists and "non-profit" lapdog organizations.

US government already has established channel for complaining about unethical companies: Better Business Bureau. They don't need manufactured complaints.

I agree with your comments except this part: "US government already has established channel for complaining about unethical companies: Better Business Bureau. They don't need manufactured complaints."

The BBB is a private organization with nothing to do with the government. Some would say the BBB is a protection racket.

Ackman is outspent by Herbalife in lobbying: Ackman spent $264,000 last year vs $2 million by Herbalife

http://www.reuters.com/article/2014/03/09/us-herbalife-idUSB...

In general I think the whole "astroturf" critique is wanting. It relies for its efficacy on the notion that grassroots lobbying is pure and good and right. But there's nothing necessarily great about grassroots efforts. They can be just as wrongheaded, small minded, or self interested as any other interest group.

So sure astroturf campaigns try and borrow the positive glow of grassroots, but since the glow is undeserved to begin with that's a pretty minor peccadillo.

I only gave it a half-hearted read, but I assume it's standard journalism's "give both sides equal treatment."

Also known as "false equivalence" and is the reason why climate quacks get so much air time.

Comparing Bronte Capital to climate quacks is in itself false equivalence.

Fair enough.

Article seems relatively balanced to me. And I don't think we should fault Ackman for shorting a company he's lobbying against. But having publicized too-close ties w Representative Sánchez, any change in his Herbalife position should me met with serious suspicion. This isn't an article about the ethics of shorting & lobbying, or nutritional supplement pyramid schemes vs. Wall Street -- it's about insider trading.

Very interesting to note that bet happened nearly two years ago. Herbalife still has not crashed and Ackman lost half a billion on it already.

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