Nutritional BS and Pyramid Schemes

Vacuous and misleading medical and nutritional claims have in modern times found the perfect model for the selling of snake oil in the form of Multi-Level Marketing, or whatever your favorite pseudonym for pyramid schemes might be. The two go hand in hand, because people are already being trained to misrepresent the dubious financial merits of pyramid schemes, and that mind set is perfectly suited for bogus medical or nutritional claims as well. Since its inception MLM has flourished in this environment.

Fortunately, the times they are a changin’ and along with exposing fraudulent medical claims, slowly but surely MLM is about to be dismantled. From a strict economics point of view, any MLM is a pyramid scheme, because of how it works. Under unlimited recruiting of resellers, profits must go to zero. That much is economics 101. The FTC came close in the recent Herbalife settlement, but they stuck to the delusional idea that a legal MLM is possible and failed to curtail the unlimited recruiting, so Herbalife and others are happily recruiting away.

Spurious Health Claims from Kangen

On the Lazy Man and Money site, there was a recent post about Kangen water machines, which was well intended, but missed the point completely in terms of the false narrative of alkaline water and water electrolysis. I posted some comments. The article is great as far as it goes, but it misses completely the nutritional disaster we are living in.

John Oliver & Herbalife

This video is a hilarious examination of MLM, but we should keep in mind that the entire underlying approach to health: keep eating crap, but make up the difference with “meal replacements” and supplements, is putting the world on its head, and disastrous from a health standpoint. Unfortunately, there is a lot of money in it and regulators still have not figured out a way to deal with it, although it would be very simple. From the standpoint of economics 101, under perfect competition profits must eventually go to zero, and if you (and everybody else) is constantly recruiting new distributors, you are creating perfect competition and retail profits must go to zero. Furthermore, the way the FTC defines it the income from MLM must be driven from retail sales, not from recruiting, and therefore by their own definition every MLM is of necessity a pyramid scheme in economic terms – never mind the difficulties the FTC has in dealing with it legally.

Oliver on MLM

The Dream Podcast

A brilliant podcast series, The Dream, explores the nonsense of MLM. Dubious health and medical claims have always been natural allies of MLM. It is the modern equivalent of snake oil. The key insights from T. Colin Campbell about the nonsense of a reductionist approach to nutrition (or pharmaceuticals for that matter) are your best guide. I recently posted a YouTube video of his presentation which boils down his book Whole to the most simple terms.

1 thought on “Nutritional BS and Pyramid Schemes”

  1. That article on Kangen Water was actually published in June, 2014 – predating the John Oliver by more than a couple of years.

    Prior to that, I’ve written more about the MonaVie’s juice push around 2007 as a replacement for eating well due to a high ORAC score. The USDA stopped publishing its ORAC database because of supplement scams.

    I tend not to get into the nutritional aspect as deeply as other websites might, because my readership is likely more focused the financial aspect of the pyramid schemes.

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