Sunday, May 25, 2008

MLM and Skepticism

This post is a little break from the normal political shenanigans. I want to recommend that all of my readers (yes, all 2 of you) go and check out this article by Steve Novella at The Rogues Gallery blog on Multi-level marketing and nutritional supplements. Recently, one of our family members got involved with one of these schemes and I was flabbergasted that these types of business are still out there because they are just nonsense. Any job opportunity that requires you in order to make any money to get more people involved who are going to sell the exact same product as you to the same people is a job opportunity that goes against basic economics.

The companies work like this. They require you to recruit more people in order for you to make real money. But those people are also supposed to go out and recruit more people. All the while you are supposed to also be selling products. But those products are not where the real money comes from, it comes from recruiting more people. At some point you're just going to run out of people. 

Now when we questioned this family member about the soundness of this company, implying that it sounded like a pyramid scheme, he replied that it the company said it was not an illegal pyramid scheme. Of course it's not, it's a perfectly legal one. Since there is some product involved that acts as the medium to push the money upstream, it doesn't fall into the same legal problems as a typical pyramid scheme does. 

And their products always stink.

The Rational Moderate

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