Hate pays

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Posting about hate is not my style, but understanding how and why it flourishes is in my opinion the only way to effectively combat it.


While some may not agree with me I firmly believe that equality is an equation based on a algorithm framed by a logical progression of thought and to that end we must continue to face hate with compassion, but to do so we must also focus on the need to engender a greater understanding of its roots as well as turn a keen eye towards how this very emotionally complex social problem is driven by a coherent albeit skewed plan that as you can see from the article below is often reflected in economics.   Does is pay to hate? Emotionally it takes it toll but hate can also be a very lucrative business and because of this we need to begin to approach the solution with an understanding that the success of the dehumanization of millions lines pockets.   The purse strings just might be as mighty as the sword take a read and see what you think.

Today, the Ku Klux Klan is one of the most extreme and reviled symbols of American racism. But there was once a time when the fringe hate group verged on “mainstream.” In the 1920s, its members numbered in the millions and made up a significant percentage of the US population. This is the KKK that claimed to control elections and counted U.S. presidents among its members.

In 2011, Roland G. Fryer and Steven D. Levitt, the economist co-author of Freakonomics, looked into historical statistics about KKK membership and demographic, criminal and political trends at the time. And they found something surprising: a seldom-seen side of the KKK.

“Rather than a terrorist organization,” they wrote, “the 1920s Klan is best described as a social organization with a wildly successful multi-level marketing structure.” According to Fryer and Levitt, in its heyday, the KKK was a giant, perverse pyramid scheme. Instead of perpetrating a racist agenda, the KKK’s leaders exploited pre-existing, popular racism to make money.

They were very, very, very successful. At a time when per capita income in the U.S. was under $700, the Indiana Klan leader pulled in about $200,000 annually. In 2015, that’s the equivalent of more than $2.8 million.

The Business of Hate

KKK membership peaked in 1924 at close to 4 million members (Levitt and Fryer) 


The 1920s KKK made a lot of money selling robes, memorabilia, candy, and life insurance policies to its own members

For their research, Fryer and Levitt compiled a database of historical KKK documents, including internal censuses, member applications, and robe order forms. They cross-referenced the names on these forms with data from the 1920 and 1930 American Censuses.

From this database, which is consistent with previous analyses, we know that this new KKK didn’t really take off until about 1920. Then membership suddenly — and somewhat mysteriously — boomed. Estimates of the KKK’s size at its peak in 1924 range from 1.5 million to 4 million — 4-15% of the eligible population.

According to Fryer and Levitt, this boom was the result of an innovative new marketing campaign.

In December of 1920, the KKK hired a PR firm, the “Southern Publicity Association,” to boost recruitment. The firm had previously represented the Salvation Army and the Anti-Saloon League, but it was close to bankruptcy.

The incentives in the contract were good, possibly too good. Simmons had always made money off his Klansmen. He sold them $6 robes and Klan-branded life insurance policies at $53,000 a pop. He also charged his members $10 initiation fees. According to the contract, the Southern Publicity Association would get 80% of this initiation fee for every new member it signed up.

When the Southern Publicity Association signed on, the full initiation fee was still $10, roughly equivalent to $125 in 2015. Eighty percent of the fee was $8, and roughly equivalent to $100. This meant the Southern Publicity Association could offer salesmen an attractive commission while keeping a substantial cut.

The Southern Publicity Association quickly built and deployed a national sales force of over 1,000 “Kleagles” — the KKK’s name for its commission-paid salesmen. Every time a Kleagle recruited a new member (called a “Ghoul”), the Kleagle earned $4 of the $10 initiation fee. At first, the Southern Publicity Association sent $2 of the remaining $6 to Simmons, pocketed $2.50, and handed $1.50 to a regional supervisor called the “Great Goblin.”

Soon, the whole KKK adopted the $4 Kleagle scheme, and the entitlement chain got longer. The economic structure that eventually arose looked much like a modern multi-level marketing company–with extremely stupid titles.

The Southern Publicity Association was joined by a whole tier of “King Kleagles,” who were responsible for overseeing recruitment in each state. The King Kleagle’s share of the remaining $6 was reduced to $1. Fifty cents went to the Great Goblin, $1.25 went to a national sales manager called the “Imperial Kleagle.” Another state-level authority, the “Grand Dragon”, who was more in charge of governance than recruitment, collected $2.50, and the two heads of the KKK — Grand Wizard Simmons, and another executive, titled the “Imperial Wizard,” split the remaining $0.75.

The group expanded, and new Kleagles were recruited from among the Ghouls. According to Levitt and Fryer, Kleagles went into untapped markets with the charge to “make salient whatever prejudices – anti-Catholicism, anti-Semitism, racism, and so on – were most acute in the particular areas they were selling Klan memberships.” They did, in exchange for 40% of the sale. But there were more profits to be made off each new recruit.

Today, the U.S. government distinguishes “legitimate” pyramid selling from an illegal pyramid scheme based on whether a company makes most of its profits from its customers, or from its members/employees. While the KKK was, in most respects, a “non-profit” dedicated to championing a political and social “cause” (racism and xenophobia), it exclusively made money off its members. The Klan sold to the Klan, and the Klan alone.

A Surprisingly Ineffective Hate Group

Pyramids like the KKK only survive for as long as they can expand. And, because they grow exponentially, that isn’t long. At their largest, they’re particularly vulnerable to the disintegration of interpersonal bonds, especially among the leadership.

The KKK’s popular collapse came in 1924 and 1925. D.C. Stephenson, the “Grand Dragon” of Indiana and several other states, was a charismatic figure considered largely responsible for the KKK’s widespread popularity in his home state. Fryer and Levitt estimate Klan membership in Indiana at almost 19% of the eligible population — nearly 1 in 5.

But America would soon discover that D.C. Stephenson was not the squeaky-clean, Protestant, prohibitionist, nationalist white-supremacist he claimed to be.

In 1925, Stephenson was tried and convicted of the rape and murder of Madge Oberholtzer, a young state employee. Following her abuse by Stephenson, Oberholtzer had received medical attention too late to save her life, but she told all in a signed statement on her deathbed. The judge found that Stephenson had kidnapped Oberholtzer, forced her to drink liquor, raped and physically abused her, and caused her death.

When the Stephenson scandal broke, members fled the KKK in droves. By 1930, national KKK membership was back down to 30,000.

Levitt and Fryer see this sudden collapse as evidence that the KKK was a fundamentally weak organization — a profit-driven scheme rather than a true ideological group. Levitt and Fryer write:

“Whether [a] new member remained active in the Klan for many years, or provided public goods to the organization, was immaterial to the Kleagle. This fueled the growth in membership during the ascent, but resulted in an organization in which the level of attachment of the typical member to the group was likely to be weak, compared to other social groups.”

They also found that even in its heyday, when it came to effecting policy and culture, the KKK was surprisingly ineffective. With historic political groups and movements, it’s hard to separate correlation from causation. As Levitt and Freyer say, the KKK may have thrived, “in places where hate crimes would have occurred regardless of their presence.” To look for evidence of the KKK’s causal impact, Fryer and Levitt compared the 1910s to the 1920s, regions with a strong KKK to regions with similar nativism and white supremacism but a weak KKK, and the early 1920s to the period after the KKK’s sudden implosion.

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Source: Roland G. Fryer and Steven D. Levitt

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