Inequality has become mentionable in polite company—inequality of one thing or another, that is. If you’re a Republican, the moral abyss in American life runs between Makers, unfairly taxed, and Takers, unfairly taxing. By contrast, many Democrats have the audacity to think that a ratio of 354-to-1 between the salaries of CEOs and average workers in their companies is a bit much. But normal journalism barely skims the surface of inequality. Even liberal politicians tend to jam the subject into a bar chart or two, fail to retranslate it into the wrenching discrepancies in health, justice, and freedom that wealth and poverty bring, fail to show how much these discrepancies stem not from good and ill luck but from the whole workings of a social system. As is the case with the salary-ratio statistic, the inequality reported is more often that of income, which comes and goes, than of wealth, which piles up and rules.
As for what we are pleased to call “the fourth estate” of the plutocracy that we nostalgically call “our democracy,” one or another facet of the many-splendored phenomenon of inequality does crop up as a subject or at least an occasional fillip, thanks in no small part to Occupy Wall Street’s prowess with arithmetical rhetoric. So it is, here and there, speakable that “the 1 percent” lead happier lives than “the 99 percent.” Still, not nearly so much attention goes to the 0.1 percent as opposed to the 99.9 percent; or to the fact, say, that the households of the top 0.1 percent own 22 percent of total wealth, or that the Walton family in 2010 owned as much as the bottom 42 percent; or, in general, to how the great game of getting and spending is systematically rigged.
What follows from such numbers, though? The immensity of radical unfairness and wildly unequal prospects for life is harder to get the collective mind around. Bernie Sanders and Elizabeth Warren do connect the dots, but otherwise it’s startling to realize just how thoroughly our politics has abandoned the passion to call out malefactors of great wealth. In our lengthening Gilded Age, scarcely a politician echoes Theodore Roosevelt, who thundered in 1910 against “a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power.” Roosevelt was determined “to change the conditions which enable these men to accumulate power which it is not for the general welfare that they should hold or exercise.” His determination, he went on, “caused these men to combine to…discredit the policy of the Government and thereby secure a reversal of that policy, so that they may enjoy unmolested the fruits of their own evil-doing.” Roosevelt regarded the election of 1908 as “one to determine who shall rule this free country—the people through their governmental agents or a few ruthless and domineering men, whose wealth makes them peculiarly formidable, because they hide behind the breastworks of corporate organization.” A century later, long after Franklin D. Roosevelt saved big capitalists from themselves, the returns are in.
Today, in our pallid, remedial politics, the big ask from the liberal left is that the Securities and Exchange Commission require companies to disclose their top-dog-to-middle-dog ratios. Not change them, simply fess up.
The poor may evoke pity, even compassion, but conventional journalists show little interest in detailing how the great game of winning and losing is rigged. Bankers who employ robosigners to cook up fraudulent mortgages get off, while 26,000 welfare recipients in San Diego get their homes searched in pursuit of petty fraud. This is class warfare with a vengeance, and it’s obvious which class wins. Neither Congress nor most of the nation’s pulpits shake with indignation at the question of which crimes send you to jail and which don’t. Such declarations would not play well at fundraisers where politicians shake their cups for campaign contributions. And can you imagine a “Meet the Press” or CNN segment on the class-rigged state of life, liberty, and the pursuit of happiness today?
Enter Matt Taibbi, the flaming indignado of American journalism, who recently left Rolling Stone, where he was chief corporate scourge in residence for a decade, to join Pierre Omidyar’s First Look Media. Although corporate thieves do not get off easy in Taibbi’s largely plausible account, his chief nemesis in The Divide is the government that might have been expected, a la T. R., to remember the imperative to form “a more perfect Union, establish Justice…promote the general Welfare.” We have a government, Taibbi writes, that sponsors the “sorting of the entire population into arrestable and nonarrestable classes.” We’re well launched into a
dystopian sorting process…where the mania of the state isn’t secrecy or censorship but unfairness. Obsessed with success and wealth and despising failure and poverty, our society is systematically dividing the population into winners and losers, using institutions like the courts to speed the process….It isn’t just that some clever crook on Wall Street can steal a billion dollars and never see the inside of a courtroom; it’s that, plus the fact that some black teenager a few miles away can go to jail just for standing on a street corner, that makes the whole picture complete.
Some of the outcomes are visible here and there in the scattered shreds we call news. We read stories of hard luck and flagrant crooks. Ceremonial pyres burn at the prosecutions of Bernard Madoff, Allen Stanford, & Co., who rip off the middle class and the clueless rich. Readers may remember the documentary filmmaker Charles Ferguson, who, having won an Oscar in 2011 for Inside Job, about the financial world’s crimes, told the Academy: “Three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that’s wrong.” Three more years have passed, and the grand total sentenced to prison is one.
Taibbi’s compelling approach is to juxtapose winner stories and loser stories. He pokes into crimes high and low, pursuing a Woody Guthrie theory of history, as per Pretty Boy Floyd: “Some will rob you with a six-gun and some with a fountain pen.” His America is not a tale of two Americas, one of them happening to do better than the other, the other in need of a stronger safety net. There is a single rigged America where unfairness is the name of the game. Taibbi’s dominating premise is that the law is a fraud unless it is a seamless garment, a unity. The way a criminal justice system prosecutes crimes, and exacts penalties for them, cuts to its heart, for many are the laws on the books, but far fewer and more meaningful are the laws that are actually enforced. The way a society punishes is the way it lives. While no one is being charged with financial crimes, New York City police stop and search hundreds of thousands of people per year on suspicion of suspiciousness. If brought to trial, and lucky, they may get off, but not before having to take days off to stand up to the creaking wheels of justice, for their time is considered worthless. “The process is the punishment,” as insiders say.
The everyday workings of punishment-by-process drive Taibbi splenetic, emetic, and sympathetic. The splenetic and emetic parts concern criminals who go free because prosecutors, themselves halfway out the door to partnerships in white-shoe law firms, haven’t the heart to sentence or even charge them. His sympathy goes to ordinary street criminals like 26-year-old Tory Marone, picked up for sleeping in the park, who get dragged into court only to be defended by barely breathing stumblebum lawyers, while the executives of a giant bank that launders billions for the sellers of the stuff he smokes get to stay on the streets. Taibbi’s juxtapositions are his arguments. This unfairness is wrong. This must stop.
By one estimate, between $1 trillion and $4.8 trillion worth of fraudulent mortgages were issued in the United States between 2005 and 2007. A few individuals were prosecuted. More were offered deferred prosecution deals to pay fines instead of facing criminal charges. Civil suits have been brought against JPMorgan Chase and Bank of America. The total number of criminal prosecutions brought against any bank is: one.
Taibbi begins his infuriating saga with the tale of that bank, New York Chinatown’s Abacus Federal Savings Bank, indicted in 2012 along with 19 of its employees—who were dragged into the courtroom in chains. Abacus held about one ten-thousandth the assets of JPMorgan Chase, by the reckoning of one of the few reporters who covered the Abacus case, Bloomberg Businessweek’s Drake Bennett. Bennett wrote about Abacus that “compared with the whales of global finance, it’s plankton.” Taibbi, not to be outdone on the metaphor front, writes that the money-laundering and interest-rate-fixing crimes of the giant Swiss bank UBS “make the shenanigans at Abacus Federal Savings Bank seem like kindergarteners whispering during naptime.”
How did this inequity happen? In Taibbi’s view, it goes back to…a memo written by Eric Holder in 1999. Taibbi believes he has uncovered the smoking memo at the root of an “accidental revolution” that resulted in the persecution of the Abacus Bank, whose loans did not default, while the whales of global finance swim free. The document was entitled “Bringing Criminal Charges Against Corporations” and it was written when Holder was Bill Clinton’s deputy attorney general.
Holder wrote then that, in considering whether to file charges against corporations, “prosecutors may consider the collateral consequences of a corporate criminal conviction in determining whether to charge the corporation with a criminal offense.” Collateral consequences. In other words, in Taibbi’s reading of Holder’s memo, prosecutors should consider practicing selective leniency if the costs of prosecution are deemed too high.
Once issued, Taibbi writes, this memo “was now loosed from its cage, running wild in American society like a strung-out lab animal.” Holder’s villainy was unequivocal, self-evident, and all-powerful. After leaving the Clinton Administration, Holder became a corporate lawyer and remained one, in effect, when, a decade later, Barack Obama appointed him attorney general, opening up the floodgates to deferred prosecution agreements and nonprosecution agreements and other arrangements through which criminal executives could buy stay-out-of-jail cards. Thus did the Change President buy into the legal theory of his attorney general.
Two problems are worth raising even if one shares, as this reviewer does, Taibbi’s indignation at the routine perversions of plutocratic justice. First, what does the memo say? Taibbi takes time out from his single-memo theory of history to call it “dully written but entirely reasonable-sounding.” It is, in fact, a commonplace of the law-and-economics movement that has subjected regulation to drawing and quartering over the last quarter century. One thing that makes Holder’s memo dull is that it is choked with qualifiers: “One of the factors in determining….Prosecutors may take into account the possibly substantial consequences to [various parties] many of whom may…have played no role in the criminal conduct.” Second, might Taibbi be exaggerating the impact of the Holder memo all by its lonesome? This reviewer is no expert, but there are presumably other smoking memos lining the sinkhole of American justice. Was justice fair before Holder’s memo?
Still, the general point about the grotesquerie of the double standard for criminal prosecution obtains. In the aftermath of the financial meltdown, the comparatively more aggressive prosecutors of George W. Bush’s Justice Department exited, and Holder’s people took charge. Appointed head of the Fraud Section of the Justice Department’s Criminal Division was one Denis McInerney, a man who, Taibbi writes, defended the accounting firm Arthur Andersen in its obstruction-of-justice Enron case. McInerney had not, at the time of his appointment, prosecuted a case in more than 15 years.
Had Taibbi done more research, and done his reader the favor of leaving traces in footnotes, he would have strengthened his case—not that the Holder memo was Day Zero in history’s wrong turn, but that the Obama Administration played class favorites. At a panel discussion last year alongside McInerney, University of Michigan Law Professor David Uhlmann, former chief of the Justice Department’s Environmental Crimes Section, publicly decried what he called “a profound ambivalence within parts of the Department about the very notion of corporate criminality.” But McInerney was having none of that: “I’m not ambivalent in the least. It’s an appropriate thing to have. As a result of it, and the enforcement of it over the last ten, 20 years, we have seen a complete radical change in how the corporate world behaves in a very positive way. It’s a good thing. And continued aggressive enforcement of it, that is also incentivizing companies to do the right thing, is exactly where we should be and where we are.”
“Complete radical change”—lacking guilty pleas, no sentences, no trials. “Incentivizing companies to do the right thing.” This is the sort of stuff that drives Taibbi around the bend. And rightly so.
Added Uhlmann, by the way: “[I]f the terms are attractive enough, the company can avoid criminal prosecution. I’d suggest to you that gives the impression, rightfully or wrong[fully], that gives the impression that justice can be bought.”
How to make the heart flame at the sheer unfairness? How to freshen up Old Testament rants to speak in tongues of fire? How to arouse indignation—not pity, not just barbed resentment, but actionable fury—at the moral indecency? This is Taibbi’s problem—how to keep the blood boiling while the mind works at the same time. He’s not perfect.
He’s to be credited, in my book, for abandoning wan talk about playing fields, level and not, and evoking the full measure of misery—the homelessness, disease, crime, addiction, incarceration, the degradation of citizenship—that is at stake. But too often he resorts to extravagance. For (with a few exceptional paragraphs) Taibbi does not like his metaphors quiet or his temperature cooler than red hot. Before The Divide, he was best known for his picture of Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” In The Divide, Taibbi writes that HSBC, formerly the Hongkong and Shanghai Banking Corporation, which laundered billions of dollars for drug cartels, “makes al-Qaeda look like the Peace Corps.” A Justice Department announcement that UBS would not be prosecuted for taking part in the worldwide price-fixing operation known as Libor “hit an amazing new low in the annals of public groveling before a rich and powerful company.” Lehman Brothers’ Richard Fuld “is the kind of person who would fall drunk down a spiral staircase and then sue the architect for building blurry steps.” Hedge fund billionaires who acted unscrupulously to short-sell their way to profit from the misfortunes of a mild-mannered Canadian company are “antisocial maniacs.”
In 2009, Reuters’s Heidi N. Moore made a strong case that Taibbi was overly, misleadingly obsessed with one of many fast dealers, Goldman Sachs. Indeed, Taibbi doesn’t like his villains complicated—or old. In the Abacus case, the presiding judge, Renee White, is “a legendary city curmudgeon, a wraithlike woman with a long turtlish neck and orange hair who seems unhappy not only to be listening to a motion to dismiss but to be on planet Earth at all.” She “barks.” She “cranes her long neck.” She “glares.” I might have let all this pass—I wasn’t sitting in that courtroom—had it not been for the accident that I once saw Renee White at work in another courtroom. In 1997, I served as a juror at a Manhattan homicide trial, Judge White presiding, and found her exemplary. The defendant was an old Puerto Rican man without much money who had already spent a year in jail awaiting trial in a threadbare case. Mindful of White’s careful instructions about what constitutes reasonable doubt, the jury quickly found him not guilty. For years, I’ve been citing her to students.
Perhaps, since then, Judge White has had a bad 15 years. Perhaps she bent over backward for the Abacus prosecutors. Or they had a better case than he admits. One way or the other, a Taibbi of equal zeal but greater care wouldn’t raise such distracting questions.
Muckraking comes in different registers, and zeal has different rhythms. Exposing lynchings in the 1890s, Ida B. Wells was out front with her indignation but kept her accounts spare and descriptive. In 1903-04, the muckraker Ida M. Tarbell savaged John D. Rockefeller’s Standard Oil trust at great length yet with magisterial calm and the flowing prose of a long-gone century. In the 1902-03 pieces he later gathered into Shame of the Cities, Lincoln Steffens succeeded in being both methodical and ferocious in an effort “to see if the shameful facts, spread out in all their shame, would not burn through our civic shamelessness and set fire to American pride.”
Taibbi, for all his cheap shots, has wedged himself into this illustrious company, but to far less political effect than his predecessors. Make no mistake: If he wrote more rigorously, with footnotes, the impact of his work would still be slight. It’s no strike against his merits that he writes in a time when the climate-change denier and all-around right-wing ideologue George Will has been a mass media fixture for more than 30 years, and that, now that Will has moved to Fox News for reasons of convenience (he says), he is replaced on “This Week with George Stephanopoulos” by the right-wing hack Laura Ingraham. Steffens wrote in a time when a cigar company was thrilled to name a cigar after him and put his face on the box. Don’t look for Taibbi Blunts anytime soon.