‘…And They Lived Happily Ever After’
June 28, 2012
This image has been posted with express written permission. This cartoon was originally published at Town Hall.
SCOTUS Decision: The Fun Part
June 28, 2012
This image has been posted with express written permission. This cartoon was originally published at Town Hall.
Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won’t hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that. If you heard about it at all, you’re probably either in the municipal bond business or married to an antitrust lawyer. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government’s massive case against Microsoft in the Nineties – not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony “Tony Ducks” Corallo.
But this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.
The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from “virtually every state, district and territory in the United States,” according to one settlement. And they did it so cleverly that the victims never even knew they were being cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime.
In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business. What’s more, in the manner of old mob trials, Wall Street’s secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices. The new-age gangsters even invented an elaborate code to hide their crimes. Like Elizabethan highway robbers who spoke in thieves’ cant, or Italian mobsters who talked about “getting a button man to clip the capo,” on tape after tape these Wall Street crooks coughed up phrases like “pull a nickel out” or “get to the right level” or “you’re hanging out there” – all code words used to manipulate the interest rates on municipal bonds. The only thing that made this trial different from a typical mob trial was the scale of the crime.
USA v. Carollo involved classic cartel activity: not just one corrupt bank, but many, all acting in careful concert against the public interest. In the years since the economic crash of 2008, we’ve seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordinated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – “an open-and-shut case of anti-competitive behavior,” as one former regulator described it.
More recently, a major international investigation has been launched into the manipulation of Libor, the interbank lending index that is used to calculate global interest rates for products worth more than $3 trillion a year. If and when that case is presented to the public at trial – there are several major civil suits in the works here in the States – we may yet find out that the world’s most powerful banks have, for years, been fixing the prices of almost every adjustable-rate vehicle on earth, from mortgages and credit cards to interest-rate swaps and even currencies.
But USA v. Carollo marks the first time we actually got incontrovertible evidence that Wall Street has moved into this cartel-type brand of criminality. It also offered a disgusting glimpse into the enabling and grossly cynical role played by politicians, who took Super Bowl tickets and bribe-stuffed envelopes to look the other way while gangsters raided the public kitty. And though the punishments that were ultimately handed down in the trial – minor convictions of three bit players – felt deeply unsatisfying, it was still a watershed moment in the ongoing story of America’s gradual awakening to the realities of financial corruption. In a post-crash era where Wall Street trials almost never make it into court, and even the harshest settlements end with the evidence buried by the government and the offending banks permitted to escape with no admission of wrongdoing, this case finally dragged the whole ugly truth of American finance out into the open – and it was a hell of a show.
1. THE SCAM
This was no trial scene from popular lore, no Inherit the Wind or State of California v. Orenthal James Simpson. No gallery packed with rapt spectators, no ceiling fans set whirring to beat back the tension and the heat, no defense counsel’s resting a sympathetic hand on the defendant’s shoulder as opening statements commence. No, the setting for USA v. Carollo reflected the bizarre alternate universe that exists on Wall Street. Like so many court cases involving big banks, the proceeding looked more like a roomful of expensive lawyers negotiating a major corporate merger than a public search for justice.The trial began on April 16th in a federal court in Lower Manhattan. The courtroom, an aerielike setting 23 stories up, offered a panoramic view of the city and the East River. Though the gallery was usually full throughout the three-plus weeks of testimony, the spectators were not average citizens come to witness how they had been robbed blind by America’s biggest banks. Instead, there were row after row of suits – other lawyers eager to observe a long-awaited case, one that could influence the outcome in a handful of civil suits pending across the country. In fact, the defendants themselves, whom the trial would reveal as easily replaceable cogs in a much larger machine of corruption, were barely visible from the gallery, obscured by the great chattering congress of prosecution and defense attorneys.
Only the presence of the mostly nonwhite and elderly jury, which resembled the front pew of a Harlem church, served as a reminder that the case had any connection to the real world. Even reporters from most of the major news outlets didn’t bother to attend. The judge in the trial, the right honorable and amusingly cantankerous Harold Baer, acknowledged that the case was not likely to set the public’s pulse racing. “It is unlikely, I think, that this will generate a lot of media publicity,” Baer sighed to the jury in his preliminary instructions…
Selfishness as Virtue
June 28, 2012
The health of American society is a perennial favorite topic for pundits, intellectuals, professors and politicians, as well it should be. The Founders understood the fragility of a free society and would take comfort knowing that our chattering classes keep watch over it. “A republic, if you can keep it”, warned Benjamin Franklin. Yet the gaze of today’s watchmen too often strays toward the meretricious. As ever, some confuse cause and effect. In these sped-up times, many fixate on the urgent while ignoring the essential. A great many, especially in the social science field, seem mesmerized by metrics, reminding us of Nietzsche’s famous remark that “were it not for the constant counterfeiting of the world by means of numbers, men could not live.” Some see numbers nearly everywhere: GDP, GNP, Gini coefficients, median income, unemployment and demographic data, the fluctuations of the Dow and the S&P indices, and much more besides.
It is widely assumed that we know a lot more about our social circumstances thanks to all these numbers than we did before they were crunched. That is not entirely obvious. With increasing momentum ever since the establishment of the Bureau of Labor Statistics in 1913, for example, we have become progressively obsessed with economic data to the point of neurosis. Our 19th-century forebears did not lose sleep or get caught up in herd-like trading behavior upon learning that growth in the third quarter of 1873 was much lower than expected, because they never expected anything in particular in the first place.
More generally, one suspects that method and data have too often displaced the search for wisdom and the skills to apply it, hiding ideology and more subtle forms of bias along the way. Perhaps things were clearer when we spoke of political economy and political philosophy, before we hived off social sciences under the name of economics and political science. Perhaps the separation of moral sensibilities rooted in religion from intellectual endeavors is not so enlightened after all. A case in point may be developed through an appreciation of sociologist Eric Klinenberg’s new bookGoing Solo: The Extraordinary Rise and Surprising Appeal of Living Alone.
G
oing Solo bases itself on relatively new data showing that more than 50 percent of American adults are single, and 31 million—roughly one out of every seven adults—live alone. This is a significant increase from 1950, when only 22 percent of American adults were single. It corresponds with an increase in the average age of marriage by five years to 28 for men and 26 for women. Put another way, people who live alone make up 28 percent of all U.S. households, which makes them more numerous than any other domestic unit, including the nuclear family. These are the highest numbers ever recorded since recorders of such things started, well, recording them.
This is very significant data, and here admittedly is a case where numbers reveal a situation that would otherwise not be obvious even to attentive people upon mere observation. Klinenberg does a commendable job of presenting it in a comprehensive yet lucid fashion.
Klinenberg, a professor at New York University and editor of the journal Public Culture, would not be much of a sociologist if he just left it at that, however. And he doesn’t. As his subtitle suggests, he likes what the data tell us; his position could be summed up by the subtitle of a book he commends: How Singles Are Stereotyped, Stigmatized, and Ignored, and Still Live Happily Ever After. Klinenberg is rarely explicit about his convictions, which saves him the trouble of seriously assaying their implications, but he finally gets to the point directly in his conclusion, asserting that “living alone is an individual choice that’s as valid as the choice to get married or live with a domestic partner. . . . [I]t’s a collective achievement—which is why it’s common in developed nations but not in poor ones.” Klinenberg cites Sweden as a model to be emulated.
This is a novel position, to be sure, considering that no known civilization in human history has lauded solitary living as a social ideal. Either the extended family or, since the Industrial Revolution, the nuclear family variant of it, has been a universal social norm for at least the past 10,000 years and arguably much longer than that. And you don’t need data to see why: Society needs children and children need families.
That, however, is actually the least of it. What the Founders knew, but so many contemporaries seem to have forgotten, is that the well-being of any society turns not just on its capacity to procreate but on its ability to transmit a tradition of moral reasoning, and the values that attend it, to future generations. Drawing from the Hebrew prophets and the Greek philosophers, they recognized that values are in flux as virtuous or venal cycles reverberate across generations. Not that moral development is to be feared, or that change is in principle to be disparaged, but development and change has to be carefully nurtured by sentries on the lookout for indulgence, corrosion and selfishness. The Founders understood that the good life can only be safeguarded by a good society, and that this indelible connection bestows obligations on individuals to invest in the acculturation of future generations.
To this ancient wisdom, the contemporary social and natural sciences have added powerful evidence over the past quarter century. We are social animals and context is critical in all we do as individuals and as members of groups. Yet Klinenberg somehow manages to ignore the intergenerational ramifications of “going solo….”
Lessons in Liberty from Laura Ingalls Wilder
June 28, 2012
America is a nation obsessed with its founders. Histories of the Revolution and biographies of its leaders have been consistent bestsellers for decades; a few years ago, HBO’s miniseries on the life of John Adams was an unlikely pop-culture craze. The most relevant form of this founder-worship is surely the Tea Party: From Gadsden-flag bumper stickers to lawmakers’ frequent homages to the founding era, the movement has rekindled in some corners of our politics a devotion to the Constitution and its framers.
This popular enthusiasm for the revolutionary era is surely salutary. The men who forged our nation exhibited extraordinary courage and a genius that has stood the test of time; their accomplishments are worthy of remembrance and honor. Yet there is a risk in our veneration of the founders as well: They are the easy Americans to love, having thrown off the yoke of a detested oppressor and insisted on the promise of liberty. And at a moment when our own government seems to overstep its proper bounds, we have come to think that our time demands the type of response theirs did — and so look to the revolutionary model to guide our actions today.
But the task before today’s Americans is not to launch a new order. We are called, rather, to live out the liberty the founders made possible for us. The challenge of self-government, after all, is a long-term one: Simply to shake off tyranny — be it hard or soft — is not enough. As Edmund Burke noted in his Reflections on the Revolution in France, “The effect of liberty to individuals is, that they may do what they please: we ought to see what it will please them to do, before we risk congratulations which may be soon turned into complaints.” In other words, attaining — or reclaiming — freedom is only the beginning of the story. The founders themselves understood as much; Benjamin Franklin famously told a woman who asked what type of government had been settled upon at the Constitutional Convention, “A republic, madam, if you can keep it.” The essence of our freedom, then, is the task of maintaining it — exercising liberty constructively, responsibly, in order to preserve it for ourselves and our heirs.
This is a much more subtle and difficult challenge. Success in this endeavor doesn’t involve spectacular gestures like throwing tea into Boston Harbor or signing a Declaration. It isn’t marked by a clear beginning and end. And it isn’t carried out by a small band of extraordinary heroes whose antics are well-sung. Rather, it happens, for the most part, invisibly, almost unconsciously — in the quiet patterns of the everyday lives of free, self-governing people.
In America, the essential ingredient for preserving and living out our freedom has been self-reliance — the heart and soul of self-government. Critics since the ancient Greek philosophers have warned of democracy’s tendency to enable the many to take from the few and, in the process, to undermine citizens’ capacities for virtuous independence. Throughout our history, however, Americans have insisted that our peculiar spirit of self-reliance would counteract that tendency, and so make possible a virtuous republic. The maintenance of our liberty has therefore rested on each citizen’s striving to provide for himself and his family through his own labor; at the same time, it has rested on citizens’ coming together to provide directly, and of their own initiative, for common needs and wants. In our society rooted in the promise of self-government, the endurance of freedom depends on each citizen’s deep desire to avoid being beholden to, reliant on, and thus reigned over by others.
Unfortunately, in America today, self-reliance is in short supply. The staggering statistics on government expenditures and welfare-stateredistribution offer powerful evidence of this fact, as does the scale of dependence on public support. More than 50 million Americans receive Medicaid benefits, 48.7 million are on Medicare, more than 50 million are on Social Security, and 45 million receive food stamps or other nutrition benefits. In 2010, according to an analysis by USA Today, “[a] record 18.3% of the nation’s total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs….Wages accounted for the lowest share of income — 51.0% — since the government began keeping track in 1929.” According to the Census Bureau, in the first quarter of 2011, 49.1% of the population lived in a household in which at least one member received some type of government benefit.
More subtle forms of dependency are no less damaging. Consider the implications of government’s growing entanglement in ever more numerous and important aspects of our lives — from the provision of food and shelter to higher-order concerns like finance, education, charity, and even leisure and culture. The result is an unhealthy shift in Americans’ attitudes toward the state: We have been cowed into thinking that reductions in government’s activity and scope would spell disaster, as no other agent — certainly not uncredentialed, unregulated individuals acting on their own initiative and relying on their own skills — could keep our economy and society humming along.
In the face of these trends, how can we recover the habits of self-reliance — or, at the very least, an appreciation for our ability as free people to survive and flourish without utter dependence on government and its associated agents? We can begin by borrowing a page from the millions of Americans obsessed with the founders, and seek to be instructed by models of lived liberty. After all, as the Tea Party has sagely realized, the heroes of the past whom we choose to elevate and imitate can shape our understanding of our own responsibilities, of our own strengths, and of our own place in history.
Who in America’s past, then, can show us the way to a mature, sustainable democratic life — one defined not by the rebellious seizure of liberty, but by the consistent and wise exercise of it through a dedication to self-reliance? The answer is the men and women who extended the freedoms articulated in Philadelphia and secured at Yorktown out to the Pacific Coast: the pioneers.
Their history has, sadly, been under-appreciated. This is due in part to the fact that the academy — which does most of the work of professional history — dismisses them as plunderers and marauders, despoilers of pristine environments and native civilizations. But it is also because the pioneers’ history is complicated, and does not lend itself to easy summary through the deeds of a few extraordinary figures. The history of the pioneers is, for the most part, the story of average people who pursued typical American desires: greater prosperity, breathing room, adventure, religious liberty. In fact, it is their very ordinariness that makes them such promising examples for today’s Americans seeking models of self-reliance and self-government.
Fortunately, there is one pioneer life that has been preserved in exhaustive detail — a life with which many Americans, though not enough, are already familiar. This life belongs not to someone known for authoring a governing document, achieving heroic feats on the battlefield, or amassing a staggering fortune. Rather, she is known and beloved precisely for giving Americans a sense of ordinary pioneer lives through the example of her own.
Through the Little House books of Laura Ingalls Wilder, Americans have access to the history of the pioneers, and of one pioneer family in particular that exemplified the connection between self-reliance and the preservation of freedom. Were more Americans — especially the young audiences for whom the books were intended — to become familiar with Wilder’s works, and through them the example of the pioneers, the cultural effects would surely be beneficial. Much as the Tea Party renewed Americans’ appreciation of the freedoms that are our birthright, a historical-appreciation movement built around Wilder and her fellow pioneers could help Americans recover the habits of self-reliance that, in their waning, have put those freedoms in jeopardy…
Losers
June 28, 2012
This image has been posted with express written permission. This cartoon was originally published at Town Hall.
Mitt’s Balanced Approach
June 28, 2012
This image has been posted with express written permission. This cartoon was originally published at Town Hall.
