Broken Windows And The Stealing Of Hearts
Posted: March 8, 2012 Filed under: Bailout Blues, Banksters, Corporate Crime, corruption, Department of Homeland Security, Domestic Policy, double-speak, Economy, Eric Holder, ethics, financial institutions, George W. Bush, Global Financial Crisis, indefinite detention, Injustice system, Patriot Act, The Bonus Class, The Great Recession, torture, U.S. Economy 21 Comments
Yesterday I read an interesting essay by William Black over at New Economic Perspectives. In the essay, Black, who headed the forensic audit team during the S&L crisis, pulls forward the Broken Window Theory, a criminological model based on a simple and some have said simplistic idea. The theory was introduced by James Q. Wilson and received a fair amount of popularity during the 1990s, particularly in conservative circles.
Readers might remember Rudy Giuliani’s ‘war against graffiti,’ his zero-tolerance campaign in NYC. That effort, the elimination of the squeegee men and the crack down on street prostitution among other things were based on the broken window philosophy, which uses an abandoned building metaphor.
Imagine a building in any neighborhood [although Wilson focused exclusively on what he termed ‘blue-collar crime.’] The first broken window of our abandoned building if left unrepaired sends a clear message to antisocial types: no one cares about this building. So, it’s open season on all the other windows, on anything of value that’s been left behind. If the owner doesn’t care about the integrity of the building then the street tough is encouraged to vandalize and take whatever’s not nailed down.
The attitude feeds on itself or so the theory goes. Honest citizens are less likely to confront the petty thief, which only encourages others to act out in destructive, antisocial ways. Honest citizens begin to feel overwhelmed and outnumbered and stop safeguarding their own neighborhoods. What’s the point? they say. No one cares. Communities begin to self-destruct.
Now whether you buy into this crime theory or not, I think the metaphor holds when you consider what we’ve been witnessing in the degradation of our financial markets, our legal system, even the refusal to admit that ‘there’s trouble in River City.’
As Professor Black points out, if we were to take Wilson’s theory and apply it to the explosion of ‘white collar crime’ within our financial system, it would be a major step in restoring the integrity of our system and bolstering peer pressure against misconduct. As it stands now, Wall Street movers and shakers and their DC handmaidens have implemented business-as-usual policies that reward the thief and punish the whistleblower. As Black points out in the essay:
We have adopted executive and professional compensation systems that are exceptionally criminogenic. We have excused and ignored the endemic “earnings management” that is the inherent result of these compensation policies and the inherent degradation of professionalism that results from allowing CEOs to create a Gresham’s dynamic among appraisers, auditors, credit rating agencies, and stock analysts. The intellectual father of modern executive compensation, Michael Jensen, now warns about his Frankenstein creation. He argues that one of our problems is dishonesty about the results. Surveys indicate that the great bulk of CFOs claim that it is essential to manipulate earnings. Jensen explains that the manipulation inherently reduces shareholder value and insists that it be called “lying.” I have seen Mary Jo White, the former U.S. Attorney for the Southern District of New York, who now defends senior managers, lecture that there is “good” “earnings management.”
My husband had some unsettling experience in this area. Early in his career, he worked as a CPA [the two companies will remain nameless].
But in each case, he was ‘asked’ to clean up the numbers, make them look better than they were. He refused and found himself on the street, looking for employment elsewhere. I remember him saying at the time, ‘Look, I’m a numbers guy. I’ve never been good at fiction writing.’ This was back in the late 70s early 80s, so this attitude has been a long time in the making. Now, we’re seeing accounting fraud that is literally off the charts. Is it any wonder the country’s financial system is on life support?
We can see the destructive results of this careless, corrupt posturing all around us. Professor Black continued:
Fiduciary duties are critical means of preventing broken windows from occurring and making it likely that any broken windows in corporate governance will soon be remedied, yet we have steadily weakened fiduciary duties. For example, Delaware now allows the elimination of the fiduciary duty of care as long as the shareholders approve. Court decisions have increasingly weakened the fiduciary duties of loyalty and care. The Chamber of Commerce’s most recent priorities have been to weaken Sarbanes-Oxley and the Foreign Corrupt Practices Act. We have made it exceptionally difficult for shareholders who are victims of securities fraud to bring civil suits against the officers and entities that led or aided and abetted the securities fraud. The Private Securities Litigation Reform Act of 1995 (PSLRA) has achieved its true intended purpose – making it exceptionally difficult for shareholders who are the victims of securities fraud to bring even the most meritorious securities fraud action.
Reading this, I immediately sensed we could apply the metaphor just as easily to our legal predicament. Dak wrote to this yesterday—about the disheartening disrepair of our justice system, which was badly wounded during the Bush/Cheney years with the help of eager lawyers like John Yoo, stretching, reinterpreting, rewriting the parameters on the subjects of torture, indefinite detention, rendition, etc.
Not to be outdone, Eric Holder stood before Northwestern University’s Law School the other day and with the same twisted logic, explained away due process, otherwise known as ‘how to justify assassination.’ In this case, American citizens, those the President deems are a threat to the Nation, can be killed on native ground or foreign soil. Jonathon Turley, law professor at George Washington University and frequent legal commentator in the media, headed a recent blog post as follows: Holder Promises to Kill Citizens with Care.
Sorry, this does not make me feel better. What it does make me think is lawlessness simply breeds more lawlessness. The Broken Window theory writ large. As Turley explained:
The choice of a law school was a curious place for discussion of authoritarian powers. Obama has replaced the constitutional protections afforded to citizens with a “trust me” pledge that Holder repeated yesterday at Northwestern. The good news is that Holder promised not to hunt citizens for sport.
Holder proclaimed that “The president may use force abroad against a senior operational leader of a foreign terrorist organization with which the United States is at war — even if that individual happens to be a U.S. citizen.” The use of the word “abroad” is interesting since senior Administration officials have asserted that the President may kill an American anywhere and anytime, including the United States. Holder’s speech does not materially limit that claimed authority. He merely assures citizens that Obama will only kill those of us he finds abroad and a significant threat. Notably, Holder added “Our legal authority is not limited to the battlefields in Afghanistan.”
Turley went on to comment that Holder was vague, to say the least, when it came to the use of these ‘new’ governmental/executive powers, claiming that the powers-that-be will only kill citizens when:
“the consent of the nation involved or after a determination that the nation is unable or unwilling to deal effectively with a threat to the United States.”
And as far as ‘due process?” Holder declared that:
“a careful and thorough executive branch review of the facts in a case amounts to ‘due process.’”
Chilling! As Turley grimly noted in an earlier post, this is no longer the land of the free.
Seemingly unrelated was this report from the New York Times: the heart of Dublin’s 12th-century patron saint was stolen earlier this week from Christ’s Church Cathedral. The heart of Laurence O’Toole had been housed in a heart-shaped box, safely secured [or so church authorities believed] within an iron cage. The relic’s disappearance was preceded by a rash of reliquary robberies from churches, monasteries and convents around Ireland. According to the article:
The small cage hosting the heart-shaped box containing the relic was tucked away in an innocuous alcove at the side of a small altar. Visitors to the cathedral on Monday stared at the twisted bars and the empty space behind. The bars themselves were sundered evenly.
According to Dermot Dunne, dean of Christ Church, the box had lain undisturbed for centuries. He had no idea why someone would take it.
Whether it’s the heart of a saint or the heart of a Nation, the theft is a grievous insult. The crime betrays the public trust and our basic sense of decency. But the thieves of O’Tooles’s heart performed a curious act before exiting.
The Irish culprits lit candles at two of the Cathedral’s altars. Which means the perpetrators possessed, at the very least, an ironic sense of tradition.
The same cannot be said of our homegrown hooligans. Crass greed and the lust for unlimited power have their own dark tradition. As Americans, we do not expect vice to be confused with virtue. In the past, we could not imagine a blatant disrespect for the Rule of Law–crimes ignored, excused, then openly declared necessary for whatever raison du moment.
Not here, we told ourselves repeatedly. Not in the United States.
Perhaps, we should light candles of our own. A small devotion for the lost and dying.
In The Land Of The Delusional
Posted: March 2, 2012 Filed under: 2012 presidential campaign, Austerity, double-speak, Economy, income inequality, Mitt Romney, religious extremists, Republican presidential politics, the GOP, U.S. Economy, War on Women, Women's Healthcare 16 CommentsIn the Land of the Delusional the Koch brothers are principled citizens who merely disagree with Democratic policy stands and are aghast at the
vindictive slurs leveled against them and all other sincere, freedom-loving Republicans. In the Land of the Delusional, the hate and rage on review is a product of pink-bellied Lefties, Alinski acolytes, looking to take down American virtue and reduce the country’s might and glory. In the Land of the Delusional bankrupt ideas, economic mayhem and privateering can be obscured by attacks on woman, gays and the down and outers.
March is living up to its reputation—coming in like snarling Lion. Rush Limbaugh exposed a full Monty of misogyny, his comments on Sandra Fluke provoking even House Speaker Boehner to suggest the diatribe was ‘inappropriate.’ What inspired the outburst? Several weeks of desperate frontal attacks on women’s healthcare issues, thinly veiled and wrapped beneath ‘religious liberty’ arguments.
Let’s not kid ourselves! This is little more than shifting the conversation from discussion over economic issues, for which the Republican party has no credible position. The US Budget Watch has reported that Republican plans to slash taxes on corporations and high-income earners would explode the national debt up to $3 trillion. And for all the ballyhoo by the Norquist group the Washington Post reported [as well as many other sources] that the country’s revenue-collection has eroded to a 60-year low.
From the WP report:
Polls show that a large majority of Americans blame wasteful or unnecessary federal programs for the nation’s budget problems. But routine increases in defense and domestic spending account for only about 15 percent of the financial deterioration, according to a new analysis of CBO data.
The biggest culprit, by far, has been an erosion of tax revenue triggered largely by two recessions and multiple rounds of tax cuts. Together, the economy and the tax bills enacted under former president George W. Bush, and to a lesser extent by President Obama, wiped out $6.3 trillion in anticipated revenue. That’s nearly half of the $12.7 trillion swing from projected surpluses to real debt. Federal tax collections now stand at their lowest level as a percentage of the economy in 60 years.
But why let facts stand in the way. Paul Ryan, the Republican’s designated ‘serious thinker’ certainly doesn’t.
Ryan also complimented Romney’s economic plan. The congressman’s stamp of approval has been important for Republicans since he earned praise last year for his ambitious budget — which would dramatically change Medicare— from strong conservatives.
“Very credible. They are talking about entitlement reform. They are putting specifics on the table on Medicare and Social Security reform. The president, knowing that these are the big drivers of our debt, is ducking it,” Ryan said of Romney’s proposals.
Ah, yes. The ideologically blind leading those blinded by ambition. That certainly gives me confidence.
But as Paul Krugman suggested a mere 10 ten days ago, Mitt Romney let slip a truism in the swirl of Michigan campaigning when he said:
“If you just cut, if all you’re thinking about doing is cutting spending, as you cut spending you’ll slow down the economy.”
Over which the ideological purists set the dogs loose. The Club for Growth immediately denounced the Romney slip, insisting that it was a clear indication that Mitt was an imposter, not a ‘true’ limited government conservative [translation: not willing to drown all government in that Norquist bathtub].
What’s a candidate to do? Retreat, of course, in the same way Romney flipped on the Blunt Amendment, breaking all records, I would guess. In less than an hour, Candidate Romney twisted from ‘not going to go there’ to ‘of course, I support it.’ Enough to make your head spin. This is a political party in the death throes.
So, what’s the best way to distract?
Let’s pillory the women, start calling them sluts or suggest they film sexual exploits for the sake of some overweight, mean-spirited shock jock. Or let’s pretend that the perceived decline of the Nation rests squarely on the shoulders of the Gay Community and their screechy insistence that they too expect and deserve [can you believe the gall of these people] basic civil rights. And don’t forget the statistics on the ever-expanding numbers of Americans slipping into poverty. We tried calling them losers and moochers. How about we deny they exist, the way a North Carolina legislator recently announced. Yes sir, that’s the ticket!
In the Land of the Delusional schizophrenics rule the day, magical thinking replaces reason and bare-foot and pregnant is a very good thing. In the Land of the Delusional all things are possible.
Except the truth.
Why Austerity is Necessary: short version
Posted: February 15, 2012 Filed under: U.S. Economy, U.S. Politics | Tags: austerity, confidence fairy, tax the rich 15 Comments
Does anyone honestly think austerity is important to the restoration of fiscal balance because discipline and frugality lead to wealth? The people promoting austerity are invited to dinner in places like the room to the right. They’re doing well and not practicing austerity, so the answer must lie elsewhere.
And, really, it’s not that hard to figure out if you remember not to listen to a word they say.
- 1) For whatever reason (the crash in this case) there’s not enough money to go around.
- 1a) It is necessary to get the money from somewhere.
- 2) You could get it from rich people.
- 2a) If you do this by making them take the loss (= no taxpayer-funded bailout), they will threaten to take their ball and go home. (For instance, “I won’t buy your treasury bonds. I’ll buy somebody else’s.” Government goes into cold sweat worrying about finding money and has a crisis of confidence. This is the real “confidence fairy.”)
- 2b) Assuming you must bail out the rich, the government could cover the cost by taxing the rich. But the wealthy own the media, plus they can defund re-election campaigns, so the actual people in government would be out of a job. This, too, leads to cold sweat, but it does not yet have a catchy name. (The “keep-my-job fairy”?)
- 3) You could get it from everybody else.
- 3a) Everybody else objects because they didn’t cause the problem, so why should they pay for it?
Because austerity! It sounds so much better than,
“You pay for it. I don’t want to.” And way better than,
“I don’t need you for anything, Bub. Pay up.”
Full disclosure: I am (obviously) not an economist.
Crossposted from Acid Test
Just Exactly What Qualifies Mitt Romney to be POTUS?
Posted: February 3, 2012 Filed under: 2012 presidential campaign, 2012 primaries, U.S. Economy, U.S. Military, U.S. Politics | Tags: America the Beautiful, Center for American Progress, children in poverty, coal mining, environment, goal mining, lack of qualifications, Mit Romney, National Parks, oil drilling, Poverty, public lands, Romney contributors, Romney super pac 22 CommentsVia Think Progress, yesterday Mitt Romney sat for an interview with the editorial board of the Reno Gazette-Journal. Today, the conservative newspaper endorsed Romney for the Republican nomination in advance of the Nevada caucuses tomorrow.
During the interview, Romney was asked whether, if elected, he would consider permitting the state of Nevada to buy back public lands that are currently held by the Federal government. Here’s his response:
I don’t know the reason that the federal government owns such a large share of Nevada. And when I was in Utah at the Olympics there I heard a similar refrain there. What they were concerned about was that the government would step in and say, “We’re taking this” — which by the way has extraordinary coal reserves — “and we’re not going to let you develop these coal reserves.” I mean, it drove the people nuts. Unless there’s a valid, and legitimate, and compelling governmental purpose, I don’t know why the government owns so much of this land.
So I haven’t studied it, what the purpose is of the land, so I don’t want to say, “Oh, I’m about to hand it over.” But where government ownership of land is designed to satisfy, let’s say, the most extreme environmentalists, from keeping a population from developing their coal, their gold, their other resources for the benefit of the state, I would find that to be unacceptable.
Public lands in Nevada – and other western states—actually provide an enormous economic boost and sustain hundreds of thousands of jobs. Indeed, recent Interior Department statistics show that federally managed public lands in Nevada provided over $1 billion in economic impacts and supported 13,311 jobs in 2010 (and this statistic doesn’t even include the economic impacts of Forest Service lands, managed by the Department of Agriculture). Recreation, energy and minerals, and grazing and timber all play a part in the economic effects that public lands provide to Nevada. Activities like skiing at Lake Tahoe, boating at Lake Mead, and hiking at Great Basin National Park all take place on public lands.
Do you suppose Romney has even heard of Teddy Roosevelt? Or was the conservationist President insufficiently “conservative” for today’s Republican Party? Today “conservatives” don’t seem to care about conserving the beauty of nature for all Americans. It sounds like Romney is more interested in milking public lands for coal, gold, and oil than preserving their beauty so that in the future children can learn “to fall in love with America” as he was able to do? (h/t Think Progress).
A couple of days ago in, Romney sang “America the Beautiful” at a campaign appearance at a retirement community in Florida.
But what will Romney’s policies do to the beauty of our country? The folks at Think Progress made a video about it.
What else hasn’t Mitt Romney “studied” about our country? Well, he doesn’t seem to be aware that America’s social safety net is pretty weak and that his economic policies will completely shred what’s left of social programs like food stamps, Medicaid, Medicare, and Social Security.
Romney doesn’t seem to be aware that the number of Americans living in “deep poverty” is the highest it’s been in 35 years.
More than 20 million Americans live in a household with income of less than half the federal poverty rate, the level social scientists often use as a category for the very poor, according to census data for 2010. Last year that meant an annual income below $11,057 for a family of four.
The portion of the population in that category was the highest in at least 35 years and has almost doubled since 1975, from 3.7 percent then to 6.7 percent in 2010.
Romney told CNN on Feb. 1 that “I’m not concerned about the very poor” because they have many programs to help them. He later clarified his remarks, telling reporters on his campaign plane that low-income people have an “ample safety net,” including Medicaid, housing vouchers, food stamps and the Earned Income Tax Credit.
I wonder if Romney knows that one in five American children lives in deep poverty? Frankly, I doubt it. And just think of all those fetuses who don’t get proper nutrition and health care because their pregnant mothers are poverty-stricken. Mitt probably hasn’t “studied” that yet, because he really just doesn’t care.
Now Romney is claiming he “misspoke” when he told CNN’s Soledad O’Brien–twice!–that he’s not concerned about the very poor, because they have an “ample safety net.” But O’Brien doesn’t buy it. And, as NPR points out Romney even made the same remark about the poor to the press corps on his campaign plane after the CNN interview.
So what has Romney “studied?” And if he hasn’t familiarized himself with two of the most important issues facing Americans today–the environment and poverty–why on earth does he want to be president anyway? Is it because he’s an expert on foreign policy? Well, no. Not really.
So why does this man want to be President of the United States? He’s repeatedly told us that he knows how to create jobs and manage an economy. But then, why didn’t he do that when he was governor of Massachusetts?
Numbers are important in evaluating Mitt Romney, but the focus should not be on the $250 million estimated fortune he amassed at Bain Capital, or the $374,00 in speaking fees he took in last year, or even on the roughly 15 federal percent tax rate he paid.
The most important number is 47 — Massachusetts’s rank in job creation when he was governor. This is the number that most calls into question Romney’s own current job application.No job is comparable to the presidency, but the closest thing to it is governor of a large state — an executive position in public office, where the welfare of millions of people is the charge. Unlike a corporate executive, whose overriding goal is to make profits for investors, the president and governors have the same central goal — improving the well-being of the entire population. The first priority, usually, is the overall economy.
Indeed, Romney won office in 2002, after shouldering aside Acting Governor Jane Swift, with a pledge to use his business experience and connections to bring jobs to Massachusetts. He failed, dreadfully.The 47 figure is one Romney cannot escape. During his four years in office, Massachusetts ranked 47th in overall job growth — only 0.9 percent compared with 5.3 percent nationally. Romney has countered that the unemployment went down appreciably — from 5.6 percent to 4.7 percent during his term.
How could so few new jobs translate into a healthy-looking decline in unemployment? The answer is simple — and not so healthy: Working-age adults were packing up and moving out. Many were replaced, fortunately, by immigrants. But overall, Massachusetts was one of only two states to have no growth in its resident labor force during Romney’s term.
So what exactly qualifies Mitt Romney to be President of the U.S.? And why does he want the job? Perhaps it has something to do with the folks that are funding his campaign?
Goldman Sachs $496,430
JPMorgan Chase & Co $317,400
Morgan Stanley $277,850
Credit Suisse Group $276,250
Citigroup Inc $267,050
Bank of America $211,650
Barclays $203,650
Kirkland & Ellis $201,701
HIG Capital $188,500
PriceWaterhouseCoopers $179,300
Blackstone Group $170,550
Bain Capital $144,000
EMC Corp $127,800
Wells Fargo $126,200
UBS AG $123,900
Elliott Management $121,000
Citadel Investment Group $118,625
Bain & Co $116,050
The Villages $98,300
Sullivan & Cromwell $97,150
Or maybe the moguls who are funding his super pac “Restore Our Future,” 10 of whom gave $1 million or more?
What will become of “America the Beautiful” if Romney and his multimillion-dollar backers achieve their goals?











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