MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT
Journalist and scholarly muse Thomas Frank noted in a recent e-mail to colleagues,
September 15 will mark five years since the collapse of Lehman Brothers and the official beginning of the slump that never ends. It was a moment that smashed the faith of millions of people. And so it’s time for a look back: What did the nation learn from that moment of complete disillusionment?
Well, basically nothing. We came to the turning point and didn’t turn.
Frank was referring to his September dateline Harper’s Magazine article (only available in the print edition and behind an online paywall), in which he concluded:
But a society that believes good government to be an impossibility is unlikely to do what is necessary to keep industry honest. Instead, its regulators will come to see the regulated, rather than the public, as their main clients. They will imagine that industry can police itself. They will party with their private-sector pals and spin happily through the revolving door. And the rest of us will resign ourselves to scandal after scandal, as a new generation of looters rises up to claim positions at the trough when the old looters retire. Indeed—to repurpose an immortal statement by a certain Bush Administration economist—given what we now think we know about the system, it would be irrational for them not to loot….
There is one way, however, in which the changes brought about by 2008 have been permanent—one way in which the center will probably never hold again. We are a society that watched as those who obeyed the rules got played by Wall Street and Washington. And it has not only hardened us, made us more blasé about corruption; it has corrupted us. We be held our powerlessness at the hands of the mighty, and we decided that the thing to do was to make Wall Street even stronger. We accepted our powerlessness and then magnified it. Today we all know that another bubble will soon inflate and burst, but we have chosen to live with that— five years from the last, five years to the next! Just grab your cash and hang on.
Frank reflects upon what Elizabeth Warren was, in essence, admonishing Attorney General Holder in a letter to him discussed in yesterday’s BuzzFlash at Truthout commentary, “Elizabeth Warren Reads Riot Act to Holder for Not Prosecuting Big Bank Mortgage Fraud.”
When you adopt as a tacit policy that those in large financial institutions will not be prosecuted for crimes (or individuals personally fined) against the economic well being of the nation, as well as the fleecing of countless homeowners, you devalue respect for the law. In doing so, Holder and Obama have severely harmed probably the most basic glue of a diverse American society by creating a fundamental skepticism that the law will be fairly applied and cannot be bought.
The American legal system is by no means perfect. Minorities are disproportionately discriminated against in policing and prosecution, and the rich can pay for attorneys that can find a loophole in a knotted thread. But the basic institution of our legal system being — in overall concept — one that ultimately bends toward fairness has been tarnished to the point of potentially creating a societal disrespect for the rule of law, when the law exempts those who do greatest harm to society (even if in a “non-violent” way).
The reality is that the Obama Administration has turned the law upside down, punishing those who were conned by fraud — while, on the other hand, rewarding (with taxpayer subsidies, favorable tax rates, government contracts, appointment to positions of power and immunity from prosecution among other perquisites) those who have intentionally committed fraud in a variety of ways (some of which were noted in yesteday’s BuzzFlash at Truthout commentary and in a large number of previous BF at TO columns.)
The lack of governmental legal and regulatory enforcement of the looters at the top of the American financial pyramid that both Frank and Warren are deeply disturbed about is like keeping two sets of books: one set of laws for the financial and ruling elite and another set for the other 99%.
This cynically undermines the US legal system. It makes being a victim of fraud a crime (subject to foreclosure, bankruptcy, etc.), while — on the other hand — making the actual criminal (the one who illegally profits) into a holder of a get out of jail free card, along with a bag of trillions of dollars in goodies courtesy of the very people being fleeced.
Thomas Frank is not optimistic:
Ignoring public cynicism is the easy way forward. You don’t have to vilify or punish anyone, you don’t have to investigate or explain anything. But ignoring it will have terrible consequences, and not just because the Democrats have traditionally been the party of government and will suffer all the more if our epidemic federalphobia is not addressed. The bigger problem is this: the economy has to have rules, and government is how we make those rules. If vigilant financial regulation is missing or suppressed or underfunded, disasters like the crash of 2008 are unavoidable.
When the law is diminished to a smirking slap on the wrist for those individuals and financial organizations who caused such hardship to the vast majority of Americans, it becomes tarred and feathered beyond credibility. Once respect for the law is dissolved, there is no super glue yet invented that can maintain it as a stabilizing force in our society.