— The Erimtan Angle —

‘Journalist Matt Taibbi joins Larry to examine inequality in the U.S. justice system. In his new book, The Divide-American Injustice in the Age of the Wealth Gap. Taibbi says white-collar criminals walk, while the poor get locked up in record numbers (2 May 2014)’.

In the Murdoch-owned Wall Street Journal, the blogger, journalist, and libertarian political pundit Matt Welch, who is also a co-host of ‘The Independents’ on the Fox Business Network, reviews the book as follows: “[w]hen the polemicist who made Goldman Sachs synonymous with a “vampire squid” writes a book called The Divide, with a subtitle that references “the wealth gap,” one may reasonably anticipate some undergraduate-style fist-shaking about income quintiles and the predatory rich. But one would be wrong. Matt Taibbi’s The Divide is primarily concerned with the grotesquely unequal application of American justice, between the too-big-to-jail Wall Street elite and the too-poor-to-fight minority underclass. “The cleaving of the country into two completely different states—one a small archipelago of hyperacquisitive untouchables, the other a vast ghetto of expendables with only theoretical rights,” Mr. Taibbi maintains, “is a terrible story, and a crazy one.” The characterization is typically overwrought, but the general indictment is broadly correct”.[1]

Welch’s statement that Taibbi’s “general indictment is broadly correct” does strike me as somewhat condescending . . . but juxtaposing the harsh prosecution of the “small, family-owned Chinatown operation . . . called Abacus Federal Savings Bank” to the lenient treatment received by “Countrywide, Citigroup, JPMorgan Chase, AIG—each of which, eventually, signed non-prosecution agreements with the Department of Justice” seems like an illustration of an injustice that is more than just “broadly correct”.[2] And the fact that “large banks” and “their executives” were essentially immune from prosecutions in the aftermath of the 2008 financial meltdown. In his book, Taibbi traces the origins of the Too Big To Fail (TBTF) mantra to a “1999 Justice Department memo written by a then obscure lawyer named Eric Holder” that read that “Prosecutors may take into account the possibly substantial consequences to a corporation’s officers, directors, employees, and shareholders”, employing the loaded phrase “collateral consequences”.[3] Funny how things work out sometimes . . . and in conclusion, here is Welch positing that “at heart The Divide is a face-slap, not a legal brief. Though Mr. Taibbi doesn’t couch it in these terms, his warning is all about moral hazard, in two senses of the phrase. When swindlers know that their risks will be subsidized, and their potential crimes will be punishable only through negotiated corporate settlements, they will surely commit more crimes. And when most of the population either does not know or does not care that the lowest socioeconomic classes live in something akin to a police state, we should be greatly concerned for the moral health of our society”.[4]

 

[1] Matt Welch, “Book Review: ‘The Divide’ by Matt Taibbi” The Wall Street Journal (11 April 2014). http://online.wsj.com/news/articles/SB10001424052702303456104579489582963112764.

[2] Matt Welch, “Book Review: ‘The Divide’ by Matt Taibbi”.

[3] Matt Welch, “Book Review: ‘The Divide’ by Matt Taibbi”.

[4] Matt Welch, “Book Review: ‘The Divide’ by Matt Taibbi”.

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