William K. Black
August 26, 2019 Kansas City, MO
Greg Weiner has written an article aimed at those he hates – progressive Democrats. He entitled it “The Shallow Cynicism of ‘Everything is Rigged.’” Weiner wrote, in the midst of the most corrupt administration in U.S. history, not to attack President Trump, but instead to attack Senators Warren and Sanders. Their sin? They oppose corruption. Worse, they view corruption as immoral, they ‘walk the walk’ by refusing to take contributions from corporations, and they are proving remarkably skilled at explaining to the public how the corrupt rig specific systems. Democrats are reacting by giving strong support to Warren and Sanders. Weiner argues that some corruption is good and that we need far more of it.
Weiner identifies himself as a former “senior Senate aide to Bob Kerrey,” but he is a member of an ultra-right wing group of Republicans and less than a handful of former New Democrats who have continued to race rightwards. Weiner’s colleagues include the pardoned felon, “Scooter” Libby, Paul Wolfowitz, the Nation’s most notorious “chicken hawk” and architect of the catastrophic invasion of Iraq, a leading proponent of closing the doors to immigrants who lack university degrees, and a gaggle of Kagans dedicated to combatting “radical Islam.” In short, Weiner has spent his life rigging systems to benefit the rich and powerful. His closest colleagues are leading architects of, disastrously, rigging the system here and abroad.
Weiner’s descent into an apologist for corruption was not a large fall for him. Kerrey was a founder of the “New Democrats” group in the Senate, the Wall Street wing of the Democratic Party. Kerrey, now an investment banker, is attacking Bob Mueller and Democrats for daring to investigate and criticize President Trump.
Weiner, in classic New Democrat fashion, conflates Senators Warren and Sanders with President Trump. Their sin is trying to un-rig the system. Weiner does not criticize any of Trump’s actions. Weiner claims, without presenting any support, that Warren and Sanders “deflect criticism by delegitimizing opposition.” Weiner’s real concern is that Warren and Sanders are effective in explaining persuasively to the public how various systems are rigged. The Senators understand that the powerful rig the system in sophisticated ways. Weiner writes of the decline of “classic corruption – of the cash-under-the-table Teapot Dome variety.” Warren and Sanders’ success in explaining to the public how modern political contributions and cynical backscratching deals rig the system to enrich the wealthy and powerful petrifies Weiner. He wants the public to focus only on how the wealthy and powerful rigged the system 98 years ago in 1921 when the Teapot Dome scandal began.
This corruption chatter, a mainstay of American political history that has accelerated in recent years, is unhealthy for political conversation.
American politics has never been cleaner of classic corruption — of the cash-under-the-table Teapot Dome variety — than it is now. The bigger problem is that the political puritanism that sees corruption around every corner actually makes it harder to address the issues in whose name it is invoked.
Weiner has experience, but no academic expertise, with corruption. Weiner thinks it is reassuring that “American politics has never been cleaner of classic corruption.” He makes this statement during the Trump administration, which is by far the most corrupt administration in our history. Weiner has proved that clumsy “classic corruption” is obviously not how corruption works in modern America. Warren and Sanders have demonstrated the modern means by which corrupt elites rig specific systems so that they win and we lose.
Weiner claims that “political puritanism” is a “greater problem” than modern corruption. Weiner is asserting that if you oppose modern corruption, which is vastly more destructive and enriching to the corrupt than the Teapot Dome bribes of 1921, you are not moral – you are a pompous “puritan.” Weiner’s romantic view of elite corruption is a common pathology of the right. Far right political scientists like Weiner and economists are most susceptible to valorizing corruption.
When he was not arguing in favor of white nationalism and a war against Islam, Samuel Huntington was want to praise corruption.
Samuel Huntington, the political theorist, once suggested that some amount of corruption could be a “welcome lubricant,” easing the path to modernization, and that if economic growth is what you are after “the only thing worse than a society with a rigid, over-centralized, dishonest bureaucracy is one with a rigid, over-centralized, honest bureaucracy.”
Weiner, however, is most closely channeling another deeply conservative political scientist who wreaked horrific damage on black communities – James Q. Wilson of ‘broken windows’ infamy. Wilson was one of the leaders of the mass incarceration movement aimed at blacks and Latinos for even minor infractions such as selling broken packs of cigarettes. Wilson was writing to urge that politicians and businessmen who accepted and gave bribes should often face no prosecutions. Wilson famously ranted against applying “moral” objections to corruption. He derided moral objections to bribery as “puritanical” in his April 28, 1968 op ed in the New York Times. He went on to support bribes that “facilitate” the “attainment of social objectives.”
Wilson, in language strikingly similar to Trump’s attacks on women who complain of sexual harassment, viewed politicians as the innocent victims of lying complainants who make up stories of corruption to harm powerful men. Wilson, in a NYT op ed praising the joys of corruption, even took the opportunity to make detours to attack women and blacks on matters unrelated to corruption. NYT op eds have strict word count limits, so Wilson must have been looking for years to use his limited word count to get in these two bigoted attacks in front of a national audience.
Female students often get higher grades than males (around Harvard this is known as the “Radcliffe B”) partly because professors wish to avoid having to confront a weepy co-ed.
And I suspect Negroes may get higher grades than whites, other things being equal, out of some measure of professorial guilt or moral cowardice. (Under the impact of the Black Power Movement, the “Negro B” may even become the “Negro A-minus.”
Note that if Wilson “suspects” a racist or sexist trope might be true against a group he hates in the first clause of a sentence, it become indisputably true by the second clause and he denounces progressive professors who disagree with him as “coward[s].” The two right wing political science pathologies go together. It is completely consistent that they serve as apologists for elite criminals and denounce, deride, demean, and demonize those who lack power and wealth as the real problem for the unforgivable ‘crime’ of daring to attend elite schools while black or female. It is also revealing that the NYT was willing to spread his racist and sexist bile, based on what he “suspect[s]” to be the inferiority of women and blacks, in its greatest treasure – the featured Sunday op ed.
I have written previously about Wilson’s unwillingness to take elite crimes seriously. He did not even understand that elite white-collar crime is ‘predatory.’
In a book entitled, Thinking About Crime, Wilson argued that criminology should focus overwhelmingly on low-status blue collar criminals.
This book [does not deal] with “white collar crimes”…. Partly this reflects the limits of my own knowledge, but it also reflects my conviction, which I believe is the conviction of most citizens, that predatory street crime is a far more serious matter than consumer fraud [or] antitrust violations … because predatory crime … makes difficult or impossible maintenance of meaningful human communities (1975: xx).
I am rather tolerant of some forms of civic corruption (if a good mayor can stay in office and govern effectively only by making a few deals with highway contractors and insurance agents, I do not get overly alarmed)…. (1975: xix).
Note Wilson’s approach to science. He has not researched white-collar crime, but he has a “conviction” that “predatory street crime is a far more serious matter.” Why? White-collar criminals and predators are “predatory.” They often target poorer, politically weaker citizens. They cause massively greater financial losses than street crimes. They kill tens of thousands of Americans annually, and hundreds of thousands globally.
Why is the mayor a “good mayor” if he is accepting bribes? If he accepts bribes, why does Wilson think the mayor will only accept “a few [corrupt] deals”? The mayor, once he accepts “a few” bribes, is far more likely to accept dozens of bribes. Wilson, Huntington, and Weiner share the bizarre belief that being corrupted is not corrupting. Humans, however, find corruption morally corrupting. In particular, if we “tolera[te]” corruption as Wilson and Weiner advise us to do, we make it exceptionally likely that corruption will grow.
Weiner then spins into another round of false equivalency. He claims that if it in the self-interest of non-elite Americans not to be the victims of a system rigged in favor of the wealthy, their $10 political contributions to Senators Warren and Sanders are morally equivalent to the $2 million contributions and $8 million in lobbying fees that a private insurer spends to maintain the rigged system. Recall that the consequences of rigging the health care system to enrich private insurers is that the U.S. wastes roughly $4 trillion annually on excess health care costs that produce no gain in health care. Much of this waste goes into the pockets of the owners and senior executives running private health insurers. This is not simply corrupt, it is stupid and we cannot afford to continue to waste nearly $4 trillion annually.
Weiner then makes a foray into economics, where he is even weaker than in his own field.
Anthropomorphizing economic “systems” that are actually the products of trillions of individual choices further confuses the issue. Ms. Warren may wish to describe the results of those choices as kicking “dirt” on workers, but there is no single identifiable system doing the kicking.
All the claims of rigged systems that now saturate American politics make reasoned conversation more difficult.
This entire passage is devoid of substance and economically illiterate. First, neither Warren nor Sanders anthromorphizes “systems.” Second, the systems they criticize are not “the products of trillions of individual choices.” Both criticize, for example, the refusal to prosecute the elite bankers who led the “control fraud and predation” epidemics that hyper-inflated the real estate bubble that drove the Great Financial Crisis (GFC). A few thousand senior bankers made those decisions. They rigged the system to turn control fraud and predation into “sure things.” Similarly, the Senators criticize payday lenders engaged in control fraud and predation for rigging the system against customers. Roughly 100 senior payday lending executives made the critical decisions. The Senators criticize modern executive compensation. Modern research demonstrates how criminogenic that system is. Several thousand senior officials made the critical decisions. The Senators criticize for-profit ‘universities.’ These ‘universities’ have a record of horrific “control fraud and predation.” They rig the system against their students (and the federal government as guarantor for student loans). A few hundred senior executives make the critical decisions that rigged the system. Each of the specific examples I have discussed is a “system.” None of them, even remotely, represents a “free market.”
Readers of my work are familiar with the two great epidemics of loan origination fraud that hyper-inflated the residential real estate bubble that drove the GFC. Lenders’ personnel and agents (mortgage brokers) extorted appraisers to inflate values and encouraged the extraordinary inflation of borrowers’ incomes through ‘liar’s loans.’ These were two specific system rigged by senior bank executives to produce epidemic levels of fraud and predation. These transactions involved millions of people, but a few thousand senior bank executives made the critical decisions that rigged the system. Again, the executives’ goal was to produce a ‘Gresham’s’ dynamic that would drive honest lenders out of nonprime lenders.
Weiner makes the mistake of assuming that corruption is a problem unique to the public sector. Senators Warren and Sanders have a far superior understanding of private sector corruption that white-collar criminologists have long documented. (George Akerlof made the same point in 1970 in describing the ‘Gresham’s’ dynamic.) CEOs are the primary corruption ‘vector.’ They suborn public officials, but more frequently and worse is their corruption of other private sector actors such as prestigious law firms, outside auditors, credit rating agencies, appraisers, employees, and agents such as the mortgage loan brokers. The technically correct word for each of these fraud epidemics (and the third epidemic of secondary market fraud) is “system.” In common English, a system that the perpetrators shape to aid their control fraud and predation schemes is “rigged” and “corrupt.” Senators Warren and Sanders are spot on in their terminology.
Weiner admits his real problem is with Warren and Sanders’ policies.
This puritan strain in American politics makes it more difficult to find common ground because it stigmatizes, and therefore hardens, opposition. How can there be a legitimate compromise with corruption?
I confess to being a Midwesterner. I was taught from my earliest memories that corruption is wrong and that our duty is to ‘speak truth to power’ to fight elite corruption. All my life experiences as a financial regulator where I fought corruption and all my academic research confirms that my parents had it right. Corruption is immoral and immensely destructive. Corruption invariably imposes it greatest costs on those with less power and wealth (minorities, women, and the elderly) and showers the least ethical elites with greatly increased power and wealth. There is no legitimate compromise with corruption. The fact that Weiner’s goal in life is to convince people to see corruption as legitimate and moral tells us why we should do the opposite.
Weiner’s view that corruption is not corrupting is not simply false and immoral. Weiner has spent his life as an apologist, advocate for, and admirer of corruption. He has paid Warren and Sanders the ultimate compliment – he knows their campaign promises are real. He knows that they pose a grave threat to the corrupt system that he serves and he is desperate to prevent their nomination.
Why the NYT keeps giving so much space to corruption apologists desperate to destroy progressive Democrats’ candidacies and to smear women and minorities is the real question. After the disgrace of publishing Wilson’s racist and sexist rant and apologia for corruption, one would have hoped that the paper would have learned a painful lesson.
Your point is well taken and on the mark individually, however when a new paradigm is required missing the mark as in the case you identify is ubiquitous and, even correctly, pointing such out sadly accomplishes no progress toward what is required.
New paradigms are always accompanied by a new tool and/or insight that describes and creates an entirely new pattern. In the present economic and monetary case the new insight is that money is not the operant cause of “monetary” inflation, but rather individual and systemic monetary scarcity coupled with chronic price and asset inflation that the current paradigm enforces. The new tool is a direct and reciprocal monetary policy implemented at the point of retail sale which happens to be a true turning/pivoting point because it is the terminal ending point of the entire legitimate economic/productive process, the terminal summing point of all costs for every consumer item or service and hence also the terminal expression point for all prices and the terminal expression point for all forms of inflation as well. Thus a 50% Discount/Rebate monetary policy at that point reverses both monetary scarcity by immediately doubling everyone’s potential purchasing power and slays price and asset inflation by (miraculously so far as current orthodoxy is concerned) integrating beneficial price deflation into profit making economic systems.
Of course humanity not being an entirely rational and ethical being even the reality inversion aspect of true paradigm changes needs some further policies, structural changes and regulation. To wit the succinct new pardigm aligned book found here:
“How can there be a legitimate compromise with corruption?” The question is an extended oxymoron, self-contradictory in the very phrasing of it. One might as easily ask: “How can there be a nonviolent compromise with murder?” As sold-out (or should I say “bought”) as the NYT has obviously become (a paper I once took pride in reading daily here in the boonies of the Midwest), it borders on the unbelievable to see a patently absurd, blatantly amoral piece like Weiner’s find space in the Gray Lady’s bed. But then again, if one is to oppose evil, not only is the devil you know preferable to the one you don’t, but even better is the devil that announces itself to you.
Thank you, Steve, for the link to your book. As a long-time supporter of C H Douglas, it is good to see his practical approach to economics is appreciated.
I have to agree with your comment on William Black’s article, a rebuttal sorely needed against corruption, but no real suggestions as to the changes really required. Certainly, Warren and Saunders are at the forefront in attacking the embedded corruption in the system, but until a practical and understandable program can be presented to change the system at its foundation, then little will change.
Unfortunately, I found the Preface and Introduction to your book very difficult to comprehend and understand in a clear and practical way that needs to be presented to the general public.
You are correct though, there has to be a paradigm shift in economic thinking if we are ever to get out of the toxic swamp of current economic thinking.
Corruption is corrosive to public trust. Gresham’s Law, indeed.
There is an answer to price gauging, excessive price hikes. It’s called competition. In capitalism with real competition, profits go to zero. Competition brings prices in line with production costs. There is no need for Steve Hummel’s proposal. All the decades (over a century) of anti-trust, anti-cartel, anti-monopoly efforts and legislation and regulation were directed against abusive market power. A sector that displays classic competition and pressure to keep prices low, is agricultural production, that has one of the lowest inflation rates of all sectors.
We already have answers to abusive market power. There is no need for Hummel’s proposal. We already have sufficient legislation and regulation. We simply need to enforce it.
Thanks Graham. Yes I am going to re-write it by simply showing how tying a direct and reciprocal monetary policy at retail sale will resolve individual and systemic monetary austerity and slay any possibility of inflation in one fell swoop. (Garden variety “monetary” inflation is virtually always a small single digit percentage and hyperinflations never occur without specific disastrous circumstances taking place and only after a central bank leverages up speculators who short the currency) Hence how can you possibly have inflation when consumer prices on every item or service from a package of chewing gum to autos, homes and stock prices when their prices are reduced by 50%?
@Tim Exactly. The model for the solution is common sense and fairness in our Constitution. Sanders, Warren and even Kamala Harris would present a real contrast to Trump and GOP if they address CONTINUING fraud and abuse by Wall Street and the corrupted settlements with existing law and cover up of fraudulent settlements. There’s a golden opportunity in CA with recent decision to return $330 million of legal aid to financial crisis homeowner victims.