Different Laws for Rich & Poor


I like Matt Taibbi a lot. I love his Rolling Stone articles and I used to love his weekly blog there. I'm glad he's back at RS and publishing articles. I think he was one of the best reporters of the financial crisis, and I especially love his ability to make the details of these issues understandable. I also love the freedom RS gives him to drop the f-bomb on some of these "vampire squid" executives.

That said, I liked
The Divide rather than loving it. I think there's a ton of great information in it, and I agree with Taibbi's thesis: that there's something broken about a society that fails to pursue any of the Wall Street criminals who egregiously broke laws and ruined lives in search of bigger year-end bonuses, especially when that society is simultaneously cracking down on -- and cracking heads of -- poor folks in "bad neighborhoods." My only objection to the book was that I thought the anecdotes went on a bit too long, and I thought they were too exclusively focused on the problems of the urban poor, especially in greater New York City.

The book begins well, with a stark comparison. "At its peak in 1991," Taibbi says, "according to FBI data, there were 758 violent crimes per 100,000 people. By 2010 that number had plunged to 425 crimes per 100,000, a drop of more than 44 percent" (p. 1). The contrast: "In 1991 there were about one million Americans behind bars. By 2012 the number was over 2.2 million, a more than 100 percent increase." Taibbi believes "
We’re creating a dystopia, where the mania of the state isn’t secrecy or censorship but unfairness" (p. 12). The process begins, in Taibbi's story, with a 1999 memo written by an obscure Clinton staffer named Eric Holder. "Bringing Criminal Charges Against Corporations" is an interesting memo, and it had an interesting role in the reinterpretation of the Justice Department's role. For me, it was a little too much of an insider story, though. I was more interested in the connections between Holder (and his associate Lanny Breuer) and the law firm of Covington and Burling (one of whose founders wrote extensively in opposition of the New Deal back in the 1930s). When Holder and Breuer were running Justice, twenty-two other lawyers from that single firm held key positions in the Department. I'd like to hear more about that.

Taibbi has collected a lot of these bizarre, unjust contrasts. "
For instance , in 2011, the state of Ohio —the same state that lost tens of millions in the early 2000s when its pension fund bought severely overpriced mortgage-backed securities from a Lehman Brothers banker named John Kasich, who would later become governor —tried to recoup some of its losses by sending out 22,000 notices to Ohioans seeking 'overpayments' in either welfare or food stamps"(p. 341). In a passage that reminds me of Chrystia Freeland's discussion of cognitive capture, Taibbi describes President Obama's remarks on 60 Minutes in December, 2011, suggesting that a lot of the "least ethical behavior" on Wall street wasn't strictly illegal. "The thing that’s interesting about this claim," Taibbi says, "isn’t that it’s factually wrong, which incidentally it almost always is, often to a humorously enormous degree. What’s interesting is that the people who make this claim usually believe it to be true. Even Barack Obama , despite the fact that he’s almost universally understood to be an outstanding lawyer and should know better, probably believes it to be true. This weird psychological kink is where the Divide lives. Increasingly, the people who make decisions about justice and punishment in this country see a meaningful difference between crime and merely breaking the law" (pp. 397-398). Crime, it turns out, is what poor people are increasingly assumed to be doing, even when they're just standing outside their apartment building having a smoke at 1 AM. Breaking the law is just being "aggressive" with the rules of the game, and it's perceived as victimless -- even when taxpayers have to ante up billions of dollars in bailouts.

And let's not forget to follow the money. While the Financial Crisis Inquiry Committee got $10 million in funding, "
the federal drug enforcement budget leaped from $ 13.275 billion to $ 15.278 billion. That meant that just the increase in the national drug enforcement budget for the year of the biggest financial crisis since the Depression was roughly two hundred times the size of the budget for the sole executive branch effort at formally investigating the causes of financial corruption" (p. 407). Policing and incarceration are big business in America. It's the one thing, after all, we can't outsource overseas.

After Horwitz, Steinberg


Nature Incorporated: Industrialization and the Waters of New England Theodore Steinberg, 1991

This book was originally Ted Steinberg’s dissertation. His advisors were David Hackett Fischer, Morton Horwitz, and Donald Worster (nice committee!). Steinberg’s thesis is that “industrial capitalism is not only an economic system, but a system of ecological relations as well” (11). This idea goes beyond the obvious (but important) recognition that the environment influences social and economic choices, toward a more subtle discussion of how “the natural world came to represent new sources of energy and raw materials [that were] perceived more and more as a set of inputs.” Steinberg mentions Environmental Historians William Cronon and Carolyn Merchant in this context, but the thrust of his argument develops Horwitz’s theme of “an instrumental conception” of both resources and the “law that sanctioned the maximization of economic growth” (16). Basically, Steinberg takes Horwitz’s argument that the law became a servant of economic progress and extends it to the natural world, which also became an “instrument” of particular human designs rather than a common ground shared equally by all.

I assigned Steinberg’s Introduction to my EnvHist class last semester, and my lecture video incorporated much of the story Steinberg tells of the takeover of the Charles and Merrimack Rivers by textile industrialists, and the associated shift in social ideas of the public good and the changing role of incorporated organizations from providers of public services to private, for-profit business. A key issue in Horwitz’s
Transformation of American Law, which Steinberg picks up, is that this sneaky hijacking of common law and attitudes toward ownership, along with the confusion of public and private sectors that springs from it — all these changes have distributional and social justice consequences. So the point is not only that over time it became “commonly assumed, even expected, that water should be tapped, controlled, and dominated in the name of progress,” but that the rewards of this control legitimately belonged to the few, to the exclusion of the many. This was a big change, and it opened the door for the modern world.

Steinberg’s story of the beginning of textile milling in Massachusetts calls attention to the contested nature of all the changes the mills tried to make to the flow and control of rivers like the Charles. How and why people reacted to these sneaky changes in the social contract was the element missing from Horwitz’s story (why we don't remember these challenges better in US History is a question yet to be addressed). Steinberg begins filling in the details, including the story of how the Boston Manufacturing Company used the legal system to settle what amounted to a class-action lawsuit in 1848, by paying just $26,000 to get permanent uncontested control of the Merrimack River. In 1850, as a consequence of their uncontested control of what had once been a common resource, the BMC made $14 million. I stressed this moment in my lecture, because it seemed so typical: a corporation (which is technically immortal) uses the courts to buy off the people it has injured with a pile of cash that seems significant to them, but is actually minuscule in comparison to the damage the corporation has evaded responsibility for. How many superfund sites, oil spills, and industrial accidents have been bailed out over the years by this trick, I wonder?

Like Horwitz, Steinberg also shows how much the changes in our society’s understanding of property rights and commons owed not to free competition in the market, but to government interference on behalf of the rich, through the courts. This is another important thing for students to understand, I think. Current debates about the relationship between businesses and the environment are too often framed as a sort of
Atlas Shrugged episode, with “statist” environmentalists trying to infringe on the rights of “individualist” businesses. Steinberg’s story of the textile industry helps explain that building corporate power was a social process — the BMC was given power in the elaborate set of choices Steinberg describes. And some people objected, but the changes went ahead despite the regular complaints of area farmers and upstream fishermen. This led many people in places like the Charles River valley in the early 1790s to believe “their natural rights [had been] stolen from them, and their best property at the mercy of one or two Millers, still the lucky favorites & likely to remain, so long as the rage for Factory at every place, whether others sink or swim, continues the rage of Government” (37). Interesting that these complaints were made early in the story, when Massachusetts residents were still filled with the “Spirit of ’76” and the populist understanding of natural rights that led to the Revolution. By the end of the story in the middle of the 19th century, the language of resistance had been forced to change because the things people were resisting hadn’t even been dreamed of in the Revolutionary era.

Steinberg describes the Boston Associates’ campaign to control Lake Winnepissiogee, the destruction of fisheries and then the capitalists’ attempts to reintroduce fish and manage what was formerly a common good, and the problem of industrial and urban pollution in rivers controlled by the industrialists. Each of these topics have been expanded by others, along the lines Steinberg suggests. The only flaw in the book, for me, is the Thoreau-ian wrapper Steinberg adds at the beginning and end. As recorded in the 1849 classic,
A Week on the Concord and Merrimack Rivers, Henry David Thoreau was horrified by what he saw happening in New England, but I don’t think Steinberg shows how Thoreau represents any type of viable alternative. Of course, Thoreau is familiar to most students from High School, and my students got a bit caught up in the Thoreau thing -- so it works. At the conclusion of the book, Steinberg admits that “greater command over…nature in general, had its positive points.” But, he concludes, “this aggressive, manipulative posture toward the natural world [is] a problem that penetrates to the core of modern American culture” (271). Like Thoreau, this sentiment is easy to agree with but difficult to act on. In addition to the sneakiness of the legal and social changes, our inability to see how things might have gone leads to a sense of inevitability. So when I taught this segment last semester, I tried to frame the story with Robert Owen. At the beginning of the story, Nathan Appleton and Francis Cabot Lowell went to Scotland to visit Owen’s mill city New Lanarck. By the end of the story, the BMC had built cities on the Merrimack, made millions, polluted the water, and then took their money and left when the industry went into decline, leaving behind permanent social and environmental problems. Owen, on the other hand, had left industry to found the cooperative community New Harmony in America and became the father of the Cooperative movement in Britain. It’s not a perfect counterpoint, but Owen’s story compared to Appleton’s and Lowell’s at least suggests that things could have gone differently in Lawrence and Lowell.