HANG THE JURY

If a juror believes a defendant is guilty of breaking the law, but believes also that the law itself is not just, she has the right to vote with her conscience and not with the law.

A single juror has the ability to acquit a defendant in a trial for any reason. Even if the juror believes the defendant is guilty. This is called jury nullification. This is not a loophole. Nor is it illegal. But it’s a secret and it shouldn’t be.

With that said, let’s begin.

A cursory review of prison statistics illustrates the nightmare that is African Americans’ experience with our criminal “justice” system. There are currently more than 7 million Americans caught up at some point in the prison system between probation, incarceration and parole. Incredibly, 40 percent of our prisoners are black even though African Americans comprise only 13 percent of the total U.S. population. I live in a state where that number is closer to 50 percent. All told, America has 25 percent of the world’s incarcerated population despite only having 5 percent of the world’s population. This makes the sheer number of blacks in the prison system today even more overwhelming.

If you think there’s something wrong with this picture, continue reading, as there’s something that you can do about it. If you think this is because black people commit crime at a higher rate than white people do, then there’s a special place for you in hell or, worse, Congress.

Half of the prisoners in the United States are serving time for non-violent drug-related charges and 80 percent of those charges are for possession. Advocates and activists throughout the nation are attempting to reverse this trend, as the mass incarceration of black men specifically has become an epidemic. Despite the best efforts of groups such as the NAACP and the ACLU to reverse the trend, the problem persists unabated with most feeling helpless to change the system in a meaningful way.

But something can be done. By understanding your rights as a citizen to participate in the legal system, change can occur. Simply performing a civic obligation and reporting for jury duty gives every American the ability to weigh in on this issue.

Few people who are arrested on drug possession charges ever make it to trial for two reasons. One is that most cases are settled with a plea deal that a defendant often learns of for the first time while standing in front of a judge. The court-appointed attorney is basically there just to explain the plea to the defendant. The second reason is that plea deals are often considerably more attractive than the potential of losing in a trial and being sentenced by a judge, who is obligated to hand down sentences in strict accordance with the law. In states with mandatory minimum sentencing requirements, the risks are enormous.

But for those rare cases that do make it to trial, most people would be surprised to know that the most powerful person in the room is not an attorney or even the judge, for that matter. It’s the juror. One dissenting juror has the ability to decide whether or not a defendant should be set free no matter how the facts are presented. If a juror believes a defendant is guilty of breaking the law, but believes also that the law itself is not just, she has the right to vote with her conscience and not with the law.

Whether or not a judge has an obligation to inform a jury of this right has been battled over for two and a half centuries. As it stands now, judges are not required to inform a jury of their right to nullify a verdict; therefore, most do not.

Intrigued? Incredulous? Inspired? If you are brave enough to defy injustice and provide the last line of sane defense in an insane world, it’s best to arm yourself with an understanding of how we arrived at this point in history and your constitutional right to turn the tide.

The Modern “Middle Passage”
In order to properly describe the extent to which our criminal justice system is inherently and overwhelmingly racist, we must learn to speak about it with a new language. The current language, inculcated into the population by the government and corporate media over several decades, includes phrases such as “tough on crime,” “zero tolerance,” and “three strikes.” This type of rhetoric has been delivered repeatedly and enthusiastically since President Ronald Reagan declared the official start to the War on Drugs in 1982. Thirty years and a billion episodes of Law & Order later, we are all fluent in the language of narcotics.

Unfortunately, most of us have turned a blind eye to the mass incarceration of young black men in America during this time. Most of us shrugged it off. Most of us have failed to comprehend the rise of the prison industrial complex. Most of us, but not all of us.

In her book, The New Jim Crow, Michelle Alexander speaks to both the sociological and institutional aspects of racism in the American legal system. Since its publication in 2010, her book has been gradually galvanizing members of the black community around the concept of incarceration as a new form of slavery. And because of the efforts of outspoken leaders such as Dr. Cornel West, tireless advocacy from grassroots drug and prison reform groups and the comprehensive analysis provided by Alexander, the nation is beginning to speak about incarceration with a new language.

Rev. Roger Williams, pastor of the First Baptist Church in Glen Cove, N.Y., and president of the local NAACP chapter, says the reaction in the black community has been “multifaceted.” He says Alexander’s book has certainly inspired debate, with some putting “all of the onus on the black community,” others who have a “balanced understanding,” and “then you have those who feel like white folks are coming for you.” In every case, says Williams, “it’s almost like shoveling smoke trying to get a consensus, but it’s certainly stirring leadership.”

Fred Brewington, a prominent New York attorney and activist, has lectured frequently on this issue and even given sermons on The New Jim Crow, as he lives it every day in the criminal justice system.
“Unfortunately, the system has become the norm,” says Brewington. He shares Williams’ view that the book hasn’t necessarily filtered through the black community, but it has started to take root. “It’s not as though everyone is waking up and saying, ‘Where are all our African American men?’” But he calls Alexander’s book a “wonderful compilation of information that is there for the use of front-line advocates.”

Alexander’s book boldly equates the effects of today’s punitive drug laws to those of the Jim Crow laws that legalized segregation and unequal treatment under the law with respect to race. Specifically, she addresses the mass incarceration of black men in America under draconian drug statutes. For those who believe her analogy is a stretch, Alexander has a powerful weapon at her disposal: statistics.

Our modern journey to enslavement begins in 1972 in the years immediately following stark gains made during the Civil Rights movement. The prison population was around 350,000 as compared to 2.2 million people today. In 1972, violent crime had already peaked and was on the decline in the United States. The reason for the peak during the prior years was arguably the result of the Baby Boomers being between 18 and 25 years old—the prime adolescent years of criminal agitation—mixed with civil unrest and protests during the Vietnam era.

But by the mid to late ’70s, conscription had formally ended, the Boomers were more worried about getting jobs than getting high and violent crime was precipitously declining. As Alexander notes in The New Jim Crow, the National Advisory Commission on Criminal Justice Standards and Goals recommended as early as 1973, “no new institutions for adults should be built and existing institutions for juveniles should be closed.”

Sociologists and criminologists had come to realize that punitive punishments and long-term sentences had little to no positive impact on crime statistics and that rehabilitation and treatment were more appropriate measures for all but the most violent criminals. Plus, the numbers were on their side. Despite a difficult economy, violent crime was falling—not only in the United States, but also around the globe. Given these circumstances, it was somewhat surprising that President Reagan declared an official “War on Drugs” in 1982, only two years into his first term. Surprising also because America didn’t really have a drug problem in 1982.

Ask enough people from a black neighborhood where “crack” came from, and it won’t take long for someone to tell you it was the CIA. This point has been hotly debated for years. But the fact remains that the period during which cocaine first began flooding the streets of American cities coincides precisely with the start of CIA operations in Central America, specifically Nicaragua. In the early 1980s guerrilla fighters in Nicaragua were suddenly flush with cash from American drug dealers—cash used to purchase American weapons in their fight against the Sandinistas, the Marxist government that aligned itself with Cuba.

In 1982, the U.S. Attorney General drafted a Memorandum of Understanding to the CIA establishing the United States’ interest in overthrowing the Sandinista government in Nicaragua; the same year the Reagan administration declared the War on Drugs. But crack cocaine had yet to reach the streets. It would take another three years for crack to begin appearing in the black neighborhoods; crack derived from cocaine funneled from Nicaragua. Call it a conspiracy or an incredible coincidence, but the timing is irrefutable. In the meantime, however, the Reagan administration didn’t sit idly by and wait for crack to become an epidemic. It had laws to change and a paradigm to shift. It didn’t take long.

Despite the downward trend of violent crime and no evidence yet of a rampant drug problem, the Reagan administration increased anti-drug funding for the FBI, Department of Defense and the Drug Enforcement Administration tenfold between 1980 and 1984; almost the exact size of the funding decrease to federal drug treatment, rehabilitation and education programs. Cocaine funneled from Central America hit the streets in 1985 in the form of crack and was deemed an epidemic by the media by 1986. By the end of 1986 the country had already adopted mandatory minimum sentencing requirements for drug-related felonies.

In less than five years a crisis had been fully manufactured in our cities and federal, state and local law enforcement agencies were given incentives in the form of military arsenals and cash to increase the number of arrests. Police departments were suddenly competing for cash grants, assault weapons and air power. The government’s sudden change of course and willingness to fund anything related to drug crimes also created an opportunity for private industry, which was only too anxious to jump into the fray.

In 1983, Corrections Corporation of America (CCA), the first privately held prison corporation, was formed. Despite the historically low prison population, the government’s drug war prompted private industry to suddenly jump into the incarceration game. Today, CCA is a nearly $2 billion (and growing) corporation with more than 90,000 “beds” under its control.

Allowing for privatization of our prisons is one of the more egregious examples of how divorced our policymakers are from common sense in this country. The goal of a private penal corporation is to profit from high and extended rates of “occupancy.” (CCA literally speaks in these terms as though it was part of the hospitality industry.) The private prison lobby in America has pressured lawmakers over the years to maintain harsh minimum sentencing requirements as corporations have little financial incentive to encourage rehabilitation of prisoners. As far as the private prison industry is concerned, the only useful felon is one who is incarcerated, not reformed.

Reagan’s “war” saw a clean population getting hooked on drugs. During this “war,” rehabilitation was replaced with recidivism. Treatment was abandoned in favor of solitary confinement. Education was upended by “stop and frisk.” Prevention was sacrificed in the name of incarceration. The result? Half of all inmates today are in prison for drug-related crimes, of which 80 percent are related to possession of marijuana. To say the black community bore the brunt of this war is an understatement. To wit, more black American men are in the prison system today than there were slaves just prior to the Civil War. Present the statistics any way you please. There’s no pretty picture to paint. Black America is once again in chains.

The System
Each year, hundreds of thousands of “stop-and-frisk” acts are performed in black neighborhoods. They are rarely, if ever, conducted in white neighborhoods, office complexes or college campuses. Nevertheless, politicians point to the success of “stop and frisk” in the absolute number of people arrested for carrying drugs instead of the miniscule percentage of people found carrying drugs who were searched. I’m no mathematician, but logic would dictate that if you only stop and search people in black neighborhoods, then when you find drugs on someone the chances are that person is going to be black.

The reasoning behind “stop and frisk” is so specious and the process itself so unconstitutional it defies logic. And yet, it’s generally upheld in court. In 2012, 533,000 people were subjected to “stop and frisk” by the NYPD, according to the NY Civil Liberties Union (NYCLU). Once again, even though blacks comprise 25 percent of the city’s population, they made up 55 percent of those who were stopped and frisked.

Many officers are unhappy with the “stop-and-frisk” protocol but are caught up in the nightmare due to pressure that comes from the top. Recently, the New York Daily News reported on a case where NYPD Officer Pedro Serrano testified against the department after taping his supervisor, Deputy Inspector Christopher McCormack, telling him to target “male blacks. And I told you at roll call, and I have no problem [to] tell you this, male blacks 14 to 21.” These kinds of orders are not unique. They stem from quotas that are often handed down from the police brass. And officers such as Serrano who speak out against these practices are often shunned by their colleagues.

But wrestling with one’s conscience and struggling to maintain police quotas is nothing compared to the hell that awaits a young black man swept up into the web of “stop and frisk.” Once in court, the odds are stacked against him. In a recent conversation, Brewington described the harrowing the process of being caught by the police and ushered through the “system.”

Those with a prior arrest who are brought in on possession charges may meet an attorney such as Brewington in the holding cell. They’re actually one of the lucky ones, as a staggering number of accused felons make it all the way to sentencing in front of a judge without ever having spoken to an attorney. A far cry from what happens on TV. Brewington describes the encounter as something less than a conversation, as he advises his client to answer simply “yes” or “no” because everyone around him has an incentive to use his words against him in their own plea deal.

Time is of the essence, as he is typically carrying an offer from the D.A. that is set to expire quickly. Whether they want to go free is not a question he will raise. They’re in the system now. The only question is, how long? Risking an appearance in front of a jury means risking a much longer sentence.

“The fear is that you’re going to get a jury that’s really not of your peers,” says Brewington, who is loath to advise a jury trial. He says many of the young men he encounters “have not acquired the requisite skills to appear sympathetic” in front of a jury “that looks at you as though you must have done something wrong.”

The confusing whirlwind of circumstances between being frisked by law enforcement officials and accepting a plea deal is just the start, a piece of the legacy from Reagan’s “War on Drugs.”
But if Ronald Reagan was responsible for putting so many black people behind bars, it was Bill Clinton who was most responsible for keeping them there. In an effort to make Democrats appear “tough on crime,” the Clinton administration institutionalized punitive measures outside of the system, such as lifetime bans on some forms of welfare including access to food stamps, government jobs and public housing. Parolees, now branded as felons for life, were suddenly unable to leave their district while being forbidden from returning home, accessing food and gaining employment in the public sector.

“If the initiative is to eradicate the drug trade,” says Williams, the opposite occurred. “What you’re doing is inducing the necessary anger on the inside that will be accentuated when they come back. And the only thing that will accept them back is the game.”


Throughout the ’90s, recidivism spiked and parolees came face to face with President Clinton’s most punitive anti-crime measures—the “Three Strikes” rule and mandatory minimums. Under Clinton, life sentences were mandated for any third-time felon, or felon convicted of multiple counts, regardless of the nature or severity of the crime. Mandatory minimum sentences for even the lowest level drug offenders were implemented as outrage finally began to creep into American consciousness. Black churches and organizations were up in arms. Some judges resigned. Alexander even recounts the story of a notoriously harsh judge who wept when forced to hand down a 10-year sentence “for what appeared to be a minor mistake in judgment in having given a ride to a drug dealer for a meeting with an undercover agent.”

Beyond the practical hindrances a felon faces in attempting to re-enter society, there’s an emotional burden and stigma that is carried forever; a burden that extends to the family as well. Dr. Jeffrey Reynolds, president of the Long Island Council on Alcoholism and Drug Dependence, runs programs to counsel children of incarcerated parents. While their parents are on the inside, the kids “suffer guilt, shame and isolation,” says Reynolds, adding, “Seventy percent of kids of incarcerated parents, without intervention, wind up incarcerated themselves.” But he speaks to the effectiveness of intervention, saying, “None of our kids have been incarcerated. With a little bit of help and a little bit of energy, it makes a huge difference.”

Even those who are released carry with them the shame of having been on the inside and the painful memories that accompany incarceration. Horrifically, more than 70,000 prisoners are raped every year. Additionally, tens of thousands of prisoners are locked in solitary confinement at any given time in the United States, a punishment usually employed by totalitarian regimes that was all but outlawed in the United States prior to Reagan’s War on Drugs and the emergence of the modern prison industrial complex.

Nullification is a “Juror’s Prerogative”
“Unjust laws exist; shall we be content to obey them, or shall we endeavor to amend them, and obey them until we have succeeded, or shall we transgress them at once?”
—Henry David Thoreau, Civil Disobedience

You don’t have to agree that the “War on Drugs” was an intentional war on the poor, disenfranchised people of color in this country to understand that this was the result. Thinking, feeling people know these laws must be changed. And while we, as citizens, must indeed protest, engage in civil disobedience and write to Congress, there is more that can be done and it begins with understanding your rights.

In a New York Times op-ed last year, Alexander floated a question raised to her by a woman named Susan Burton. Her question was simple, but brilliant: What if there was a movement to convince “thousands, even hundreds of thousands, of people charged with crimes to refuse to play the game, to refuse to plea out?” Her supposition was that this would theoretically crash the criminal justice system. She’s right. But the risk would be enormous given the potential and very legal retribution the system provides for.

But if the black community is examining this option and weighing the risks of such a strategy, it is incumbent upon the white liberal community to do the same on the opposite side of the equation. In this scenario, African Americans have everything to lose and white people have nothing to lose. So to possess this knowledge, have nothing to lose and still refuse to be an “upstander” is to be silently complicit in modern-day slavery.

Most white Americans have only a casual relationship with our legal system. Their understanding of what is just and what is legal generally comes from watching television crime shows and movies. This is why most people have the impression that the sole responsibility of a juror is to deliver a verdict based upon legal facts and that his or her personal feelings of fairness and justice cannot be considered.

This is patently false.

If you manage to get by “voir dire,” the process of questioning jurors to sit for a particular trial, and are fortunate enough to be selected, you can participate in a revolutionary movement. You can hang a jury without ever having to explain why. Jurors such as this are referred to as “stealth jurors.” Quiet activists who are guided by conscience not convention, or as Fred Brewington says, “The jury becomes the advocate for society.”
But first, you have to be in the position to do so. The key to getting through voir dire is to answer honestly without revealing anything ideologically. There is a science to voir dire and cases are often determined by how adroit an attorney is at selecting a jury. So remember these simple facts:

1) Less is more: You cannot misrepresent yourself by exercising restraint during voir dire.
2) You are not the one on trial.
3) Your goal is to get on that jury.

Serving on a jury is tedious, time-consuming and may even be financially detrimental. There is nothing romantic about the inner-workings of our legal system, no matter how glorified it is on television. Moreover, only a handful of Americans will actually be selected for a trial that involves drug possession charges for the reasons I stated in the opening of this piece. The goal here is to make enough people aware that the reason our system was designed to have trials decided by a “jury of one’s peers” was to prevent unjust laws from unfairly condemning citizens to incarceration or any form of punishment.

Like I said, the chance of being picked for a jury that involves drug possession charges is extremely remote. But our ability to disseminate a simple message of civil obedience to encourage defiance in the face of injustice has never been greater. If millions of Americans know who Joseph Kony is and know how to dance “Gangnam-Style” then they can at least understand their legal right and moral obligation to hang a jury in the case of drug possession charges.

Twitter. Facebook. Smoke signals. Whatever your preferred method of communication, it’s time to spread the word and find the “one in twelve” willing to hang the jury.

 

This article is an excerpt from Jed Morey’s forthcoming book titled The Great American Disconnect: Five Fundamental Threats to our Republic

“America in Chains” Illustration by Jon Moreno
“Dissenting Juror” Illustration by Jon Sasala
“Hang The Jury” Video by Rashed Mian
www.hangthejury.com created by Michael Conforti

Wall Street Regulation

Glass-Steagall has made somewhat of a comeback with help from the Occupy movement and rising political stars like Elizabeth Warren… The only two political insiders you won’t catch talking about reinstating Glass-Steagall both happen to be running for president.

Part 4 of the Special “Off The Reservation” Election Series in the Long Island Press.

The Banking Act of 1933, commonly known as Glass-Steagall, was established to tame the harmful speculative behavior of an industry run amok in the early part of the 20th century; behavior many observers at the time credited for the market crash that precipitated the Great Depression. For some, the repeal of Glass-Steagall, by the Gramm-Leach-Bliley Act of 1999, was the deathblow to financial prudence on Wall Street.

 In reality it was simply the formal recognition of careless financial practices that were largely in place already. Since the near-collapse of the banking industry in 2008, Glass-Steagall has made somewhat of a comeback with help from the Occupy movement and rising political stars like Elizabeth Warren, the former federal consumer protection advocate now running for Senate in Massachusetts. The only two political insiders you won’t catch talking about reinstating Glass-Steagall both happen to be running for president.

Wall Street reform is as important as it was in 2008 but both President Obama and Gov. Mitt Romney have taken great pains to avoid talking about it too much. For his part, President Obama seems content to rest on the laurels of the Dodd-Frank Act, Congress’s attempt to rein in Wall Street excess, which had enough support to pass but not enough to be properly funded or enforced. According to Romney’s platform, he would “Repeal Dodd-Frank and replace with streamlined, modern regulatory framework.” That’s the extent of his vision for the future of Wall Street according his platform. Ten words.

So while the rest of the country is suddenly talking about a law enacted almost 80 years ago, these guys aren’t going anywhere near it. The truth is, Wall Street reform and, more specifically Glass-Steagall, is more complicated, making it easy for Obama and Romney to be evasive.

So let’s answer two questions. What would actual Wall Street reform look like and what exactly was Glass-Steagall?

The purpose of the original act was to establish a barrier between traditional banks and the risk-taking investment firms, denying investment banks access to consumer deposits and secure, interest-bearing loans. The unwritten effect of Glass-Steagall, however, was to establish a culture of prudency in the consumer and business banking realm, leaving sophisticated professional investments to more savvy financiers who had the ability to calculate the inherent risk of a financial instrument. For decades to follow, the merits of Glass-Steagall would continue to be debated, but it nevertheless drew a marked distinction between the function of a consumer bank and an investment bank.

Today reinstating Glass-Steagall is a common rallying cry among those who decry the bad behavior of Wall Street. Its repeal has become the fulcrum of nearly every debate surrounding deregulation. Actually accomplishing this, of course, is easier said than done.

The best way to reconcile the debate over whether to reinstate Glass-Steagall is to appreciate that the culture of Glass-Steagall was more important than the act itself. Over time the restrictions placed on bankers under the act were chipped away, but the culture that governed the banking industry endured beyond its measures. Eventually, savvy bankers and politicians found ways to loosen its screws and interpret the act to their own benefit.

Don’t Just Blame Republicans

In 1978, President Jimmy Carter oversaw the passage of the International Banking Act, a bill that should probably receive as much, if not more attention than Gramm-Leach-Bliley. Essentially, the act allowed foreign banks or entities that engaged in “banking-like activities” to participate in domestic financial markets. For the first time, foreign investment firms were able to make competitive loans so long as they didn’t compete for consumer deposits; initially individual states could determine whether their regulatory structure could support this new activity. The government would go on to loosen restrictions governing the competition for consumer deposits and allowing bank holding companies to treat money markets like checking accounts.

In his book “End This Depression Now,” economist Paul Krugman argues that perhaps the most influential step with respect to the banking sector came with Carter’s passage of the “Monetary Control Act of 1980, which ended regulations that had prevented banks from paying interest on many kinds of deposits. Unfortunately, banking is not like trucking, and the effect of deregulation was not so much to encourage efficiency as to encourage risk taking.”

 By 1987 the bank holding companies, including foreign companies allowed to operate within the U.S. banking system, were granted access to mortgages to create a package of investments called mortgage-backed securities; the threshold for the amount of investing activity in instruments such as these was also increased, paving the way for the growth of investments backed by the strength (or weakness) of the consumer market.

During that same year, members of the Federal Reserve began calling for the repeal of Glass-Steagall as then-chairman Paul Volcker was providing the tie-breaking resistance. But this was a mere formality because by this time, Glass-Steagall was effectively over.

Yet even though most of the threads of regulation had been pulled from the overcoat that protected consumers from risky banking practices, the culture of prudent banking still existed to an extent; maintaining the Glass-Steagall Act on the books was an indication of this sentiment. Throughout the decades when regulations were steadily eroding, powerful national figures such as Paul Volcker under Carter and Reagan, and Treasury Secretary Nicholas Brady under George H.W. Bush managed to temper the enthusiasm of the movement.

That George Bush Senior heeded their admonitions was an admission that the public’s appetite for deregulation was actually beginning to wane in the post-Reagan hangover. Richard Berke’s New York Times article of Dec. 11, 1988, on the eve of the Bush presidency, encapsulated this feeling. Berke wrote, “Lawmakers and analysts say the pressure is fed by a heightened public uneasiness about deregulatory shortcomings that touch the daily lives of millions of Americans: from delays at airports and strains on the air traffic control system to the presence of hazardous chemicals in the workplace to worries about the safety of money deposited in savings institutions.” Alas, these four years would prove to be a momentary hiccup in the deregulation movement.

During the Clinton years, the nation’s leadership was largely comprised of proponents of deregulation. In fact, by his second term, Clinton was almost entirely surrounded by rabid free market enthusiasts. A former chairman at Goldman Sachs, Robert Rubin, was Secretary of the Treasury, Alan Greenspan was still at the helm of the Federal Reserve and Phil Gramm was the head of the powerful Senate Banking Committee. All of these men had close ties to Wall Street and made no secret of their intention to release bankers from the burdensome shackles of regulation and oversight.

Reforming Reform

In 2008, economist Joseph Stiglitz warned of the enduring negative consequences of deregulation. At a hearing held in front of the House Committee on Financial Services, Stiglitz invoked Adam Smith saying, “Even he recognized that unregulated markets will try to restrict competition, and without strong competition markets will not be efficient.” One of Stiglitz’s solutions was to restore transparency to investments and the markets themselves by restricting “banks’ dealing with criminals, unregulated and non-transparent hedge funds, and off-shore banks that do not conform to regulatory and accounting standards of our highly regulated financial entities.”

For emphasis he noted, “We have shown that we can do this when we want, when terrorism is the issue.”

Still, the nagging question remains as to what reform might look like. After all, not all deregulation is irresponsible. Most of the discussion in the media surrounding deregulation revolves around the concept that our banking institutions are “too big to fail.” Thus the rallying cry for reinstating Glass-Steagall and separating banks from investment banks. I’m in tepid agreement with the underlying principle, but the reality of the situation is far more complicated. The fact is banking has gone global and the deregulation genie is out of the bottle.

As I said earlier, Glass-Steagall was as much about instilling a culture of prudency to the banking world as it was about erecting a barrier between commercial banks and investment banks. Advocates like Elizabeth Warren like to say that prior to 1999 and the repeal of Glass-Steagall, the economy functioned through periods of both prosperity and recession since 1934 without the banking sector once collapsing. It’s a fair, but oversimplified assertion that overlooks the fact that Glass-Steagall was on a ventilator in 1978 and dead by 1980. A 30-year run of prosperity from 1978 to 2008, with a few brief recessions in between, is nothing to sneeze at.

Restoring balance to the banking sector does not necessarily require separating the banks. Not yet at least. It begins with transparency and reestablishing the culture of prudency that has been conspicuously absent over the past decade. After all, you cannot value what you cannot see; nor can you mitigate risk unless you first manage reward.

What this really boils down to is accountability, which is ultimately a behavioral issue. Allowing investors to actually see how a bank behaves by viewing the size and scope of their transactions would theoretically assuage their appetite for risk. Given these conclusions, it’s easier to make the case that our current president would provide more accountability and inspire behavioral changes on Wall Street, particularly given Romney’s intransigence when it comes to considering financial reform. But tough talk against Wall Street has all but disappeared from Obama’s rhetoric leaving little hope that a second term will elicit any further positive change. So this week, while neither man seems serious about financial reform, the status quo is better than further deregulation and letting bankers rule the roost.

Tie goes to the incumbent.

Fat Cat Manifest: Rev. Ike’s Thinkonomics

If you guaranteed most folks an income next year of one million bucks, but it came with a 70% tax rate, what percentage would sign on the bottom line? Do you suppose there would be a huge groundswell of tea baggers with five-figure incomes turning up their noses on principle over this outlandish top marginal tax rate (which still prevailed in Reagan’s first term)? I, for one, would sign up in a heartbeat then register Republican and rejoin the NRA, lest anyone try to get their mitts on my remaining $300,000.

“As he thinketh in his heart, so is he.” –Proverbs 23:7

If you guaranteed most folks an income next year of one million bucks, but it came with a 70% tax rate, what percentage would sign on the bottom line? Do you suppose there would be a huge groundswell of tea baggers with five-figure incomes turning up their noses, on principle, over such a top marginal tax rate (which still prevailed under Reagan)? I, for one, would sign up in a heartbeat then register Republican and rejoin the NRA, lest anyone try to get their mitts on my remaining $300,000.

The income gap between the top tier and everyone else continues its seismic expansion. Nonetheless, only one-third of Americans, when surveyed, see themselves as ‘have-nots.’ On the contrary, recent census data finds that “a record number of Americans — nearly 1 in 2 — have fallen into poverty or are scraping by on earnings that classify them as low income.”

Liberals shake their heads over how wage slaves continue to vote against their own economic interests in favor of Fat Cat bennies like terminating the estate, er, death tax. Like Huey Long’s fictional alter-ego, Willie Stark, kept saying to his minions: “You’re a hick. Nobody ever helped a hick but a hick himself.” Average mokes being played for suckers resonated back in the Great Depression. Not in today’s Great Recession.

A captive (audience like the American Public) can become in thrall to their captor’s cause. So suggests the Stockholm Syndrome. It was invoked to defend media heiress Patty Hearst for her gun-toting, bank-robbing spree with the Symbionese Liberation Army after they had kidnapped her. The prosecution case portrayed a poor little rich girl acting out, posing all radical chic in her Ché beret and M-1 carbine. It is probably a symbiosis of both, as it is for the American consumer – conditioned to be who we wannabe.

Back when Patty and her SLA pals were liberating God knows who, I was a young man on the make, angling to become a millionaire before I turned 30. I started up a couple of promising ventures, raised a bunch of bucks, but, alas, came up short. Subsequently, I took to quipping that, “I have a negative net worth, but a wealth of self-esteem.” Though, truthfully, that may well have been a pre-existing attitude.

In college, I became intrigued with dynamic ‘visualizing’ through Maslow’s ‘self-actualization,’ particularly its commercial applications. I wrote a paper on Holiday Magic and other nominal purveyors of cosmetics which were really in the business of selling ‘distributorships’ via pyramid schemes. It was classic bait-and-switch, mesmerizing marks in revivalist-style marketing confabs featuring ‘Mind Dynamics.’

Then I went on a pilgrimage to the rococo Palace Cathedral in Northern Manhattan’s Washington Heights to catch the Prosperity Gospel of the Rev. Ike. While Reverend Frederick J. Eikerenkoetter’s mother was AfroAmerican, his paternal fore-bearers, like mine, came by way of the Dutch East Indies. Rev. Ike’s was a “do-it-yourself church” with a biracial congregation whose “only savior…is the God in you.” And he wasn’t talking about “that stingy, hard-hearted, hard-of-hearing God-in the-Sky… you learned about in Sunday School.”

A self-professed heretic, Rev. Ike stood four-square at odds with St Paul: “the best thing you can do for the poor is not be one of them.” As one of the pioneering televangelists, the Rev. Ike reached an estimated congregation of 2.5 million. Critics brayed that he played his flock for suckers, a condescending, sanctimonious judgment that sold his flock short. Rev. Ike was almost always square with them. “Be proud of the way I look because you spend $1,000 a week to buy my clothes,” and “my garage runneth over.”

In one sermon he nailed the pious Focus on Family types who shill for special interests in the name of the Lord:

Oh the Games People Play now
Every night and every day now….
People walking up to you, now
Singing glory Halleluiah, now
As they try to sock it to you, now
In the name of the Lord.

Like Lady Gaga, Rev. Ike channeled the yearnings of followers who live vicariously through their icons. Devotees could Be Like Ike by Thinking Like Ike. Rev. Ike’s Thinkonomics teaches the Mastery of Mind and how that mastered mind can be a magnet for money: “If your mind can conceive it, then you can achieve it!” This mantra was lifted virtually verbatim from Napoleon Hill’s 1937 classic, ‘Think and Grow Rich’ which, in turn, draws on the ‘autosuggestion’ of Émile Coué’s “Every day, in every way, I’m getting better and better.” It all goes back, as Rev. Ike reminded his flock, to Proverbs 23:7.

My parents, in their diametric ways, bore out Milton’s observation in Paradise Lost that, “the mind is its own place and in itself in his life, can make a Heaven of Hell, a Hell of Heaven.” Rebounding from a career-ending stroke at 52, my father, Ernest, retained his comprehension even as his speech remained truncated. His pat phrases emerged mostly upbeat, like “Up & up!” “Always laughing!” and remained so “Till the end!”

As an advisor to captains of industry, Ernest liked to share a Sufi-style anecdote on Dale-Carnegie’s “How to Win Friends and Influence People.” Noting that his clientele, not unlike Rev. Ike, had done quite nicely by themselves, if not by others, he would refer you to Baudelaire: “Brigands are convinced – of what? That they must succeed. And so they do succeed.”

Tea Partisanship

Entitlement programs don’t imply that people have some childish sense of entitlement as some Republicans would have us all believe; the programs are precisely referred to as such because we are entitled to receive them.

Boehner and ObamaPart IV of The Season of Our Disconnect

Perhaps the best, most succinct commentary I heard regarding the acrimonious debt ceiling debate was during a BBC broadcast this past week. When asked what the sentiment was in Europe regarding the countdown to American debt default that Congress narrowly avoided on Aug. 2, the reporter said there was a sense of bewilderment that the United States would voluntarily default on its obligations when so many countries were struggling against doing so involuntarily. Not only did this highlight how silly the entire debacle really was but there’s something about hearing it delivered in a British accent that makes it sound all the more ridiculous.

The Republican Party, of which I have been affiliated with since coming of voting age, has never behaved so badly. This is a party that touts itself as pro-business and anti-tax, with every member running amok trying to out-Ronald Reagan one another. Yet anyone who runs a business will tell you that cutting costs can only achieve so much and that, at some point, revenue has to increase proportionate to the growth of expenses. Theoretically that means these pro-business Republicans should recognize the need to increase revenue, i.e., taxes, and any increase in revenue should be ascribed to expenditures with no direct, offsetting revenue line.

Since the greatest single unfunded liability in America is defense and military spending, which accounts for 25 percent of the budget, this area seems like the most logical place to cut expenses. Instead, the Republican Party has waged an all-out assault on entitlement programs such as Social Security and Medicare, which Americans have fully supported for decades. They demonize these programs, sullying them as “entitlements,” and deriding them as welfare-like benefits for ungrateful, undeserving idlers living off the government teat.

Entitlement programs don’t imply that people have some childish sense of entitlement as some Republicans would have us all believe; the programs are precisely referred to as such because we are entitled to receive them. Why? Because we have already paid for them. Check out your pay stub – it’s called FICA. Republicans are trying to terrify Americans with the misleading threats of disappearing future Social Security payments and dwindling Medicare coverage because they’re trying to obfuscate the fact that the wars in Iraq and Afghanistan will have cost the nation nearly $3 trillion between the direct cost of the engagements and subsequent social costs such as veteran care. There’s no pre-tax line item or fee for “Wars We Didn’t Ask For” on your paycheck. We have been giving the government the funding necessary to keep these programs alive for generations and they keep blowing money on conflicts we never wanted. Giving the American government Social Security and Medicare funding is like lending cash to your meth-addict uncle who promises he’s on the wagon and just needs a few bucks to get back on his feet. He’ll disappoint you every time.

And then there’s Reagan. True-blue Republicans who like to evoke imagery of the Gipper could use a refresher course and a reminder that when President Reagan cut taxes in the beginning of his administration, the jobless rate jumped above 10 percent (higher than under Obama) and the federal deficit grew to a then-unprecedented level. Desperate to get things under control he raised taxes seven times during his administration and increased federal spending so much that he left office with a tremendous deficit despite myriad tax hikes. Moreover, total tax revenue as a percentage of GDP was more under Reagan after his initial tax cuts than they are today and we just fought two, decade-long wars. Middle-class Republicans should also recall how Reagan nearly doubled the Social Security withdrawal (your money for “safe keeping” remember) but capped it at a certain income level. Or as Matt Taibbi writes in his recent book Griftopia: “That means that a married couple earning $100,000 total will pay roughly the same amount of Social Security taxes that Lloyd Blankfein or Bill Gates will.” This was nothing short of a heist on the middle-class in America, the memory of which is something today’s Republican leaders have entirely backwards.

Throughout the tenure of the Obama administration, Republicans, who are working to please Tea Party activists−the lowest common ideological denominator in the GOP−have continued to distort Reagan’s legacy and persist in blowing up America’s revenue line while adding unfunded liabilities on the expense line. Now they’re smashing our piggy banks to pay for their transgressions while continuing to extend the most favorable corporate tax environment in the history of the country.

Dig this. According to the Congressional Budget Office, corporate income tax accounts for only 1.3 percent of GDP (compared to individual income taxes, which are 6.2 percent of GDP). The last time it was this low was in 1983 when corporate tax was only 1.1 percent of GDP and the federal deficit was so big Reagan increased taxes every year thereafter. According to the Brookings Institute, the last time corporate income tax receipts were so low was in 1940. In the 1950’s, the golden era that Republicans really love to imagine reliving, the average was 4.76 percent of GDP. That’s quadruple what it is today. Shrinking corporate tax receipts is just one of a host of lopsided tax issues that favor corporations and wealthy Americans and force the government to borrow eye-popping sums of money.

The Democratic Party under the feckless and waffling leadership of Barack Obama has likewise capitulated to the right wing lunatic fringe. Because Democrats aren’t putting up a fight and caving to every unreasonable demand made by House Speaker John Boehner and Senate Minority Leader Mitch McConnell, the Tea Party’s whipping boys, a corrosive new partisanship has emerged in America. Ignorant, ill-informed zealots running a government against the people have officially hijacked Abraham Lincoln’s government of the people, by the people and for the people.

 

Our Prime Yearning Years

The only true and good thing about Ayn Rand and objectivism (a fancy word for “that which screws the masses”) is that they’re both dead. Rand may have been a wonderful writer but objectivism is the Scientology of economic theory.

Part II of The Season of Our Disconnect (PART I)

Alan Greenspan
"Deregulation is fundamen... what's that dear? Oh yes, I would like some more pudding."

The haul from Hempstead Harbor was so big the first week it had reopened after being closed for more than 40 years of remediation that the axle on my friend Jimmy’s truck was bending slightly at the end of each day. He said the mood of the other diggers on the water was ebullient. Their boats were tightly locked together, with guys shouting to one another in celebration; it was a strange scene for men who typically toil in solitude to put food on their table by harvesting the ocean floor for food to put on our tables.

I caught up with Jimmy at the end of the first week, and he said, although he was physically exhausted, he wouldn’t trade the week for anything. According to him, the only disappointment was the complaints registered by local residents on the hill overlooking the water who were unhappy to discover their formerly too-toxic-to-fish harbor suddenly filled with small commercial vessels.

It seems the boats’ presence was less of an environmental and commercial triumph and more of a case of urban blight. Jimmy shrugged it off but his words stuck with me. He characterized the irate citizens’ reaction as both funny and sad, saying, “It’s amazing how people with millions of dollars are complaining about watching me scrape hundreds of dollars from the ocean floor.” Though nothing came of their complaints, it is another example highlighting our Season of Disconnect when class warfare seems to be erupting in every corner of our nation.

While politicians argue about the debt ceiling and preserving tax cuts, the big, slogging, hairy middle-class squeeze continues. Across the country people are either accepting the “new normal” or, worse, turning their pitchforks and torches on one another instead of storming the castle. Somehow we’ve lost sight of what brought us here and who is to blame for all of this—and there are some very real people and institutions to condemn.

Those who dare to protect “entitlements” are vilified by the free market despots in this nation who have taken hold of the seminal piece of misinformation that has infiltrated every meaningful discussion regarding the economy: that government is somehow corrupting the markets by attempting to inject any level of consumer protection into the financial system. Rays of common sense such as Vermont Sen. Bernie Sanders’ impassioned plea to restore sanity to the markets and protect America’s working class shone brightly for a moment only to be snuffed by the likes of Michele Bachmann and her quixotic presidential campaign kickoff.

This is a woman who mistakenly believed discussions about pegging global markets to Chinese currency instead of the dollar meant that the Treasury was actually contemplating using Yuan as America’s official money. Beyond the usual mash-up of libertarian, conservative, objectivism ideals that comprise the Tea Party, Bachmann (of course) believes that climate change is a hoax, that anyone who supports healthcare is unpatriotic, and that the best way to protect Americans and the U.S. economy is to dismantle the agencies designed to protect Americans and the U.S. economy.

It’s this last point that is so troubling because it’s what people like Bachmann are gaining traction with. Even the former Fed Chairman Alan Greenspan, the most famous and powerful disciple of free market guru Ayn Rand, testified before Congress that his extreme laissez faire policy and “markets-will-cure-all” attitude were devastatingly wrong because they fail to recognize the most natural  fundamental force that comprises the capitalist economy: Greed. Don’t get me wrong. Greed is indeed an important component of capitalism as it is simply another name for competition. But it cannot go unchecked, as it will feed on itself and everything around it when unfettered by logical behavioral constraints.

To put it bluntly, Alan Greenspan was wrong and admitted as much. So were Treasury Secretary Robert Rubin, Senate Banking Committee Chairman Phil Gramm, Securities and Exchange Commission Chairman Arthur Levitt and Treasury Secretary and White House economic advisor Larry Summers. So too were the men they served who facilitated their beliefs. Presidents Reagan, H.W. Bush, Clinton, W. Bush and now, Barack Obama, all of whom surrounded themselves with these free market hucksters and relied on the dearth of financial wherewithal in Congress while counting on the masses’ inability to understand the destructive potential of unregulated markets.

 

The only thing that is honest and true about Ayn Rand and her theory of objectivism is that they’re both dead. Ayn Rand was a wonderful writer. But in terms of her being considered a prophet of sorts, Rand’s theory of objectivism (a fancy word for “that which screws the masses”) is the Scientology of economic theory. And yet, one of history’s silliest figures is now gathering momentum with copies of Atlas Shrugged flying off Amazon’s virtual shelves and middle America wondering aloud, “Who is John Galt?!”

Forget John Galt. We need to start asking the question, “Who are we?” America is stuck in the largest identity crisis we have faced since the Civil War. The unmitigated and unwarranted assault on the middle class, the working poor and, yes, the poverty-stricken in this nation, must end. We begin by restoring authority to the regulatory agencies in our nation instead of simply requiring more bureaucratic paperwork for businesses already playing by the rules. Business owners know the difference between prudent regulation and the appearance of it.

On a level playing field it’s possible to get ahead while looking down on everyone else. It might even change the perspective of a person jaded enough to be offended by the view of men scraping shellfish from the ocean, no matter how far up the hill they live.