When Len Bias died of a cocaine overdose back in 1986 Tip O’Neill and Ronald Reagan raced each other to show the world who could punish the poor quickest and hardest. The White House urged the DEA to take ABC News along to raids on crack houses in South Central LA. O’Neill drove through the Anti-Drug Abuse Act, with its twenty-nine new mandatory-minimum sentences, and the 100-to-1 disparity in sentencing for crack/powder cocaine dealers. We were on our way to lockup time for the poor, mostly young blacks and Hispanics. At present rates, the chances of a black man being locked up sometime in his life are one in four.
All through the 1980s and ’90s professorial mountebanks like James Q. Wilson, John DiIulio and Charles Murray grew sleek from bestsellers about the criminal, probably innate propensities of the “underclass,” about the pathology of poverty, the teen predators, the collapse of morals, the irresponsibility of teen moms.
Now, there was indeed a vast criminal class coming to full vicious potential in the 1990s: a group utterly devoid of the most elementary instincts of social propriety, vacant of moral fiber, selfish to an almost unfathomable degree. The class came in the form of our corporate elite.
Given a green light in the late 1970s by the deregulatory binge urged by corporate-funded think tanks and launched legislatively by Jimmy Carter and Ted Kennedy, by the 1990s America’s corporate leadership had evolved a simple strategy for criminal self-enrichment.
Step one: lie about your performance, in a manner calculated to deceive investors. This was engineered by the production of a “pro forma” balance sheet freighted with accounting chicanery of every stripe and hue, willingly supplied by Arthur Andersen and others. Losses were labeled “capital expenditures”; losing assets were “sold” to co-conspirators in the large banks for the relevant accounting period. Later, using Generally Accepted Accounting Principles, slightly more realistic balance sheets would be presented to the SEC and the IRS.
Flaunting the “pro forma” numbers, corporations would issue more stock, borrow more money from some co-conspiratorial bank, buy back the stock for the chief executives, who would further inflate its value by dint of bogus accountancy, sell the stock to the chumps and bail out with their millions before the roof fell in, leaving pension funds like CalPERS holding the bag. The fortunes amassed by President Bush and Vice President Cheney are vivid illustrations of the technique.
The scale of looting? Prodigious. This orgy of thievery, without parallel in the history of capitalism, was condoned and abetted year after year by the archbishop of our economy, Alan Greenspan, a man with a finely honed sense of distinction between the scale of reproof merited by the very rich and those less powerful. When Ron Carey led the Teamsters to victory in 1997, Greenspan rushed to denounce the “inflationary” potential of modestly improved wage packets. Even though declared innocent by a jury of his peers, Carey was forbidden ever to run in a union election again. Where are the sermons from Greenspan about the inflationary potential of stock-option fortunes lofted on the hot air of crooked accountancy and kindred conspiracies?