Color of Law: Now the Robber Barons Replace the Welfare Queens (and Rightly So)

Gordon Gecko had a long run of it, but now the party is over. I’m talking, of course, about the character in the film Wall Street, that conniving titan of finance who would sell his mother for a buck and a quarter, and there is scant evidence that he had not already accomplished that goal. “Greed is good,” he declared.

Gecko began to have his heyday in the Reagan era. That’s when the “conventional wisdom,” fueled by greed, began to call for a supply-side economic policy in which financial benefits would be bestowed upon the wealthy and businesses in the form of tax cuts. And as the theory goes, the benefits would “trickle down” to the common folk. In reality, the result was more like “trickle on”.

Another hallmark of the Reagan era, which was perfected in the Clinton and Bush years, was the deregulation of the financial markets and other industries. Over the years, these policies were bought and paid for to the tune of $5 billion in contributions, given by Wall Street to Democratic and Republican politicians alike, to keep the government out of the gambling casinos, I mean financial markets. This led to the proliferation of exotic financial instruments called derivatives, which have turned out to be a little more than a high-tech, blue chip hustle. Unregulated, unmonitored, and getting their money’s worth, the banks were able to engage in predatory lending, sucking homeowners – particularly homeowners of color – into unconscionable subprime mortgages. When applied to the environment and food and safety standards, deregulation has resulted in salmonella- and rat-infested peanuts, E-coli tainted beef and climate change.

Meanwhile, as the media – deregulated, conglomerated and with fewer diverse voices (thank you, President Clinton) – provided us with empty calories for our entertainment, many of us did not realize what was taking place right under our noses: the most dramatic upward redistribution of wealth in history, and a level of income inequality which makes democracy unsustainable. The land of opportunity became the most unequal, top-heavy society in the West.

Since the 1980s, when much of the New Deal regulatory framework has given way to the best unbridled capitalism money could buy, society has steered its best and brightest into the whole Wall Street thing. As the nation’s infrastructure began to crumble and its students fell behind the rest of the developed world in math and science, everyone, including yours truly in a former life, wanted a job shuffling paper and moving numbers around but not creating anything tangible, not building anything of much use to society.

With the adoration of the rich and famous, and the glorification of wealth as a virtue, came the vilification of the poor and the stigmatization of poverty. This gave birth to the concept of the welfare queen, the fictional Black woman on welfare who has six children, wears a mink coat and drives a Cadillac. The typical welfare recipient is White, but never mind. What a worthy scapegoat, no doubt created in some conservative think tank. And what better justification for taking from the poor (unworthy as they are, living off the government dole), and giving to the rich (needy as they are, and unable to live the American dream)? It was “reverse Robin Hood”, as Jesse Jackson aptly described it, which culminated in the passage of welfare reform by President Clinton and a Republican Congress.

A Dickensian treatment of the poor was in full fashion. Poverty became a moral failing, an issue of genetics. “Are there no debtors’ prisons? No poor houses?” Well, given that American capitalism never was meant to employ everyone (for more information, see slavery), and given that many of the good blue collar and even white collar jobs have been sent overseas, what do you do with that surplus population, as Dickens called it? It seems no accident that the prison boom, the war on drugs, and draconian prison sentencing came at a time when there were no jobs to be found in the inner cities. The “land of the free” has the world’s largest prison population, even more than China, which is a police state and has over four times the population of the U.S. Prisons are one of America’s primary forms of social control, and there is profit in the warehousing of Black, Brown, and poor bodies.

And as all of this was going on, the people at the top were having a big party at our expense. There has been very little mention of the plight of the poor, although their ranks rose under Bush. In America, over 41 million people were poor as of 2005. Further, 18 percent of children live in poverty, and 1 in 50 children is homeless. With the collapse of the financial system, how can you scapegoat the poor when everyone is either poor or has real potential to join its ranks? This time around, the anger is directed towards the real culprits: the people who, like the robber barons of old, actually stole the money and brought us to where we are today.

It is cathartic to watch the spectacle of bank executives hauled before Congress to explain themselves. What got these people in trouble was not merely their obscenely immense wealth or the manner in which they earned or stole that wealth. Rather, in the midst of all the destruction they left in their path, the broken lives and stolen futures, these individuals still wanted to be rewarded for their failure, for being the special people they think they are. With their pernicious sense of entitlement, the robber barons looked at the rest of society with contempt, as if they are superior to the regular everyday chumps at the bottom of the pyramid scheme.

david.jpgSo, is this a sign of political maturity for the common folk, a new populism? Perhaps, but it is too early to tell. The test will come in how society responds to the crisis, learns the lessons of history, and constructs an economic system that seeks fairness, equity and justice. Heaven forbid we become more like those so-called “socialist” Europeans, with their universal healthcare, lower levels of inequality, lower poverty rates and higher educational standards. In the meantime, it will probably get worse before it gets better. But no one said it would be a pretty sight.

This article is the first part of an ongoing Color of Law series.

David A. Love

BlackCommentator.com Editorial Board member, David A. Love, JD, is a lawyer and journalist based in Philadelphia, and a contributor to the Progressive Media Project, McClatchy-Tribune News Service, In These Times and Philadelphia Independent Media Center. He contributed to the book, States of Confinement: Policing, Detention, and Prisons (St. Martin’s Press, 2000). Love is a former Amnesty International UK spokesperson, organized the first national police brutality conference as a staff member with the Center for Constitutional Rights, and served as a law clerk to two Black federal judges. His blog is davidalove.com.

This article first appeared in The Black Commentator and is republished with permission.

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Comments

  1. Timeparticle says

    Mr. Love, there is a heavy curtain that hides banking from the rest of us…

    From time to time, the curtain has been lifted long enough for us to see behind it. A number of reputable authorities have attested to what is going on, including Sir Josiah Stamp, president of the Bank of England and the second richest man in Britain in the 1920s. He declared in an address at the University of Texas in 1927:

    The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.

    Banks create money from debt. The more debt, the more they can create. But, when debt becomes too enormous for anyone to ever pay back, an economic shift must be created by the powers that be, to stabilize and reaffirm their power and status. So, money has to come from somewhere else for a short time, us.

    They must find a way to destabilize the economy, fast, under their control, without being knocked off the mountain top.

    They needed to do many things, but one item stands out, somewhat. The recent elimination of the uptick rule..

    The uptick rule is a securities trading rule used to regulate short selling in financial markets. The rule limits the timing of short sales. It mandates, subject to certain exceptions, that, when sold, a listed security must either be sold short at a price above the price at which the immediately preceding sale was effected or at the last sale price if it is higher than the last different price. In 1938, the U.S. Securities and Exchange Commission (SEC) adopted the uptick rule, more formally known as rule 10a-1, after conducting an inquiry into the effects of concentrated short selling during the market break of 1937. The original rule was implemented by Joseph P. Kennedy, Sr., the first SEC commissioner.

    The SEC eliminated the uptick rule on July 6, 2007. The elimination of the rule was preceded by an SEC order, placed on July 28, 2004, to create a one-year pilot temporarily suspending the uptick rule on select securities. The purpose of the suspension was so that the commission could study the effectiveness of the rule. The SEC’s Office of Economic Analysis and academic researchers provided the SEC with analysis of the data obtained during a six-month period starting May 2, 2005. The consensus was against the uptick rule, with the commission concluding that the uptick rule “modestly reduce[d] liquidity and do[es] not appear necessary to prevent manipulation,”although the pilot test for one year did not test for a rogue wave thought to have partly caused the 1929 crash, and for which there was no known theory in money markets.
    The rule was originally put in place to avoid the perpetration of a financial crime known as a bear raid. However, short sellers themselves viewed the rule as “largely symbolic” and having little actual effect on short selling…… yeah, right.

    On August 27, 2007, the New York Times published an article on Muriel Siebert, former state banking superintendent of New York, “Wall Street veteran and financial sage”, and, in 1967, the first woman to become a member of the New York Stock Exchange. In this article she expressed severe concerns about market volatility: “We’ve never seen volatility like this. We’re watching history being made.” Siebert pointed to the uptick rule, saying, “The S.E.C. took away the short-sale rule and when the markets were falling, institutional investors just pounded stocks because they didn’t need an uptick.”

    Oops!! Gee, I wonder what’s going on?

    On February 25, 2009, Chairman of the Federal Reserve, Ben Bernanke in testimony before the House Financial Services Committee stated he favored the SEC to examine the restoration of the uptick-rule…. Ya think?

    On March 10, 2009, the SEC and Rep. Barney Frank, Chairman of the Financial Services Committee announced plans to restore the uptick rule. The SEC stated it plans to hold a hearing as early as April. Frank said he was hopeful that it would be restored within a month… Yeah, it did the trick. Time to get out.

    This is just a drop in the bucket, but I have little room left.

    Tp.

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