29 Nov 2011: The University of Missouri, Kansas City Kansas City, MO
And since it is necessary that there should be a perpetual Intercourse of buying and selling, and dealing upon Credit; where Fraud is permitted or connived at, or hath no Law to punish it, the honest Dealer is always undone, and the Knave gets the Advantage.
—Gulliver in Gulliver’s Travels (1726)
It’s likely that the majority of citizens find academic lectures quite boring. Not the case tonight especially considering the timely subject matter—the stock market in the tank and the division between the haves and the have-nots becoming scarily greater—as the auditorium was packed. The lecture’s title, “Wall Street: The Great Jobs Killer”, sort of reveals the more particular theme: that both legalized fraud and crony capitalism have basically ruined the American economy. But the proverbial fat cats made millions if not billions from the recession-depression in the last decade. There was no beat on the bankers.
An economics and law professor at UMKC, William K. Black just wasn’t going to put up with this rank injustice. Black, a former federal regulator, prosecuted more than 800 bank executives during the 1980s savings-and-loan debacle; his last monograph on crooked bankers was The Best Way to Rob a Bank is to Own One (2005). In addition, he was featured in Michael Moore’s popular documentary film, Capitalism: A Love Story (2009). Black gave a scathing and pointed indictment of the high-end class, and especially the bankers, by scrutinizing a leaked Citicorp memo (2005), published only three years before the global crash. He cited the Quaker duty to bring truth to power.
And as support for his several claims, Black cogently cited this Citicorp, or, Citigroup memo. He explained that, in fact, Citicorp had been on a fraudulent and categorically reckless path, and it was all calculated, planned. The bankers considered themselves part of a “plutonomy”; and by way of the plutocrats’ vast capital they essentially had considerable control over societies, a tangible threat to democratic governance. (To quote: “At the heart of plutonomy is income inequality. Societies that are willing to tolerate/endorse income inequality are willing to tolerate/endorse plutonomy”). They even thought themselves Ayn Rand-esque masters of the politico-economic universe (“The earth is being held up by the muscular arms of its entrepreneur-plutocrats, like it, or not”).
As to substance, Black parsed the Citicorp memo’s inane corporate-speak, and nicely noted its great practical implications. His points included the following: the super-rich (1%) felt no need to consider the majority because only the super-rich held economic power; they claimed to be the “Managerial Aristocracy”; their precise objective was income inequality via lower taxes; their moral code was to take glory in plunder; these feckless actions caused the housing bubble to hyper-inflate, due to fraud; the corporatized economic system was completely rigged; utter morons wanted more toys when they die; even insiders thought that the mortgage loans were fraudulent; the great lie was that the executives, CEOs in specific, were the productive class when actually they eliminated jobs and took few if any risks; the wealthy simply accepted high unemployment, that 20% of children need to be in poverty; and that the plutocrats feared the democratic right to vote.
Black cited Irish satirist Swift to underscore that when legalized fraud prevails, only plunderers stand to gain. But he also recognized French economist Bastiat, who noted that legalized fraud indeed does flourish. In The Law, Bastiat stated: “When, therefore, plunder is organized by law, for the profit of those who perpetuate it, all the plundered classes tend, either by peaceful or revolutionary means, to enter in some way into the manufacturing of laws”. He further asserted that, “either they may wish to put an end to lawful plunder, or they may desire to take part in it”; Bastiat, of course, frowned upon the latter—he saw it as a grave threat to a nation. These citations were helpful, but Black principally stressed the corporate role in the meltdown, ostensibly underrating any ragioni di stato; he did not refer once to the Obama administration, which has suspiciously claimed solidarity with Occupy Wall Street, nor did he refer to the 2008 billion-dollar Citigroup bailout that took place under Bush’s leadership; and Black failed to take questions from the audience, an unfair, undemocratic action. At least the lecture was open to the public, unlike certain other politicians’ events. Otherwise, his presentation was quite informative if not utterly distressing, and it may well be the case that these malefactors of great wealth have succeeded as Black proclaimed, through, “good old-fashioned fraud”.