Matt Taibbi’s The Divide: American Injustice in the Age of The Wealth Gap is not technically a sociology book, but it is an important piece of reporting on a topic that, I think, is central to the discipline as a whole. After all, sociologist have been harping about increasing inequality and its consequences long before it was cool (that is, long before Occupy, and Picketty-mania).

Overall, the book is organized along a “compare and contrast” format, alternating chapters of the way “the system”, and especially the social structures of social control deal with the powerful and wealthy v. the powerless and poor or near-poor.

For people who follow the news, none of what is in the book will be entirely surprising, but the contrasting structure of gentle handling of the powerful by their regulatory agencies compared to the kafkaesque nightmares of stop-and-frisk, and border policies, and welfare present a powerful picture of grotesque inequalities at the individual level.

And quite frankly, even cynical me was horrified at the ways these structures used by, or imposed upon, the poor and powerless actually work (or don’t work). In effect, these chapters are a perfect reflection of what Frances Fox Pivens depicted decades ago regarding the welfare system: a system designed to NOT provide its prescribed services, and that would crumble if it had to (exposing the real levels of social precarity). In addition, what all three systems have in common, whether it’s stop-and-frisk, the border / private prison system, or the welfare system is that they are designed to discipline the poor and minorities, more than anything else (paging Foucault).

Of course, it is neither innocent nor coincidental that each of these systems deal with minorities: African Americans, undocumented migrants, and single mothers. By contrast, the chapters on the powerful deal with massive scale mismanagement and fraud, including on public money, committed by powerful, white, men, who almost never see any kind of accountability.

Taibbi’s main issue is this:

“We’ve become numb to the idea that rights aren’t absolute but are enjoyed on a kind of sliding scale.” (Loc. 80)

And how we got to this point. These are both cultural and structural issues:

“Finding the answer to some of this turns out to be easy, just simple math. Big companies have big lawyers, most street criminals do not, and prosecutors dread waging long wars against bottomless-pocketed megabanks when they can score win after easy win against common drug dealers, car thieves, and the like. After winning enough of these blowout victories, the justice bureaucracy starts drifting inexorably toward the no-sweat ten-second convictions and away from the expensive years-long battles of courtroom attrition.

Unquestionably, however, something else is at work, something that cuts deeper into the American psyche. We have a profound hatred of the weak and the poor, and a corresponding groveling terror before the rich and successful, and we’re building a bureaucracy to match those feelings.

(…)

It’s come around to that point of view at the end of a long evolutionary process, in which the rule of law has slowly been replaced by giant idiosyncratic bureaucracies that are designed to criminalize failure, poverty, and weakness on the one hand, and to immunize strength, wealth, and success on the other.” (Loc. 141)

And that is the point, for Taibbi, is that one cannot understand what is going on in the United States without both sides of that picture: more than ever, and to an even greater extent, the rich do get richer, and the poor get prison (the 10th edition!).

“We’re creating a dystopia, where the mania of the state isn’t secrecy or censorship but unfairness. Obsessed with success and wealth and despising failure and poverty, our society is systematically dividing the population into winners and losers, using institutions like the courts to speed the process. Winners get rich and get off. Losers go broke and go to jail. It isn’t just that some clever crook on Wall Street can steal a billion dollars and never see the inside of a courtroom; it’s that, plus the fact that some black teenager a few miles away can go to jail just for standing on a street corner, that makes the whole picture complete.” (Loc. 316)

This, for Taibbi, is a perfect illustration of the state of inequality in the US. And as we all know, what we witness today, and is described at length by Taibbi, is the culmination of trends that started in the 80s and led us to the 2008 recession. It is a combination of deregulation that let companies grow bigger and stronger, and therefore harder to prosecute, dismantling of the regulatory tools (Glass-Steagall), globalization and technological innovation that gave us stateless corporations.

And there is also a change in attitude towards prosecuting the corporate powerful that is encapsulated by the 1999 “collateral damage” memo penned by Eric Holder that started the idea that prosecuting corporations might lead to the collateral damage of job loss and community damages, and that these collateral damages should figure in prosecuting decisions. Funny how we never asked the question of collateral damages when government drafted the War on Drugs legislation that would devastate entire communities through the massive incarceration of young African-American men.

“From abandoning criminal prosecutions in favor of deferred prosecutions and nonprosecution agreements, the state now began to emphasize fines as a new means of settling with white-collar criminals.” (29)

And gloating about the imposition of what looks like heavy fines to us mortals, but are mere pennies to the corporations that have to pay them.

This change also has to do with a mechanism that C. Wright Mill would have recognized very-well: the power elite revolving door:

“The same process was now about to transform the federal law enforcement system, thanks in large part to new president Obama, who ushered in a herd of Ivy Leaguers and high-powered corporate defense lawyers to be his top crime-fighting officials. This new crowd of bookish lawyers was headlined by the Columbia University/Covington & Burling duo of Holder as attorney general and Lanny Breuer as head of Justice’s Criminal Division, essentially the top crime-fighting job in the country.” (31)

And indeed, Taibbi devotes a few chapters explaining how the recession of 2008 was neither a technical screw-up, or a few bad apples, or reckless borrowers, but corporate crime on a massive scale:

“Not mere technical violations, mind you, not just a thumb on a scale here and there, but crime, real crime, the kind of thing people once went to jail for. Specifically, this was a massive criminal fraud scheme, something akin to a giant counterfeiting operation, in which banks mass-produced extremely risky, low-quality subprime mortgages and with lightning-quick efficiency sold them off to institutional sucker-investors as highly rated AAA bonds. The hot potato game targeted unions, pension funds, and government-backed mortgage companies like Fannie Mae on the secondary market.” (38)

Time and time again, the evidence is there for law enforcement to see and yet, nothing happens. Part of the reason is collateral damage (a version of Davis / Moore explanation for stratification: some people are just more functionally necessary than others): just a whiff of possible job loss is enough to make prosecutors back off. But there is also the fact that large banks and corporations can marshall armies of well-paid, private attorneys to drag their cases for years, at great costs to underfunded government agencies that do not have the manpower to deal with such complicated cases, and with the risk of losing in the end. It’s better just to slap a fine that will look big to the public and will spare everybody else. And as the quote above notes, most of Obama’s top Justice department officials come from corporate law firms. There is a certain amount of empathy and thinking that, really, these are not “real” crimes.

But go to the other end of the social ladder and one can observe the legacy of another awesome gift from the 80s: the broken windows theory of law enforcement. This is a version of the slippery slope trope: if you let petty crime go unpunished (broken windows), then, you open the door to more serious criminality. So, the solution is to crack down on petty crime to prevent said slippery slope. Stop-and-frisk is an avatar of that idea, with extra dose of racism on top.

“These were programs like the infamous CompStat system and other lesser-known outgrowths of the celebrated “broken windows” urban policing strategies, programs whose effectiveness depended upon massive numbers of low-level arrests for minor violations.

All over America, indigents or the merely poor were being hauled in in ridiculous numbers, often detained even if just for a short time, given tickets, and searched. These cast-a-wide-net street-policing strategies were ostensibly designed to snag illegal guns or serious criminals with outstanding warrants, but they didn’t always work out that way. At exactly the time Holder was penning his famous memo in the late 1990s, the abjectly purposeless arrest was becoming more and more common, even as, perversely, the numbers of actual violent crimes committed had begun to drop precipitously.

And as every individual who’s ever been charged with a crime knows, anyone facing criminal arrest can expect collateral consequences. A single drug charge can ruin a person’s chances for obtaining a student loan or a government job. It can nix his or her chances of getting housing aid or a whole range of services—even innocent members of your family may lose access to government benefits. You can lose your right to vote and your access to financial aid. You can even have your children taken away.

But no police anywhere were officially asked to weigh the collateral consequences of arrests for prostitution, stealing cars, assault, selling weed, jumping turnstiles, even the simple offense of being homeless. There’s no memo in the Justice Department that wonders aloud what happens to the families of those sorts of arrestees. Instead, the new trend in policing is and has been to aggressively no longer care about any of it.” (52)

An additional consequences of the application of this kind of criminology (if you can call it that), in addition to its failure, is that it shatters any kind of legitimacy the police might have in poor and minority neighborhoods

And, so, for Taibbi, the divide in the United States today is between the arrestable and nonarrestable classes. The arrestable classes are the poor, the minorities, the single mothers, the undocumented migrants, for such crimes as standing on the street (if you don’t believe that black men are being arrested for standing on the sidewalk and talking to people  – loitering – you need to get out more).

The chapter that Taibbi devotes to stop-and-frisk is a kafkaesque nightmare where black men can be arrested 50, 60 times for just being there, not charged, but detained for days (hello, job loss), then having to deal with the court system (having to show up multiple times, whether it works with one’s job or not or be convicted in absentia), being represented by overburdened public defenders (when they’re not incompetent), and finally, being pushed to accept a deal that might leave one free, but with a criminal record. Don’t even think about fighting back against baseless charges. Justice by attrition.

Of course, the mechanism is well-known: after having pushed countless African-American men to agree to plea agreements, the criminal justice system then uses these aggregated masses of conviction to declare African-Americans as a criminal class to be subjected to more law enforcement, and the cycle repeats itself.

The power of Taibbi’s book is in these stories: of being arrested while coming home from work and not being able to show up for work the next day because one has not yet been processed, being caught in a dragnet where what matters is the stats (can anyone say “big data”?), and they have to be big. And the people caught in this nightmarish “logic” do not have the armies of well-paid private attorneys to fight back against it. So, they agree to plea just so they can go home and not have to show up for court again, but now, they have a record. And then, they get arrested again, and again, and again… and now they have a record.

“There are two important concepts here that work hand in hand. One, there’s the idea that failure to follow a police order, no matter how stupid or unreasonable, is cause for an arrest or a summons. The second idea is that the prosecutor can essentially turn any misdemeanor case against almost anyone into a de facto conviction, simply by filing charges and following through long enough with pretrial pressure to wrest a plea out of the accused.

These two concepts operating together have resulted in a new policing method, one that relies upon thousands of arrests for trivial offenses, real and imagined.” (130)

On the other hand, when it comes to corporate crime, it’s all different.

“What’s happened now, in this new era of settlements and nonprosecutions, is that the state has formally surrendered to its own excuses. It has decided just to punt from the start and take the money, which doesn’t become really wrong until it turns around the next day and decides to double down on the less-defended, flooring it all the way to trial against a welfare mom or some joker who sold a brick of dope in the projects.

(…)

That’s what nobody gets, that the two approaches to justice may individually make a kind of sense, but side by side they’re a dystopia, where common city courts become factories for turning poor people into prisoners, while federal prosecutors on the white-collar beat turn into overpriced garbage men, who behind closed doors quietly dispose of the sins of the rich for a fee.” (84)

Emphasis mine. This quote is quintessential Taibbi.

Taibbi then moves on to re-telling the story of the Lehman Brothers collapse but the point is the opposite as with stop-and-frisk: high crime, committed by people in high places, no criminal accountability. Taibbi is pretty good at explaining the complex machinations involved with securitization. That could be a tedious topic but it is not. But actually, prosecutors do count on the fact that this stuff is boring and complicated so, the public will not be clamoring for prosecution, especially when the party line on the media is that what happens might be unethical (it is) but not illegal (though it is). Taibbi does a good job of explaining the illegal nature of it all.

Taibbi then turns to his second case of the powerless getting the book thrown at them when the powerful get off scots-free: Gainesville, Florida:

“A ferocious federal immigration rule called 287(g) that essentially deputizes any and all state and local law enforcement officials to arrest undocumented aliens on behalf of the U.S. Immigration and Customs Enforcement agency (ICE). Today every local official with a badge—every cop, sheriff, ranger, or even game warden—has the power to instantly separate children from mothers, husbands from wives. All America, from the smallest town on up, has become a dragnet.” (199)

And here again, people arrested are thrown into a bureaucratic mess that also now involves private prisons, that Taibbi describes as such:

“A giant legal purgatory in which detainees don’t have any real rights or enjoy any real due process. People disappear into it, hundreds of thousands a year, and become less like prisoners with rights than like objects or packages to be crated and shipped out like cargo. ICE even has a UPS-style tracking system that allows immigrant families to punch in a number and see where their deported relative is in his or her serpentine journey through the detention system. In the real justice system, you get habeas corpus; in the shadow system, you get a tracking number to see where your familial “package” is. (201)

Similarly, the power of this is in the individual stories of people actually caught up in this system. The ICE system is described in gruesome details, with immigration judges that are actually employees of the Department of Homeland security, the pushing of stipulations (the ICE equivalent of plea bargains whereby migrants get deported fast, before they get to see an attorney), etc.

And there is a class divide here as well:

“There’s a new class of people whose goal is to become above citizenship. Live in America, conduct your trades in the weaker regulatory arena in London, pay your taxes in Antigua or the Isle of Man. Keep the rights but offshore the responsibilities. The flip side is that there is a growing subset of people, like undocumented immigrants, who live below the level of full citizenship. If the first group is stateless by choice, these people are involuntarily stateless and have virtually no rights at all.” (206)

And with private prisons in the mix, as Taibbi puts it, migrants are the new cash crop. And the consequences are also far-reaching. Basically, the whole arrest / deportation system puts its victims in the hands of cartels in Mexico as this is who meets them when they get thrown across the border. And this is all very profitable:

“Overall, the corrections industry is one of the soundest stock/equity bets in the world, with soaring revenues—the industry as a whole pulled in more than $5 billion in America in 2011.

The jailing-Hispanics business is the perfect mix of politics and profit. Companies like CCA donate generously to politicians everywhere, particularly at the state level. The firm has spent as much as $3.4 million lobbying in a single year and on average spends between $1 million and $2 million a year.

(…)

Local police forces go along because the federal government compensates them for their detention of immigrants. A program called the State Criminal Alien Assistance Program (SCAAP) pays local police forces out of the federal kitty for any detained immigrants who meet certain criteria (they’re undocumented, they stayed for at least four days, and they’ve been convicted of at least two misdemeanors). According to the GAO, states received about $1.6 billion annually in SCAAP payments through the end of the 2000s, and the numbers are likely to rise in this decade.” (215)

And this where this connects to corporate crimes of massive scale:

“In many states across the country still, immigrants from south of the border have to take taxis and bicycles everywhere they go, because the law enforcement presence is so massive that traveling any other way is a huge risk. Capture can mean the loss of everything, from never seeing a spouse again to being kidnapped, in addition to being thrust into debt for years. And this is for crimes that are essentially administrative in nature, immigrating in a proscribed way, trying to live without the right papers.

But on the flip side, there are certain kinds of crimes a native-born American can commit without any risk of arrest at all. It turns out that we prosecute administrative/political violations like serious crimes, and serious crimes like administrative violations. ” (241)

Probably because he could not resist, Taibbi also includes in the book the story of a Canadian company, Fairfax, to illustrate that not only were Wall Street people criminals, but also insane and malevolent and yet, get away with it.

Finally, Taibbi gets to its 3rd case of the way the powerless are handled by governmental bureaucratic systems: the welfare system. Here again, the stories are powerful. The amount of humiliation and degradation one has to endure to get measly benefits in the US, or, as is shown in the book, in California, is enormous. And here as well, that system is a nightmare:

“Today, every single person who applies for aid and is accepted has to be preemptively searched. These people are almost all nonwhite. And while in L.A. in the late 1980s, the person visiting the home of someone like Maria Espinosa was just a social worker from the local welfare office, the state has since upgraded. In San Diego now it’s a law enforcement official, a representative of the district attorney’s office, who comes in to look through your underwear drawer.” (316)

Because, you see, one has to be sure that the sluts are not living with a man as that would automatically be considered fraud. So, you apply for welfare, and then, you have to sit at home, sometimes for weeks, waiting for some guy to show up and go through all your stuff, while he insults you throughout the entire ordeal. These guys really seem to get off on that power. Too bad if you have a job though or if you need to go to the doctor. If you are not home when the official shows up, no benefits. The idea is that if you request aid, then, you have to be willing to endure all kinds of abuse without protesting.

“In those tens of thousands of searches over the years, P100 investigators have looked in every nook and cranny, finding sins everywhere. They rejected an applicant who shared an apartment with a roommate for failing to properly label her food in the refrigerator—how could the state be sure, after all, that the applicant wasn’t illegally sharing food with her roommate? They rejected a woman for having a Victoria’s Secret bra (“How can you afford this?” the investigator asked, again holding up the item with the favored pencil eraser end), for having too big a jacket in the closet (it must be a man’s!), for having a teenage son whose pants were too ghetto (too baggy—again, it must be a man’s clothes). Searchers looked in dresser drawers, in bathrooms, in freezers and refrigerators, under and behind couches, everywhere.” (317)

And so, if you need public assistance, your basic rights are forfeit. Protection against illegal search and seizure? You have to give that up. Oh, and never mind the bureaucratic mistakes that are made within the system and leave people without benefits. These are practically impossible to correct. And the way the system works, you never get to talk to the same caseworker twice. Every call or every visit to a welfare office will land you a different person that has to start from scratch and may have a different opinion on your case (that’s of course, after the several weeks it takes to get into the system in the first place).

“The entire world becomes a legal minefield. If you’re poor and on public assistance, just about anything you do that defines you as a living human being can turn into the basis of a fraud case. Getting laid can be fraud. Getting sick can be fraud. Putting your kids in day care can be fraud. Not “sounding poor” can be fraud.

(…)

I spent a year following a few people in different parts of the country and watched as they tried to receive their benefits on the one hand and avoid being prosecuted for fraud on the other. Both activities turn out to be essentially full-time jobs.” (329)

And in this case, it all started with Bill Clinton and welfare reform. As banks and corporations became more and more deregulated, the lives of the poor and minority became more and more regulated. Corporate fraud is massive, but it is welfare fraud that is massively investigated.

Oh, and here’s the kicker:

“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. Many if not most of these “overpayments” were actually the state’s own errors, but they went as far back as 1986 anyway, seeking checks as small as $78.” (341)

Taibbi’s chapter on robosigning and the epidemic of illegal foreclosures is also horrifying regarding the way deregulation led to rampant criminality. And the pity the poor whistle-blower who ends up living in a trailer for her conscience.

For credit card debt, the game is even more rigged:

“Once a bank like Chase “serves” its delinquent customer, there are just three paths on the flowchart of outcomes. They are:

The customer doesn’t show up in court and loses by default judgment.

The customer answers the summons and settles with the bank.

The customer answers the summons and contests the case.

In the first two cases—and this is a crucial part of this entire scheme, and the key reason that Linda’s bosses were so unconcerned about the absence of good paperwork in the debt sale—the collector typically does not come into court with any supporting documentary evidence. “They almost never have [evidence] on the first appearance,” says Straniere. All the collectors have, typically, is a complaint and the assertion of an owed balance. But in the vast majority of cases, that’s enough. Two-thirds of the time, the defendant doesn’t show and loses automatically.” (374)

And defendants don’t show up because collectors only have to say they delivered the summons, no signature or receipt needed. Too bad if you changed address and the summons never reached you. But if the defendant shows up and contests the case, collectors usually simply drop the case.

But the bottom line is this:

“What all this means is that the bulk of the credit card collection business is conducted without any supporting documentation showing up or being seen by human eyes at any part of the process. The meat of the business is collecting unopposed default judgments from defendants who either never receive a summons or receive one and never appear in court.

For debt buyers like DebtOne, the whole game is a bluff. If they buy a pile of open accounts or already-won judgments, what they’re banking on is collecting from delinquent customers who don’t fight back.” (376).

So, what does this amount to? None of this is dysfunctional or a system of justice gone wrong. It is all by design and the designers might even convince themselves that this is the way things should be.

“There’s a concrete difference between how we treat an individual who commits fraud within the structure of a giant multinational company with a lot of settlement money lying around, and how we treat, say, an ordinary broke person who commits welfare or unemployment fraud.

If you choose to take the money over and over again from the Wall Street crowd while the welfare moms keep getting jail and community service, now suddenly you’ve institutionalized the imbalance. From there, it’s not long before the tail starts wagging the dog. A massive, unconscious tendency toward reverse profiling occurs. Because, thanks to all these various factors, executives from giant multinationals simply don’t end up in the prison population, law enforcement soon starts to operate on the reverse principle, that those huge companies are not the places where jailable crimes take place. So even white-collar investigators start to look for targets elsewhere, like at smaller businesses.” (408)

Again, emphasis mine.

So, obviously, this is a very rich, well-researched, detailed book, but very well-written narratives and stories that will make your blood boil more than once.

Highly recommended.

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