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Which Crime, What Punishment?

This post expands on some of the thinking in an earlier one,Shame on Them.” I’m trying to get at the issue of how our society doles out consequences for harmful actions – or doesn’t. Forgive me for retreading some well-worn ground, but the following facts still seem to call for contemplation.

No senior executive of any of the institutions responsible for the 2008 financial crisis has faced prosecution, though there were millions of victims. The wrongdoing cost nearly eight million Americans their jobs and another four million per year, for several years, their homes. The government laid out approximately $73 b. of our money in emergency cash bailouts to many of the offending institutions themselves. Yet no top manager has been punished – in fact many were rewarded. Their salaries continued to dwarf the rest of the private sector by proportions not seen in America since the Gilded Age. Their bonuses – part of the incentive structure that encouraged the wrongdoing in the first place – kept rolling in. The federal government, which normally should have imposed a penalty on behalf of the millions of citizens who were wronged, instead awarded several of the culprits senior positions in its ranks, a privilege that allowed them to design the conditions that would be applied to their former institutions.

The failure to bring any of the perpetrators of this colossal crime to justice is not merely wrong in the abstract, it has damaged the fabric of this nation in insidious and lasting ways.

Here’s a surprising example. A friend of mine, a former Federal Reserve governor and top Treasury official, has been wondering what contributes to the resiliency of an economy. What factors make it more likely to rebound from such disasters as 2008? Her economist’s mind, she told me, tended toward fiscal, economic, and regulatory considerations -- monetary supply, capital cushions, that kind of thing. But as she discussed the issue in different settings around the country, she kept getting interrupted: ‘But no one has gone to jail,’ someone would object. My friend would listen, wondering ‘What does that have to do with economic resilience?’ Still, she took the repeated comment to heart. Among other factors, she concluded, justice – and in this case punishment – has an unseen but real bearing on the health of an economy. (She will be writing about this herself, before long.)

A more obvious impact is on the tissue of values and principles that bind a society together.

A community imposes punishment for many reasons: to exact retribution or payment, even if symbolic, that may compensate for damage done; to deter wrongdoers from repeating the act or others from copying it; and so on.

Another purpose of punishment may be to broadcast to the community as a whole where, collectively, it draws the lines. What does this community consider acceptable behavior – what is “right” -- and what does it label “wrong?” Some core elements of these value judgments are quite universal: murder of group-members is almost always severely punished, as is incest, or free-riding on others’ contributions to the common welfare. Other values may differ from community to community and change over time. No list of commandments, no ethics classes in school or on the job spell them out better than what actually gets punished.

And what actually gets punished in the United States can be measured.

This year, approximately 2.3 million people are behind bars; more than 4 million more are on probation or parole. According to the best available data, about 730,000 of the incarcerated committed (or are suspected of committing) a violent crime: for example, they robbed someone at gunpoint, or maybe even killed a person.

Please understand: I am not condoning murder, that universal taboo. But how many people’s lives were shattered by the cascading calamities that befell them during and after the Great Recession? How many divorces, suicides, drug overdoses could fairly be blamed on those events?

The places we have chosen to draw the lines between right and wrong are badly askew.

Of course, not all American citizens get an equal say in this choice. The letter of the law, its interpretation, and how it is actually enforced in practice – that is, how many resources are devoted to the investigation of which crimes, or the selection of cases that will be brought to prosecution – all lie in the hands of a tiny and specific slice of the population, mostly lawyers and judges and employees of a few select federal and state agencies. But that subgroup cannot decide these matters impartially, because its own skin is in the game.

Here’s an illustration of what I mean by that. Another friend of mine has spent years trying to toughen up federal statutes forbidding bribery and corruption. When he has taken drafts of proposed legislation around to Congressional offices and judges’ chambers seeking consensus for reforms, Members and magistrates have responded oddly. Instead of grappling with the policy implications of his proposals, they often seemed to take them personally. They would start spinning scenarios. ‘Let’s say a person went on a hunting trip with a potential party to a future suit,’ my friend might be asked. ‘Could he be prosecuted under your bill?’ These questions would come with all sorts of imaginative details. His interlocutors in government offices were suddenly seeing themselves in the role of the accused, and it scared them.

Corruption and other white-collar crimes can only be committed by the very class of people who write the laws defining what constitutes criminal behavior in the first place, and decide how those laws will be enforced. So it is in their personal interest to treat white-collar crimes lightly, while aiming the fires of justice at other categories of wrongdoing, which they or their circle are less likely to commit, such as drug-dealing. That is, they are deciding – for society as a whole – that bank robbery with a gun is a crime, but bank-robbery on a global scale with a computer is OK.

That is an obviously absurd place to draw these lines. I’m not sure what we ordinary people must do to move them. But if we keep going along with such blatant injustice, I don’t see how the fabric of our society – meaning its economy, its physical and mental health, its moral fiber -- stays whole.


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