Wednesday, March 17, 2010

Criminalizing Failure

I've been obsessing about yesterday's posting (below) complaining that prosecuting Lehman Brothers executives for breaking the law is just criminalizing failure. They lied, cheated, and committed fraud to make their company successful and they only reason they face prosecution is that they failed and the company went bankrupt anyhow. The criminal corporate executive defrauds stock and bond holders by falsifying accounting reports (AKA lying).

The prisons are full of people who failed at their criminal enterprises. Successful bank robbers vacation in Cancun, only the failures are in Folsom. Successful drug dealers live in posh mansions in Tampa, often next to successful investment bankers.

The only difference between the bank robber and the criminal corporate executive is that there is an entire class of government employees (police) actively looking to expose the bank robber's crimes and "bring him to justice." The criminal corporate executive has a cozy relationship with local law enforcement (the SEC, the Treasury Department, the Federal Reserve) who habitually avert their eyes.

Think Chicago in the 1920's. The Chicago police wouldn't go after Al Capone's gang for their basic gambling, prostitution, and bootlegging. Not unless they did something infamously unpopular like shooting up a candy store with children in it would the police act. It was mostly a live and let live arrangement with bribes. So too today with the corporate criminal class only now the bribes are a lot bigger.

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