Wells Fargo, America’s fourth-largest bank, had recently fired “more than 100 employees” for “defrauding” the Small Business Administration’s Economic Injury Disaster Loan Program, part of the $3 trillion in pandemic relief that Congress enacted in the spring. Intended for proprietors of small businesses adversely affected by the pandemic, the loan program offered cash advances of up to $10,000 that did not have to be repaid. Apparently, these 100-odd Wells Fargo employees had pretended to own small businesses eligible for the aid. When their applications were approved, they deposited the cash they received from the SBA in Wells Fargo accounts — greed compounded by stupidity. Wells Fargo’s internal investigators apparently discovered the scam.
These two books convey the same depressing message as this Wells Fargo anecdote: 21st-century America is corrupt, despoiled by selfishness and greed. It feels like anything but a coincidence that the current inhabitant of the White House is probably the most corrupt president in American history. Neither the president nor those 100-plus employees of a major bank show any compunction about cheating. The cultural taboos that once deterred such behaviors (never completely, of course, but significantly in earlier eras) are no longer operative. Appreciating the extent of our ethical collapse will be a necessary first step toward confronting it.
Both of these quite different books can help. In “Big Dirty Money: The Shocking Injustice and Unseen Cost of White Collar Crime,” Jennifer Taub, a law professor, gives her readers a crisp, engaging account of the many ways that corruption is thriving in the private sector and in governments at every level. She points out, painfully, how many miscreants have neither been prosecuted nor sent to prison even in what look like egregious cases in recent years. She provides an intriguing history of the term “white-collar crime” and wonders why so many white-collar offenders avoid significant punishment, even when caught in flagrante.
Sarah Chayes, who learned about corruption during 10 years’ residence in Afghanistan, one of the world’s most corrupt countries, has written a more ambitious book. In “On Corruption in America: And What Is at Stake,” she takes on history, economics, politics, anthropology and more in a challenging survey of American corruption that makes a reader do a lot of thinking. Her strong opinions will offend some readers and persuade others; none will be bored.
Chayes was a correspondent in Paris for NPR and then an adviser on corruption issues to U.S. commanders in Afghanistan, an experience that made her an expert on corruption in Third World settings. This book is Chayes’s first examination of corruption in her native land. She acknowledges her debts to earlier books on the subject, notably Zephyr Teachout’s “Corruption in America” and Jane Mayer’s “Dark Money.” But Chayes is an original.
Her principal point of reference in the American experience is the Gilded Age (roughly 1870 to 1900), so named by Mark Twain, co-author of a popular satire of that name that made fun of the rich and their privately owned public officials. The gilt of this period — staggering wealth accumulated by a tiny slice of the population — created a new American aristocracy whose members outdid one another at the true American pastime, conspicuous consumption. Hoi polloi on the lower rungs of society were included to some degree in the uneven prosperity of the three decades after the Civil War, but the one percent got most of it, and liked what they got.
Chayes argues that the Gilded Age ended in the three catastrophes of the first half of the 20th century: two world wars and the Great Depression. Strangely, she ignores the role of Theodore Roosevelt, the trustbusting, accidental president whose aggressive reforms put many Gilded Age excesses in the rearview mirror. But she is convincing about the three catastrophes and their consequences.
Two wars and a depression changed American society, she argues. She cites the work of sociologist Charles Fritz, who posited the theory — based on his experiences in England in the last years of World War II — that societies battered by catastrophe become more egalitarian, with stronger communal values and concerns embraced by all classes. “People who had never spoken to each other before the war now engaged in warm, caring personal relations,” Fritz wrote of the England he lived in from 1943 to 1946. “They gladly shared their scarce supplies with others who had greater needs.”
In America, Chayes writes, the three catastrophes changed political attitudes, making possible Franklin Roosevelt’s New Deal and further progressive changes following World War II. After Americans of all stations shared the traumas of world war, new, egalitarian values came into fashion, she argues. After World War II the richest Americans paid high income tax rates — as much as 92 percent; the salaries of corporate chief executives were vastly lower than today.
Over the next three decades, tax rates came down somewhat and executive salaries grew, but relatively slowly. Then came 1980 — “the moment when the postwar ethos of expanding equality foundered,” Chayes writes. The Reagan years (1981-89) marked the beginning of a new Gilded Age that continues to the present day. Egalitarianism is long gone. So CEOs who made about 20 times the average earnings of their workers in 1950 have been earning more than 300 times that average worker’s income since 2000. That is not a typo. And the top income tax rates paid today by the Americans who make the most are less than 45 percent.
Chayes sees the beneficiaries of the new Gilded Age as aggressively protecting their wealth and status by using their money to influence our politics to their advantage — no longer a disputable contention. She also describes changing values in American society that allowed what she calls “the Midas disease” to roar back to life after an absence of half a century. As in the 1890s, getting rich is powerfully in fashion.
And as Jennifer Taub makes painfully clear, a society that has embraced the Midas disease is disinclined to confront its many members who cut corners and stretch laws to get or stay rich. She begins her book with a powerful recitation of egregious white-collar crimes from recent years — “a crime spree” — that all share one attribute: “Not a single person has gone to prison for any of those serious offenses.”
Her list includes these familiar cases:
The OxyContin drug scam that added billions to the fortune of the socially prominent Sackler family and contributed to the overdose deaths of more than 232,000 Americans. (Purdue Pharma, the maker of OxyContin, agreed to plead guilty to three felonies this past week as part of an $8.3 billion settlement with the Justice Department.)
Pacific Gas & Electric, whose slovenly power grid caused numerous devastating wildfires in California, the worst of them killing 85 in the town of Paradise and destroying 18,000 buildings. The company had paid out $5 billion in dividends while deferring maintenance on the outdated transmission lines that caused fires.
Wells Fargo Bank, whose employees opened millions of checking, savings and credit card accounts in the names of customers who had no idea what was happening and gave no consent to the bank. These accounts were used to collect overdraft fees and other charges from unwitting customers. Employees who raised questions about what was going on were fired. After the scheme was exposed, Wells Fargo CEO John Stumpf resigned “in shame” but retired a wealthy man. No senior executive of the bank was criminally charged.
This introductory list of outrages is effective, but it’s only the beginning. “Big Dirty Money” is stuffed with specific examples of unpunished white-collar crimes.
Chayes’s book paints a broad picture with bold brushstrokes. Taub writes like the law professor she is (though she’s a much better writer than most lawyers), concentrating on nuts, bolts and prosecutorial negligence. Her specific, engaging anecdotes support Chayes’s large points. You can’t read these books without realizing that we are living in an awful time of lax ethical and legal standards.