Los Angeles — The Los Angeles Times hosted a webinar on Monday, Nov. 9 called “What’s Next? The State of the American Economy.” It was part of the newspaper’s 25th anniversary Festival of Books program.
The 2020 Los Angeles Times Festival of Books was scheduled for April 18-19 on the beautiful University of Southern California campus. However, due to the COVID-19 pandemic, festival organizers decided to move the program online and make it virtual only.
The webinar featured a panel of journalists including Western New England University professor Jennifer Taub who wrote “Big Dirty Money”, UC Irvine professor Mehrsa Baradaran who wrote “The Color of Money: Black Banks and the Racial Wealth Gap” and author Sarah Chayes who wrote “On Corruption in America.” L.A. Times’ DC Bureau Chief Kimbriell Kelly served as the moderator.
Some of the topics they discussed included: How are corrupt systems organized and how have they shaped our government today? How are ordinary Americans affected by the rich and powerful who don’t play by the same rules? What can we do to close the racial wealth gap?
Kelly: I was trying to find a thread that flows through all three of your books. It’s about people who are disenfranchised, it’s about access to capital and then the election happened. Sarah, tell us exactly what was the catalyst for your book?
Chayes: “I have been working on it for years. I got into it, believe it or not, in Afghanistan. It was Afghans who said, ‘If you Americans don’t tackle the corruption in this government, it doesn’t matter how many soldiers you send in here.’ They were telling me, the Taliban shakes us down at night, but the government shakes us down in the daytime. So how do you expect us to take risks on behalf of the government that treats us just as badly as the Taliban does. My last book, Thieves of State, which won the LA Times Book Prize, I am honored to say, did end with a chapter saying, ‘Hey guys, this ain’t just those folks over there. We, the United States, are on this continuum.’ I knew, at some point, I would have to grapple with this. In 2016, even before the election, the Supreme Court ruling in a corruption case having to do with the former governor of Virginia convicted of corruption, upheld on appeal unanimously. It blew my mind that the Supreme Court overturned that conviction unanimously. The opinion basically said the American democracy has more to fear from the fight against corruption than it does from corruption itself. I thought, uh oh, we’re in for trouble.”
Kelly: But do you feel that the corruption that’s happening in our country now that people are really viewing that as the corruption that you saw happening in Afghanistan?
Chayes: “Absolutely. I actually think ordinary Americans respond almost identically to the way Nigerians or the way Afghans did. They know corruption when they see it. It’s not as in your face as it is in Afghanistan where police officers are shaking you down on every street corner. I really think the reason so many Americans don’t vote and even in this last election where we had record turnout. I mean it’s not like 80 percent of the electorate or anything like that. I think there’s a real sense that, you know what, the parties on these fundamental issues of how the political economy is bent deliberately by people that you can name to serve their networks. Ordinary Americans understand that. You’ll get stuff like, ‘The fat cats are going to put who they want in office anyway.’ I mean, I live in Virginia and I can’t really deny that.”
Kelly: Jennifer, you take this to a whole another perspective. You look at this corruption and how systems of government operate. Your book is kind of an indictment on the immunity of the wealthy and the price the poor and those who are less affluent. Tell me how your book got started and why it’s very relevant today.
Taub: “I wrote this book because in 2014 I published a book called Other People’s Houses about the decades of deregulation and desupervision that led to the financial meltdown to the toxic mortgage-backed securities meltdown. I remember on the first book reading that I went to back in 2014, the very first question someone asked me is, ‘Why did no bankers go to jail?’ Of course, I didn’t have the answer and that bothered me greatly. It bothered me so much that I decided to explore the entire field and add it to what I study in white collar crime and public corruption. What drove me to look into the financial meltdown were the millions of Americans who lost their homes to foreclosure while the top of society survived and thrived and made money as the bubble expanded and rescued when the whole system collapsed. I came to find out that, of course, that’s not just something that happens in the banking sector. It happens elsewhere, for example, big Pharma. One example in the book of many is Purdue Pharma where the Sackler family became multi billionaires. Even twice now, the company has been subject to a criminal case. Once pleaded guilty back in 2007, now facing a criminal settlement as part of a bankruptcy. But the family will be unscathed. They’ll keep most of their billions. Meanwhile, 200,000 people died of prescription opioid overdoses in part because of the way they aggressively and illegally peddled their drugs. I think, to me, white collar crime is not a victimless crime. It leads to great harm in society and makes the problem of inequality even greater.”
Kelly: Speaking of inequality Mehrsa, you take on this issue of the victims pretty hard. You look at not just the impact of corruption and government but living in a country where there is so much affluence and wealth and how that wealth is not distributed in particular to people of color in this country. What made you decide to take this on as an issue?
Baradaran: “I think the thread is here, we want markets to work. We have to have a functioning rule of law. People have to be held accountable. Your contracts have to be enforced and your property has to be protected by law. Crimes have to be prosecuted. One thing that is a theme, I think, across all of our books is not only do markets break down, but democracy breaks down and society breaks down. What I talk about in my book is, within the United States, we have never applied those laws equally. We have never applied the property protection, contract enforcement and the basic rules of equal opportunity before the law to black men and women. It was legally sanctioned for hundreds of years through enslavement, through Jim Crow, through legal segregation. That corruption has been embedded within the American system. It’s just a racially-embedded system and I think until we deal head on with that, our markets will keep perpetuating like the racial wealth gap. I mean, today, black homes are worth less than white homes because they are owned by black people. Capital doesn’t work to build wealth in black communities because of this historic legacy of segregation, Jim Crow discrimination. You’re never going to fix that using the market tools alone. So that’s the stories that I track in the book. I’m a banking law scholar, I look at inequality. You can’t look at the Federal Reserve and the U.S. credit market without focusing on this massive inequality. It is like the cancer within and the reason we have the society that we do. That’s the focus of The Color of Money.“
Kelly: A lot of the wealth for black families, in particular, disappeared during the housing crisis. A lot of black families that a lot of their tied up and now you have situations where there’s even a much greater divide. How does a country solve that problem?
Baradaran: “When people are exploited and segregated and discriminated against, when there is a new opportunity for credit and high interest loans, you have a subprime crises blow up, 53 percent of black wealth disappears overnight. None of those bankers are prosecuted as Jennifer noted. Also, those homeowners, were never bailed out. We chose specifically to bail out the assets on the confirmed balance sheet as supposed to doing it with the homeowners. That’s not exactly corruption because it’s legal but it is the game being rigged. People lose trust in the system. You saw this during the financial crisis and the PPE, the Cares Act. All of those went differentially to different people and people lost trust. You have conspiracy theories. Is it any wonder that people, you know, don’t trust the government, right? The FBI has also hidden a bunch of things that it’s done to our own citizens.”
Kelly: Sarah, you talk in your book that history is going to repeat itself, right? We keep making the same mistakes over and over again. What do you think right know when you’re like, ‘You know what, we’re doing it again’?
Chayes: “Corruption is not really about do they fill their own pockets when they’re in government. It’s really that they are bending and twisting the rules and mechanism of agencies of government to serve their network rather than the public interests. You can extract enormous amounts of money from the least privileged people in our society and that you divide up the potential coalition of victims of this system who otherwise might be able to join forces to rein these guys in. Instead, you buy pitting one race against the other and you separate out the coalition. Back to who gets bailed out, as you said Jennifer, but it’s happening today and it’s not just the PPP. It’s really the Federal Reserve. It is channeling $6 trillion into the pockets basically of corporations who took on two much debt. They took on too much debt in order to overpay their shareholders and other officers. It is perfectly within the Federal Reserve’s discretion to offer cities and states loans at 0 percent interest. But they’re not doing that. They are giving the good rates to corporations. The Federal Reserve doesn’t apparently know how to buy bonds. So it had to contract a private company to buy bonds. The Board of Governors doesn’t contract that company. It tells the New York Fed to do this work. The New York Fed creates a shell company in Delaware. That shell company, which is now a private company, therefore we the people don’t have access to how our $6 trillion is getting spent. That private shell company contracts BlackRock, a gigantic money manager on a no-bid contract to do all of this buying.”
Kelly: What is a subprime crisis today they you all see that we are going to be talking about in one year or two years from now?
Taub: “One banking executive did go to jail. It shouldn’t surprise us that the person who was chosen is someone that not anyone had heard of. It turns out it was a man with a Middle Eastern name, he was born in Egypt. He was raised in Michigan and he was working out of London. He was the only executive in the U.S. who went to prison. Some of the racial inequality that I discussed in terms of who gets to use white collar crime to advance and who doesn’t in our society can be seen there. In terms of our question of now, our loss of faith in the rule of law and our loss of faith in private and government institutions. There are people who are completely anti-vaxxers despite the fact of all of the evidence that childhood vaccines do not cause autism and so on. It’s hard to really blame people for lashing onto these conspiracy theories when we see big Pharma do bad things and get away with it. This is what’s so frightening especially during the Coronavirus pandemic because we now are going to need people to believe in, accept and get a vaccine if we want to get a handle on this. I do believe there’s a link here between the rise and election of Donald Trump and our inability to hold people accountable so that makes people think maybe all government is corrupt because our government didn’t hold the bankers accountable. But also the fact that someone like Donald Trump, if had actually been held accountable, for his many misdeeds and his actions that appear to be criminal. If that had happened, I believe he would have served time in federal prison and not the oval office. But his behavior, even what we see today, refusing to accept the outcome of an election where he’s clearly lost. This kind of, I will do what I want, regardless of the law, try to make me attitude, all of that power and disregard for norms, he didn’t invent that. He took advantage of the system that kinds of rewards people who do that. If we actually get beyond it, we’re going to see wide-scale corruption if we can’t get a handle on it soon.”
Kelly: We see that media has taken a hit, in terms of the last four years of bruising from the White House. A lot of publications have folded. This work still remains. There’s potentially even more corruption. Where is this accountability going to come from? Does the public still have faith that there will be some changes under a President Biden administration?
Baradaran: “I think accountability has to come at the ballot box too. Jennifer said Donald Trump can get away with it. It is the sense of white men in power in this country have been able to get away with more. The person that does become a scapegoat, usually when you have this mass crisis and you see the person who goes to jail is someone lower on the chain of sort of racial gender hierarchy. I think that our democracy is broken in a way that was built in with bugs, right, the Electoral College. The fact that 4 million more people voted for Joe Biden than Donald Trump and it came down to really such narrow margins in these states. We have a slaveholder’s Constitution, as of today. Even Alexander Hamilton, apparently, was a holder of slaves, according to the New York Times. He was one of the heroes of the North sort of push against the South.
You have the Electoral College and the way that Senate seats are allocated. I think a lot of people feel like their vote doesn’t matter and even when you do vote you have very motivated interests with lots of money. Citizens United just blown open the door for unlimited corporate spending. It is no wonder that people just feel like why do I even vote? Why do I even participate in democracy? If we’re going to do it going forward, you have to make people’s lives actually better. You have to show them that the government is working for them. I don’t have to begin to think that this is going to be easy given that Mitch McConnell is running the Senate. Amy Comey Barrett is selected because she’s anti-abortion and a lot of people care about that. But she’s going to make a series of decisions for the next 40 years that are pro-corporation and against people. That is the record that she has.”
Kelly: With this historic election people just voted in droves so the story after story that you saw in addition to the Latino vote were about Black voters particularly about Stacey Abrams and her mobilization of voters. A lot of what fueled that is also the economy and the wealth disparities that you talked about. Can a Biden administration start to turn things around for the disparities that have been so systemic?
Baradaran: “Yeah, let’s be clear here. The Black community delivered Biden. But for Atlanta, Philadelphia, Detroit, coming out. The highest voter turnout in a century. Yes, it’s broken, the Electoral College but you had a mandate. You had a summer of racial unrest, the George Floyd shooting and many, the Breona Taylor. Those two just put the country on fire and a lot of Americans came out. We are not black, but you cannot do this to our Black brothers and sisters. I think we are at another pivotal moment. With each moment, you are going to have a jostling of power. I think the people came out and really went against him [Trump]. I think there is this general dissatisfaction and this is President-Elect Biden and Vice President-Elect Kamala Harris’s chance to really do racial equity in a way that has not been done in America in a meaningful way.”
Kelly: Based on your history in banking, what is something that the president should do to remedy that?
Baradaran: “A reparations commission. You know, I think just study it. Look at what’s been extracted, what has been taken and Sarah’s work across country. Usually when a country destroys another people, not usually, but sometimes you pay reparations. You’re never going to make the Jewish community right. You’re never going to make up for the Holocaust. But you can pay damages to some of that destruction that was wrought. You’re not going to make Black Americans whole. But, you know, there are remedies you can make. I think that heals our nation in a way that gets rid of our longstanding tension and deep routed problems. Let’s just lay it out and deal with it.”
For more information about the LA Times Festival of Books, go to https://events.latimes.com/festivalofbooks/
Watch the complete webinar below:
The LA Times will continue to monitor public health and safety protocols, but at this time, plans to hold next year’s Festival of Books on the USC campus, April 17-18, 2021.