The Other 1 Percent by Timothy Egan

“George W. Bush started the two wars in a great flourish of righteous bluster and — in the case of Iraq — outright lies.

Bush is retired, playing golf and
watching baseball. Dick Cheney is still giving speeches justifying the
enormous deception of the Iraq debacle. In the meantime, there is a
larger consequence at home, the veterans next door — those 2.3 million men and women who served in one of the two wars.

The Other 1 Percent

By Timothy Egan on American politics and life, as seen from the West.

March 15, 2012

The yellow banners, the halftime tributes, the bloviating by politicians of both parties — it’s so easy for the 99 percent of us who aren’t serving in the military to act like we support them. We all love the troops, blah, blah, blah.

And then, you see an Army lieutenant colonel accused this week of plotting to blow up the Washington State Capitol and kill his commanding officer. You see, two months ago, a man not long out of his Army uniform gunning down a park ranger in her uniform. You hear of the massacre of children and women in Afghanistan — civilians all — allegedly by an Army sergeant who served four tours of duty.

All of those incidents came from people connected to Joint Base Lewis-McChord, south of Tacoma, Wash., the largest military installation on the West Coast. And all of the suspects had completed combat tours in Iraq or Afghanistan. Is it the base, or the service, or the wars? Who’s failing these soldiers?

For now, we all are. George W. Bush started the two wars in a great flourish of righteous bluster and — in the case of Iraq — outright lies. And he had the backing of most Americans. We honked our horns at bypasses near Lewis-McChord, and told the troops our hearts were with them.

Of late, the polls show that more than 60 percent of Americans think both the Iraq and Afghanistan wars were not worth the costs in blood and money. But, more telling, veterans who fought those wars are not far behind the public in sharing the same sense of futility. A Pew poll last fall found that only a third of all people who served in Iraq or Afghanistan said the wars were worth it.

So, I guess we can move on, yes?

Nobody likes to say that someone’s service was for a misguided cause. How does a mother who lost a son, a wife who lost a husband, a child who lost a mother fit those tragedies into a cognitive conclusion that will carry them through the days?

Bush is retired, playing golf and watching baseball. Dick Cheney is still giving speeches justifying the enormous deception of the Iraq debacle. In the meantime, there is a larger consequence at home, the veterans next door — those 2.3 million men and women who served in one of the two wars.

They will be trying to live with the horrors they saw and felt for the rest of their lives, perhaps another 60 or 70 years. Their suicide rate — 38 per 100,000 — is more than three times that of the population at large. And that same Pew poll found that 37 percent of the war veterans suffered from a degree of post-traumatic stress.

At the same time, it would be wrong to put these veterans in a box, pegged as time bombs and malcontents. Too many Vietnam vets were branded as psychos or lone avengers — see Rambo, and numerous cultural clones — a perception that still lingers.

But there are a couple of things the 99 percenters can do:

One is to make sure that the Veterans Administration — and by extension, taxpayers — does not fail these citizens who put themselves in harm’s way. The Army is now conducting an investigation into whether budget concerns prompted authorities at the Madigan Army Medical Center, which serves Lewis-McChord vets, to overturn post-traumatic stress diagnoses for 285 people. Did the Army reverse its findings on the mental strain of these soldiers to save money?

If the Pew poll is accurate, more than 800,000 veterans are re-entering society with some form of psychological trauma. The wars will cost at least $2.4 trillion through 2017, according to a Congressional Budget Office estimate, which includes interest for borrowed money. The balance between money for armaments going in and mental health going out should never scrimp on the exit.

In 2009, President Obama signed a new G.I. Bill to help veterans go to college. More than 700,000 have taken advantage of it. But many ex-soldiers complain of bureaucratic ineptitude, resulting in failure to pay tuition on time and crushing debt.

A second, and larger, consideration is caution concerning all the war talk as tensions mount with Iran. Republicans Newt Gingrich, Rick Santorum and Mitt Romney — none of whom served in uniform — have all but unleashed the dogs of combat, acting as if striking Iran would be the “cakewalk” the Bush Administration predicted for Iraq.

I thought President Obama and the British prime minister, David Cameron, struck the right tone in their comments this week about the wars that most Americans have now put behind them, and the war that could loom ahead.

“No one wants war,” said Obama. “Anybody who answers a poll question about a war saying enthusiastically, we want war, probably hasn’t been involved in a war.”

Most of us do not, cannot and will not ever understand this as much as the 1 percent who fought on behalf of the 99.

The JOBS Act Is So Criminogenic by William K. Black

“…. the
comically forced effort to create a catchy acronym, is the most cynical
bill to emerge from a cynical Congress and Administration. It is an
exemplar of why congressional approval ratings are well below those of
used car dealers. The JOBS Act is something only a financial scavenger
could love. It will create a fraud-friendly and fraud-enhancing
environment.”

The JOBS Act Is So Criminogenic That It Guarantees Full-Time Jobs for Criminologists

By William K. Black, Assoc. Professor, Univ. of Missouri, Kansas City; Sr. regulator during S&L debacle

Posted: 03/20/2012

Co-written with Henry N. Pontell and Gilbert Geis*

As white-collar criminologists (and a former financial regulator and enforcement head) our careers and research focus on financial fraud by the world’s most elite private sector criminals and their political cronies. Therefore, we write to thank Congress and the president for preparing to adopt a JOBS Act that will provide us with job security for life. We will be the personal beneficiaries of Congress’ decision to adopt the law without the pesky hearings that would allow critics to launch devastating attacks on the proposed bill based on a brutally unfair tactic — the presentation of facts.

The “Jumpstart Our Business Startups” Act, the comically forced effort to create a catchy acronym, is the most cynical bill to emerge from a cynical Congress and Administration. It is an exemplar of why congressional approval ratings are well below those of used car dealers. The JOBS Act is something only a financial scavenger could love. It will create a fraud-friendly and fraud-enhancing environment. It will add to the unprecedented level of financial fraud by our most elite CEOs that has devastated the U.S. and European economies and cost over 20 million people their jobs. Financial fraud is a prime jobs killer.

Powerful regulatory regimes — strong accounting rules, strict corporate governance, tough securities laws, and vigorous civil and criminal enforcement of the regulations and laws is the greatest infrastructure for strong economic growth that a nation can provide. For decades, the U.S. had an enormous competitive advantage over other nations in raising funds through securities because investors placed great trust in issuers that were subject to effective regulation. U.S. equities traded at a substantial premium compared to securities issued in other nations (which means that companies could raise capital much more effectively and inexpensively). Regulators serve as the “cops on the beat” that prevent a Gresham’s Dynamic in which “bad ethics drives good ethics out of the markets.”

Our system worked brilliantly. America prospered. American businesses and investors prospered. Unfortunately, economists decided to destroy what worked and to replace it with a fraud-friendly, deregulated world. Alan Greenspan was only the most prominent high priest of the following dogma: “a rule against fraud is not an essential or … an important ingredient of securities markets” (Easterbrook & Fischel 1991). This faith-based economics had no basis in reality, but it led to aggressive anti-regulatory leaders whose policies were so criminogenic that they led to recurrent and ever-larger serious financial crises.

George Akerlof, Nobel Laureate in Economics (2001), and Paul Romer wrote the definitive economics article on financial fraud in 1993 (Looting: the Economic Underworld of Bankruptcy for Profit). They ended it with the following to emphasize a profound policy message.

“Neither the public nor economists foresaw that S&L deregulation was bound to produce looting. Therefore, they could not imagine how serious it would be. Thus the regulators in the field who understood what was happening from the beginning found lukewarm support, at best, for their cause. Now we know better. If we learn from experience, history need not repeat itself” (p. 60).

But economists, as a group, proved that they did not “know better” and that their problem was not that they were “unaware of the concept” of looting “control frauds” (frauds led by the leaders of seemingly legitimate entities). Economists, overwhelmingly, have ignored a Nobel Laureate in economics, white-collar criminologists and experts on public administration and regulation. They have compounded their mistakes and they have dominated financial policy in the U.S. and Europe — the epicenters of the crises.

Among the many stupid, fraud-friendly policies that led to the deregulation that prompts our recurrent, intensifying financial crises, the undisputed stupidest aspect is the recurrent, intensifying embrace of the “regulatory race to the bottom.” The “logic” of the argument in the securities law context is that (1) dishonest issuers like bad regulation because it allows them to defraud with impunity, (2) our “competitor” nations (typically described as the City of London) offer weaker regulation to induce the fraudulent issuers to locate abroad, and (3) we must not allow this to happen; we must make sure that fraudulent issuers are based in America. Of course, they never phrase honestly their “logic” about dishonesty. Four national commissions investigated the causes of financial crises — the S&L debacle, the ongoing U.S. crisis, the Irish crisis, and the Icelandic crisis. Each of the commissions has decried the idiocy of the “race to the bottom” dynamic and warned that it must end. The arguments advanced by industry in support of the JOBS Act reflect and worship at the altar of “the race to the bottom.”

It is self-defeating for us to say this because as criminologists we would have job security for life if this bill was adopted. But this bill is an atrocity. It is literally composed of the wish list in regard to fraud-friendly provisions that those intent on cheating have been dreaming about and salivating to achieve for decades. This bill will kill millions of jobs because financial frauds are weapons of mass financial destruction. It will start an international fraud-friendly deregulation race to the bottom and will become the basis for further criminogenic U.S. congressional actions.

* William K. Black is Associate Professor of Economics and Law at the University of Missouri-Kansas City. Henry N. Pontell is Professor of Criminology, Law and Society at the University of California, Irvine. Gilbert Geis is Professor Emeritus of Criminology, Law and Society at the University of California, Irving.

 

What if Goldman Sachs Was Run by ‘Fiona’ Blankfein? by Amy Siskind

“An interesting question in light of survey data just released by the Harvard Business Review which analyzes the leadership styles of women and men. Are women better leaders than men? The finding of the survey: unambiguously, yes!

What if Goldman Sachs Was Run by ‘Fiona’ Blankfein?

By Amy Siskind, President, The New Agenda

Posted: 04/ 3/2012

Wake up Goldman Sachs! If your firm had more women, things would be better.

In recent years, those of us on the outside have come to view Goldman Sachs as the perennial poster child for ethical lapses. But, when a departing employee — an insider for 12 years — writes an op-ed describing the Goldman environment as ”toxic and destructive” — unrecognizable from when he joined in 1999, it’s all the more damning:

When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.

Which left me to wonder: what if Goldman were run instead by ‘Fiona’ Blankfein?

An interesting question in light of survey data just released by the Harvard Business Review which analyzes the leadership styles of women and men. Are women better leaders than men? The finding of the survey: unambiguously, yes!

Here’s how the Goldman Sachs insider described the ingredients — the secret sauce — of the firm’s successful culture: “It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients.”

According to Harvard Business Review, a ‘Fiona’ would outperform Lloyd in every element: ‘Collaboration and Teamwork’ — female mean percentile +6.1, ‘Displays High Integrity and Honesty’ +9.3, ‘Practices Self Development’ +9.4 and ‘Builds Relationships’ +7.1.

Women managers represent the same values which allowed Goldman to earn it’s clients’ trust for 143 years.

Truth is, however: the difficulties at Goldman Sachs are not unique — even if they are the latest corporate pariah. My former employer, Morgan Stanley, recently announced its 2012 class of Managing Directors — 83 percent are men. The same as our current Congress (83 percent) which, by the way, is the least productive and least popular Congress in our country’s history!

The problem of gender imbalance is endemic and our leadership is failing us. Desperately failing us.

And here’s the startling fact behind the numbers: unless we take action and change course, trends suggest gender imbalance will only get worse!

The Truth about Women’s Progress:

Where are the Fionas? On Wall Street, in corporate America and in politics, women today aren’t even getting into the pipeline.

In the last decade — during the period depicted as ‘toxic and destructive’ in the Goldman op-ed — 141, 000 women — roughly 2.6 percent of female workers in finance — left Wall Street (389,000, or 9.6 percent, more men entered). More alarming, over that same period, the number of college and young women entering Wall Street declined by 22 percent. (Read why women are leaving Wall Street here).

And it’s not just on Wall Street. For the first time in decades, from corporate management to even politics, women’s progress has stalled or is moving backwards.

The Rules of Engagement:

A gift of the women’s movement in the 60s and 70s was for women to enter the workforce. But it was like giving us a car, without driving lessons. Women still haven’t learned to play the game.

How could we? We haven’t been taught and these ways aren’t intuitive to us. It’s not our rules of engagement. The game remains male defined and male oriented. Because men still occupy the vast majority of leadership positions.

And since we all tend to hire ‘people like us‘ (We all pay lip service to the melting pot, but we really prefer the congealing pot), we’re in a vicious cycle. The way to break the cycle is advancing Fionas. Once women have a chance to set new rules of engagement, we will flourish and succeed.

National Girlfriends Networking Day (‘NGN Day’):

How do we get there? By cultivating and supporting one another.

Today, just as many Fionas are graduating from college as Lloyds. But after college, women and men have vastly different trajectories with salaries and promotions. Why? Connections and networks are readily available and established for men. But women don’t
have these connections, don’t think we deserve them, and don’t know how to build them.

Decades ago, as women entered the workforce, we made a conscious effort to bring our daughters to work once a year. Today, we need to teach our daughters what to do once they are there — to teach women, young and old, to build their network of connections.

This year we are starting that process — on June 4th — the first annual National Girlfriends Networking Day!

On that day, we’ll begin the process of linking women together by creating a national network to help us all succeed. Women around the country will be meeting for breakfast, coffee, lunch and drinks to connect. Get involved by pledging to connect, attending a virtual event around the country — or making herstory as an Angel Investor along with prominent women like Senator Kirsten Gillibrand and FOX News co-anchor Gretchen Carlson.

Desperately Seeking Fiona!

We also need to give college and young women — our Fionas — a road map to success: A Girlfriends’ Guide. Our goal is to provide a realistic game plan — concrete steps and actions which young women can take, starting in their 20s — towards become tomorrow’s Fionas. Teaching them how to build their networks, connections and brand — and on their own terms! A Girlfriends’ Guide changes lives (read this)!

Join us cultivating and supporting tomorrow’s Fiona’s: 1) Get involved in National Girlfriends Networking Day; 2) Devote one hour a month to mentor a young woman at The Mentor Exchange; and 3) Reach out to The New Agenda set up a presentation of A Girlfriends Guide on campus.