Gotham Diary:
Economy and Justice
July 2017 (II)

10, 12 and 13 July

Monday 10th

Over the weekend, I read something that was so congruent with my own thinking that it was better than being published myself, and rather more like exciting, desperately looked-for proof of intelligent life in a distant galaxy. It was a book review in the Times Book Review, by law professor James Kwak. The title of the book, by Jesse Eisinger, isn’t very nice: The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives. The answer to the question raised in the subtitle is provided by Professor Kwak:

Increasingly, the prosecutors and the defense attorneys on opposite sides of the table are the same people, just at different points in their careers. Conducting a criminal investigation of an executive isn’t just risky; in addition to jeopardizing a future partnership at a prestigious law firm, perhaps most important, it incurs “social discomfort,” especially for the well-mannered overachievers who now populate the Justice Department. No one wants to be a class traitor, especially when the members of one’s class are such nice people.


After decades in which Wall Street masters of the universe were lionized in the media and popular culture, star investment bankers — rich, usually white men in nice suits — just don’t match the popular image of criminals. Democrats as well as Republicans cozied up to big business, outsourcing the Treasury Department to Wall Street and the Justice Department to corporate law firms. Even after the financial system collapsed, the Obama administration’s priority was to bail out the megabanks — to “foam the runway,” in Treasury Secretary Tim Geithner’s words. The Justice Department became increasingly staffed by intelligent, status-seeking, conformist graduates of the nation’s top law schools — all of whom had friends on Wall Street and in the defense bar. In that environment, the easy choice was to play along, strike a deal with an impressive-sounding fine (to be absorbed by shareholders) that held no one responsible, and avoid risking an acquittal or a hung jury. (The book’s title comes from then-U.S. Attorney James Comey’s name for prosecutors who had never lost a trial.) Corruption can take many forms — not just bags of cash under the table, but a creeping rot that saps our collective motivation to pursue the cause of justice. As Upton Sinclair might have written were he alive today: It is difficult to get a man to understand something, when his résumé depends upon his not understanding it. [Emphasis supplied]

It would be difficult to find a more sterling example of élite bankruptcy: the Justice Department, in this reading, is corrupted by its staff’s craven hopes for remunerative futures. There is no actual wrong-doing, but by the same token, there is no actual right-doing, either. Our institutional arrangements are worse than inadequate.

I have two answers, two solutions, to the underlying problem. First, we must strip corporations of “natural person” status. Without this status, a corporation could neither be party to a criminal lawsuit nor represented in such a suit by counsel. Only the actual human beings in charge of operation could be charged with criminal conduct. Given a healthy alteration of corporate law that would deny corporate funds to employees for the purpose of paying legal expenses, my bet is that, overall, the business of representing corporations would become less lucrative over time. This would make the second step easier to impose: the door between public and private service ought to be closed. This need not be formal or overt. If government lawyers are paid more, while private attorneys’ fees drop, the careerism captured by Professor Kwak’s review would become unusual and eventually shameful.

For shareholders, the upside to abandoning corporate personhood would be that their investments would no longer be diminished by immense fines. The downside would be that, if cleaning up after reckless behavior were no longer a legitimate cost of doing business, there would be a lot less “creative destruction.” I’m not so sure that that would be bad for the rest of us.

The United States’s meritocratic élite faces a severe crisis of legitimacy at the moment, and it is impossible to dismiss President Trump’s grandstanding anti-élitism as mere opportunism. Jesse Eisinger’s book points to a house on fire. We had better put it out.


Corporations are legal fictions. They exist nowhere but on paper, and it is what is written on that paper that constitutes the only evidence of corporate existence. The purpose of the fiction is to stabilize the ownership of certain kinds of property, historically churches, schools, and hospitals. The ownership of these institutions is “embodied” in the corporation that continues unchanging even as the different people who manage it over time come and go.

The modern business corporation added (in the middle of the Nineteenth Century) something very useful to the fiction: limited liability. The liability of a business corporation itself is unlimited. If it cannot pay its debts, it is bankrupted. But the liability of the shareholders is limited to the extent of their investments. This is why corporate structure is so important to a new business, as a protection to investors. Capitalism would be impossible, or at least very dangerous, without it.

In the United States, corporations have been regarded as “natural persons” since 1886 — more or less. It was in that year that a certain case came before the Supreme Court. For unusual reasons, the Court’s adjudication of the case is cloudy, but its authority has nevertheless been respected. As one consequence of the ruling, corporations have been permitted to contribute to political campaigns. More remarkably, this disembodied legal fiction can be charged with crime. These are win-win arrangements for senior executives. They can increase their own personal political contributions by dipping into the largesse of the corporate treasury. And, as Jesse Eisinger’s book demonstrates, they can leave their shareholders holding the bag for bad behavior.

Because I am not a silly person, I do not believe that a legal fiction can misbehave. There must be some other culprit.


Wednesday 12th

The other day, as I was tearing through the last chapters of James Lasdun’s exciting, disturbing novel, The Fall Guy, I was brought up short short by the protagonist’s culinary note on the evening’s dinner, its menu featuring a leg of venison, cooked sous-vide.

Topping up his drink, he salted the lean crimson meat, vacuum sealed it in one of the plastic pouches, and set it to cook. He’d picked up boysenberrries for a compote, a red cabbage to braise with a slab of pig cheek, and potatoes for a herbed spaetzle.

It was the red cabbage braised with pig cheek that stopped me. This was more signal than side-dish. The very nonchalance of the remark fairly screamed sophistication. I wondered a little why Lasdun was interrupting the tense atmosphere with a prosaic roll-call of elaborate dishes. A part of my mind reflected that, when I was growing up, no cook would have prepared a dish of red cabbage and pig cheek and called it that. There would have been a fancy name of some kind. In those days, you were supposed to know that “Crécy” meant carrots and “Florentine” meant spinach, so humble vegetables need not be named. Nowadays it is just the opposite, because the ingredients are, if humble, rather unusual. Pig’s cheek? That’s guanciale, isn’t it? No hiding behind Italian here, however! Something was going on.

This passage came immediately to mind when I read David Brooks’s column in yesterday’s Times. The column was extraordinarily interesting overall, because it not only addressed the issues that I’ve been discussing in connection with meritocracy but woke me to the current state of play, which I had rather overlooked. For the most part, his subject was higher education and highly-taxed affluent neighborhoods, the two most prominent institutions by which the favored fifth — the top economic quintile of Americans — ensures that its children will inherit its advantages. But I want you to look at the brief passage in which Brooks shows how food is put to work in this cause.

Recently I took a friend with only a high school degree to lunch. Insensitively, I led her into a gourmet sandwich shop. Suddenly I saw her face freeze up as she was confronted with sandwiches named “Padrino” and “Pomodoro” and ingredients like soppressata, capicollo and a striata baguette. I quickly asked her if she wanted to go somewhere else and she anxiously nodded yes and we ate Mexican.

Not a light bulb but a flood lamp illuminated the scene: it was like catching a clutch of domino-wearing conspirators in flagrante. Once upon a time, it was done with utensils: faced by an array of silverware alongside your plate, how did you determine which one to use in order to eat what had just been put in front of you? This was a mine field for the unsophisticated and a spectator sport for the well-mannered. Now it is the food itself. How do you know what has just been put in front of you? And are you supposed to dig in with relish when someone tells you that it’s pig cheek?

It would be wrong to attribute the desire to exclude 80% of Americans to the increasingly middle-aged high-achievers whose lives in the best ZIP codes look just like everybody else’s, only newer, shinier, sleeker, and quieter. Today’s ostentation is unlike earlier styles, in that it strives to be unnoticeable, at least in the middle distance. To be cynical, I’d venture that the favored fifth would prefer that the rest of their countrymen not notice the countless little ways in which it lives the nicer life. The pig’s cheek is a kind of smiling shibboleth, intended only to reassure the members of the tribe, which is, after all, composed of people who grew up all over the place. Pig’s cheek puts everybody with access on the same page. Finally, I understand the ubiquity of short ribs on restaurant menus.

But no matter how much of this signalling remains invisible or meaningless to the 80%, some of it is always going to be intercepted, by the likes of David Brooks’s hapless friend, not to mention J D Vance. And what’s going to anger the have-nots is not so much the not having as the faux sharing. Brooks takes his friend to a place that specializes in gourmet — sandwiches? Pig cheek? What is this fake vernacular? Donald Trump, in his gilded baroque condo, at least knows how to be rich!

This is another one of the problems that the liberal meritocratic élite is going to have to work on if it has any hopes of returning to power. Ordinary Americans have had it with the élite’s stuck-up pose of being just folks.


Friday 13th

Last week, I wrote that “five more sessions” ought to be all that I’d need to finish sorting my books in the storage unit. In the event — the other day — it took only one. I could certainly whittle the number of keepers by a boxload, and I probably shall — but I needn’t. My conscience is clear. Everything in the unit is ready to be disposed of by other hands. This afternoon, I spent an hour there going through LPs, and out of at least a hundred discs I set aside about a dozen to hold on to. I’m done.

Instead of dilating upon this historic, or at least liberating, occasion, I’d like to share my solution to the American political mess. I’ve got it all figured out.

No, this is not going to funny. But it does make me feel good, because even if it’s not likely to happen tomorrow or in time for the next elections, it makes sense. That it’s also quite simple may be proof that I’ve lost my mind, but then again maybe not.

Remember Nixon’s Southern Strategy? The old Dixiecrats were persuaded to change their political allegiance. Almost overnight, they became Republicans, members of the once-hated party of Reconstruction. (As long as we’re on the subject: Nixon also recognized the People’s Republic of China, something even less likely to have been forecast for his terms in office. Really, anything’s possible.) The Southern Strategy worked because the white people of the South suddenly realized, after having been betrayed by Lyndon Johnson, the prime mover of civil rights in America, that they weren’t really Democrats at all. They weren’t exactly Republicans, either, but they took over the party and changed it to suit themselves.

It’s time for this to happen again. This time, the turncoats that I have in mind are the Favored Fifth, the top economic quintile in the country, the people who have all the best jobs, live in the best ZIP codes, eat the best food, and send their kids to the fanciest schools. At the moment, a good many of these people tend to vote Democratic. Lots of them supported Hillary Clinton in 2016. But they are really no more Democratic than the Dixiecrats were. Like the Dixiecrats, they were electrified by the advance of Civil Rights, but their reaction was more confused. The problem was the term “liberal.” Liberalism has always been tangled in contradictions, mostly between a lively regard for property rights and a somewhat dimmer faith that the injustice of social inequality will work itself out eventually. The sleight of hand in liberal thinking holds that inequality, although it will clearly be an injustice when it is trampled out of existence in the happy future, is not an injustice right now, because it can’t be helped.

When it you get down to it, “liberal Democrat” is a contradiction in terms. We ought to stop expecting liberals to support the Democratic Party. They don’t, not really, and they never will. They are all Rockefeller Republicans at heart, and this is a good thing for the nation. It’s time for the Favored Fifth to return to its natural home. That nationalists and white supremacists and evangelicals won’t be happy to receive them makes it so much the better.

I would rechristen this revived Republican Party the Economy Party, because maintaining the economic health of the nation would be its priority. For starters, a number of business consolidations might be reversed, recreating some of the many jobs that have been lost to that profoundly inhuman objective, “economy of scale.” The new Economists would not forget that they take their name from the idea of the household, and that even if nations are not bound to handle money quite the same as housekeepers are, they are still charged with the primary job of nurturing people.

Democrats, meanwhile, would support their own newly-named Justice Party. Bernie Sanders, the ACLU, Ralph Nader — I’m not so sure about Elizabeth Warren’s place in this new alignment. One of the great things about the Economy Party would be that Warren would make its best watchdog.

On and on I could go, but the only thing that I feel it necessary to add is that Justice and Economy would be friendly antagonists, not mortal enemies. If liberals would just give up pretending to be Democrats, the friction generated by their awkward pose would cease to provide a flourishing atmosphere for extremists of all kinds.

Just a thought.

Bon week-end à tous!