July 13, 2007
Conrad Black and the filthy rich
The United States is meant to be a country that celebrates wealth. Making millions is part of the American dream, and only Europeans are meant to succumb to mean-minded envy.
I have often suspected, however, that Americans are much less relaxed about the "filthy rich" than they think. Conrad Black - who has just been found guilty of fraud in Chicago - may be about to feel the brunt of all that pent-up rage about huge salaries and perks for the super rich. Even though he was not convicted on all charges, he seems likely to get a long sentence - which could be a life sentence, for a man of 62.
The prosecution in the Black case certainly laid on the details of his opulent lifestyle with a trowel. This may have been because opulence is easier for a jury to grasp than the complicated technical details of a fraud. A colleague who reported on the trial says that two of the jurors were asleep for large
parts of the case. But everyone sat up and paid attention when the details of lavish Black parties and extravagant homes were laid out.
Ideologically, I think America does remain committed to the idea that super riches for some are a cause for celebration for everybody. That creed is reflected in low taxes and very high salaries for chief executives. Some billionaires are genuinely admired figures - think of Warren Buffet, the sage of Omaha; or even Bill Gates. They have made their money through their own hard work and intelligence; they have given lots of it away; and they are not flashy. So they remain popular.
But step out of line - and all that suppressed anger about the super rich bursts out. Just look at the sentences handed out to Bernie Ebbers, the disgraced chief executive of WorldCom - who got 25 years; and to Jeffrey Skilling, the former chief executive of Enron, who got 24 years. Those terms are vindictive for non-violent crimes. But listen to talk radio in America or look at internet chatter, and you will find plenty of people who think the death sentence would have been appropriate.
What accounts for all this rage? I am sure that some of it has to do with rising income inequality in America. At a time when the middle-classes are worried about soaring costs for healthcare and college, the sight of CEOs and hedge-fund managers squirreling away vast fortunes is bound to be faintly irritating.
But, actually, the anger existed long before the real boom in CEO pay. I was living in the US in 1989 and well remember the glee when Leona Helmsley - a famously bitchy hotel owner - was jailed for tax evasion. She had - perhaps - tempted fate, by remarking that "only the little people pay taxes." But there was not only no sympathy for Helmsley; there was real delight at her fate. Radio hosts were calling up her jail to get the full, glorious details of the humiliating work she had been set. I would not be surprised if the same thing happens with Conrad Black.
Hateful country.
Posted by: PL | July 13th, 2007 at 8:04 pm | Report this commentPlutocracy is one thing, but the public’s tolerance for gross rub-it-in vulgarity is obviously limited. Hence the jury’s wise decision.
Posted by: Derek Vertongen | July 14th, 2007 at 1:11 am | Report this commentAre you defending this criminal because he is a Brit? Your citations of the criminals at Enron and WorldCom are misleading and sad indeed. The sheer number of people who suffered, and are still suffering, financially alone warrants what they got. These “non-violent” crimes have had a large detrimental effect on the social fabric. I say pursue the criminals and mete out due punishment regardless as to whether or not they are Knights or fellows on the street. Bring it down to collective jealousy and a dim jury is sorry indeed. Down with defending criminality.
Posted by: Gande | July 14th, 2007 at 2:40 am | Report this comment“But step out of line - and all that suppressed anger about the super rich bursts out. Just look at the sentences handed out to Bernie Ebbers, the disgraced chief executive of WorldCom - who got 25 years; and to Jeffrey Skilling, the former chief executive of Enron, who got 24 years. Those terms are vindictive for non-violent crimes.”
Non-violent crimes? Taking away someone’s pension and life earnings, so the c.e.o can buy their son another Porsche, after they’ve invested their lives in a corporation isn’t violent? By you line of reasoning, taking away free speech is also “non-violent.” And your already the first casualty, for your simply a mouthpiece for another corporate publication chipping away any sort of journalistic integrity or autonomy that’s left in the mainstream media at this point (aside from the Guardian, name me one news organization that isn’t owned by a corporation).
But enough reading for you. Back to work for your master: just remember, when they say jump, you say “how high.” Judging by this piece, you can already leap quite a distance. Good work.
Posted by: clara | July 14th, 2007 at 3:32 am | Report this comment“and to Jeffrey Skilling, the former chief executive of Enron, who got 24 years. Those terms are vindictive for non-violent crimes.”
I feel obliged to repeat the above comments, Gideon Rachmans’ sympathy and defense of criminals who have stolen their employees pensions to line their own pockets, and condemned employees to poverty during their retirement, does make GR appear at best smallminded, but more likely inhuman.
Posted by: carlos | July 14th, 2007 at 7:34 am | Report this commentReally, clara - eh, carlos - at least be consistent with your name. The best part of your writing: the quotations.
Posted by: 15 years | July 14th, 2007 at 9:52 am | Report this commentThe problem isn’t with these criminals. The problem lies with the “American dream” - which comes complete, social safety net not included.
And how is it possible for a vast vetting process to churn out leaders like George W. Bush? Is this country on planet Earth?
Mr Brown wants to emulate features of the US constitutional model? To give Parliament more powers? Dear Mr Brown, no American president is obliged to a weekly session of PMQ! At most, a bi-annual state-of-the-union address. No American administration faces a shadow cabinet. No American president can be brought down by a vote of no-confidence in Congress…
Posted by: PL | July 14th, 2007 at 10:16 am | Report this commentYou may have lived in the United States; however, I suspect you are not fully informed about middle-class life in the trenches of US television hyped everyday life. Most families just earn enough to make ends meet. When the little left for retirement or savings gets stolen or robbed by the likes of Skilling, Black, or Ebbers either in terms of undeserved compensation by the minions of corporate sleaze and their supposedly alert overseers, the rage knows no bounds for tens of thousands of little people whose lives and retirements would be severely impacted.
And juries and judges know that for one facing accountability for these outrageous thefts, fraud or undeserved plunderings by the elites, thousands escape retribution, either because of studied regulatory fiat (i.e. think politics and political corruption here!) or lack of enforcement/oversight by the SEC and know-nothing managemnt appointed corporate directors. The sentences meted out are inadequate as deterrent, and are not vindictive considering the lives impacted. Most of these wrong-doers would be out in probably less than half the time mandated as sentence. A kid from a poor deprived neighborhood could serve a longer sentence after three or four felony convictions, though often the thefts are just for sustaining his meager living.
Posted by: Brahm | July 14th, 2007 at 3:02 pm | Report this commentI’m not one to condone crimes. But lemme tell you. I would not want to be a CEO of a public company in the US. This is probably why London is the place where more companies go public these days.
Posted by: name | July 14th, 2007 at 9:56 pm | Report this commentWhen it comes to dealing with White Collar Crime, I have only three words to say: God Bless America!!
London, Tokyo and other financial centers should take note if they want to be taken seriously as a safe home for investments.
Borzou Aram
Posted by: Borzou Aram | July 15th, 2007 at 2:05 pm | Report this comment“Those terms are vindictive for non-violent crimes”
I’m an enthusastic reader of GR’s articles and blogs, but Im really taken aback by his uncharacteristically crass and ill-considered remark here.
In in the case of Enron, the direct damage done to many thousands of investors and especially Enron employees/retirees was catastrophic, and Skilling’s sentence was easily warranted on that basis alone (irrespective of his salary), without even considering the broader ramifications of that scandal. GR’s implication that this type of white collar crime is moderate in its gravity is baffling - please explain what you mean here!
Posted by: Gobsmacked | July 15th, 2007 at 4:04 pm | Report this commentConrad Black’s conviction shows a failure on many fronts, ethically, logically, legally, morally,and socially. As a member of the aristocracy, he had the obligation (albeit not legal) to exhibit better values and morals than those who are not as privileged. Instead, he has shown that that he had no better values than the street peddler pushing counterfits or crack.
Posted by: DE | July 15th, 2007 at 4:08 pm | Report this commentI agree with the criticism of Rachman’s “non-violent” comment. What Americans value is working hard and taking risks (WITH YOUR OWN MONEY!!!). There is a big difference between honestly risking money, and appropriating investor or employee money for purposes that are not authorized.
Treason is also a non-violent crime, but you wouldn’t want you use this as an argument for light punishment. The punishment has to be related to the number of people harmed, not just the amount of harm.
Posted by: Matt | July 15th, 2007 at 7:22 pm | Report this commentNo real surprises as to the verdicts passed here of course.Bog standard realities of life in the one celled amoeboid brains of the typical yank. Considering that over 60% of them dont have passports and holiday in Disneyland,says a lot about their grasp on life in the real world. Fiddling, embezzlement, gun running and trafficking have been the hallmarks of Whitehouse gnomes like Texas numbnuts for the last twenty plus years. Unfortunately for Black , he cultivated the wrong friends. If only he had hung out on the ranch with the Bin Looney mob and confined his paws to rifling the state, then all would be hunky dory. Who knows, he could even have been elected as the next President of U.S.
Posted by: Ian Williams | July 15th, 2007 at 10:48 pm | Report this commentcrime inc - but that’s another story altogether and beyond the scope of american intelligence.See you in Panama old chum.
I’ve never lost much to anyone I would describe as a scoundrel, I’ve learnt to distinguish style from substance and, as a consequence, I don’t want to lynch anyone. Those who invested money/time/expectations with this schemer were always going to fall for something. His type who brook no opposition and demand their due are curiously attractive to the Press who need characters to fill their pages and he played the part.
Posted by: Tom | July 16th, 2007 at 9:11 am | Report this commentLord Black was convicted for FRAUD not for his lavish life style. In that regard the jury displayed more sense than the prosecution of Mr. Rahman.
Posted by: costas | July 16th, 2007 at 12:06 pm | Report this commentEach of Rachman’s comments on the way the filthy rich are perceived by Americans are laughably one-dimensional, seemingly informed only by the way the filthy rich themselves day-dream about how the rest must feel about them. The column belies an embarassing and complete lack of understanding about the dynamics of class and aspiration in America. For the sake of whatever limited integrity he may have, I would suggest that Rachman be more careful about so arrogantly revealing his ignorance.
Posted by: Aurora | July 16th, 2007 at 4:37 pm | Report this commentMr Rachman,
Your comment definitely touched a nerve - as the angry posts above reveal.
Indeed Americans are not at ease with money as they like to think.
I cannot understand how these people do not see that white collar crimes, while despicable, horrible etc.. , simply are not in the same league as violent crimes. (murder, rape etc..)
On top of this, the investigation and the media focused solely on a handful of people at the top in all those scandals, but very often dozens if not hundreds of people were involved - sometimes in small ways, sometimes in bigger ways. Yes, I find terrible that employees lost their pensions, but they all knew (or should’ve known) their 401k was invested almost entirely in Enron stock. I can’t recall them complaining when Enron in 2001 become one of the world’s top 10 companies… I am in no way condoning the frauds - merely pointing out that many knew the house was built of cards, including some the eventual victims of the fraud, but virtually noone cared, got interested nor blew the whistle.
And of course, these sentences do not look that harsh compared to the ones yound repeat offenders get thanks to the “zero tolerance” policy so loved by americans, but compared to how other civilised societies deal with the issue, they are indeed harsh.
The US business system is geared to encourage risk taking - and not care it may rain tomorrow. This is why US firms borrow much more than European or Japanese ones. US firms financial ratios also consitently look like US firms are much better run, much more efficient - while often it’s because there is no plan B - no extra stock in case something goes wrong, no spare capital, no spare capacity, no cover when workers go on maternity/holiday etc…
A lot of US businesses have been run like there’s no tomorrow - it’s no coincidence if the world’s biggest blow up took place there. The system encourages management to go for broke. In Europe/Japan, while most are quickly going the US way, there is still a feeling for a lot of management that the company they are in charge of needs to be around in 5, 10, or 20yrs time. (if I’m not mistaken, the Japanese often feel they’ve been “lent” the company, and need to nurture it to give it back to the next management.)
I’ll also have to agree with PL - the American Dream is part of the problem, but mostly Americans find it hard to look at themselves critically. It took them 6-7yrs to realise the incompetence of their president and his entourage!
I will sound like a follower of Marx, but honestly, who has interest in perpetuating that “dream”? Who needs workers to put in 50-70h week 50weeks a year? How come not a single presidential candidate has promised US workers they will get a 3rd week holidays? They would argue that it might cost america competitiveness etc.. A 3rd week holidays?? jeopardizing the US economy??? Give me a break. While you guys are posting here getting angry at Mr Rachman or focusing on those CEOs, you’re forgetting where you should really target your anger: the politicians. As flawed or incompetent as they are, they do have the power to change things - not CEOs, not jurys, not the media.
Tell those politicians you’ve had enough of the Bush tax cuts, of all that pork that was voted to fatten politicians’ friends and pet projects… (I’m trying to be neutral on party politics here but Bush did so much against the lower/middle class…)
Tell them you want universal healthcare, tell them that the billions going into defense ought to go to take care of US citizens..
Tell then that you shouldn’t have to work 70hr/week in 3 shitty jobs to make a leaving, tell them that while the rich guys are worried about losing 10% on their multi million portfolio, you’re about to lose your house because of the subprime collapse. (in fact, because you were easy fodder for the broker, estate agents sharks fuelled by Wall St’s cash.)
I remember a scene from Michael Moore’s Bowling for Columbine…
MM: “do you think someone should die for stealing a truck?”
random guy: “no I don’t. Except when, you know, it’s my truck - I mean I worked hard and it’s my truck. If i find somebody in my truck, I will shoot them. ”
Private property - the root of capitalism, without which we all probably be poor. And yet, taken to the extreme, such a despicable thing. How come someone (remember a human being!) deserve to die for stealing a truck, or fraud a Hollinger, Enron, Tyco for that matter - it’s beyond me. I think Americans should look at how the rest of the world is dealing with death penalty… increasingly rare, and even less used. Except of course in those bastions of freedom and democratie that are China, North Korea, Iran, Iraq… and the USA…
Posted by: a | July 17th, 2007 at 1:43 pm | Report this commentInteresting point of view. I always thought it was the other way around: That “you Europeans” had much more of an “it is what it is” attitude about wealth. Maybe that only applies to the inherited kind.
The rage of which you speak is quite properly directed at those who have enriched and otherwise glorified themselves by stealing from others, directly or indirectly. I think it’s fair to say that causing thousands of people to lose their life savings through one’s overweening greed is something more than merely “stepping out of line.” Like Skilling, Ebbers, Helmsley et al, Black’s crime was not being wealthy, or even the garish way in which he displayed his wealth. His crime was illegally diverting profits intended for the shareholders of his PUBLICLY TRADED company into his own bespoke pockets. Black clearly considered Hollinger to be his own personal piggybank — emphasis on “piggy.” Why the consequences of his behavior should be any cause for sympathy is beyond me.
Posted by: Der Senator | July 17th, 2007 at 3:04 pm | Report this commentMy esteemed colleague, Gideon Rachman, missed a rather important point about the US. It is an intensely puritanical country, with a no less intensely punitive attitude to transgression. Look at its drug laws or its heavy reliance on capital punishment. Among the western democracies the US is unique in both respects. Conrad Black and others in the same category have simply fallen foul of this combination of attitudes. It is why, after all, there are something like 2.1m prisoners in the US, equivalent to 400,000 in the UK!
Posted by: Martin Wolf | July 18th, 2007 at 10:05 am | Report this commentDear Mr. Wolf.
How many of the 2.1 million American prisoners are black or Latino? Isn’t the rather high percentage of the non-white prisoners, compared to the overall population, also highly indicative of the perasive racism in the US justice / law enforcment system, compared to the UK?
Best,
P
Posted by: Pacifist | July 18th, 2007 at 2:25 pm | Report this commentArticle about Conrad Black and the Filthy Rich.
re comment about Leona Helmsly being humiliated by the work that she had to do in prison - tell your researcher/writer to check that out - Leona did no menial work, she paid other inmates to do it for her including changing and making her bed - The filthy rich really are different.
Posted by: Motty | July 23rd, 2007 at 7:03 pm | Report this commentIn answer to the comment from “Pacifist” (incidentally, why do so many participants in this discussion group use pseudonyms?), I have discovered the following interesting quote (Martin Bright, The Observer, March 30 2003):
“One in every 100 black British adults is now in prison, according to the latest Home Office figures.
“A recent crackdown on guns, drugs and street crime has led to an explosion in the number of prisoners from an Afro-Caribbean background, who now account for one in six of all inmates.
“The figures have sparked fears of an American-style penal system, where black men are 10 times more likely to go to prison than whites and one in 20 over the age of 18 is in jail.
“The number of black prisoners in Britain’s jails has risen 54% from 7,585 to 11,710 since Labour came to power.
“The figures are likely to reopen the debate about violence and crime in black street culture. Prison reform organisations last night warned the police and the courts not to target young black men in the battle against street crime.
“At 16% of all those in jail, the number of black prisoners is hugely disproportionate to the general population, where African and Caribbean people make up just 2% of the total.”
So it appears that both the US and UK have a problem in this respect.
Posted by: Martin Wolf | July 24th, 2007 at 8:02 pm | Report this commentDear Mr. Wolf,
Here are some interesting statistics about race and prisons is the US
Race
Percentage of U.S. population that is African-American, 2000: 12.3%
Percentage of adults in state prison who are African-American, 1997: 45.6%
Percentage of U.S. population that is White 2000: 75.1%
Percentage of adults in state prison who are White, 1997: 33.3%
Percentage of U.S. population that is Hispanic or Latino, 2000: 11.8%
Percentage of adults in state prison who are Hispanic, 1997: 17.0%
http://www.prisonpolicy.org/prisonindex/prisoners.html
I was quite interested to see that extrapolating Britain’s 16% black prison population compared to the 2% of total population over America’s 12.3% would mean 98.4% of American prisoners should be black. As less than half that percentage are black, it might mean that the British system is more than twice as racist as America’s. It could, of course, mean a lot of other things too, perhaps because the British black population is more recent and has less access to economic resources, they are more likely to resort to illegal methods of wealth acquisition…..
Anyhow, facts are interesting thing!
All the best,
Posted by: Pacifist | July 25th, 2007 at 3:56 pm | Report this commentP
If America is so bad, why do so many people want to come to America. Everyone I know that is here on a visa is trying to extend it. Years from now, people will look back and see what a great president George Bush was.
Posted by: Jim Schenck | December 20th, 2007 at 4:07 am | Report this comment