How Do You Think?

Although I did not make a substantial number of posts in 2013, the traffic to my site remained relatively vigorous.  Throughout 2013 my blog had 24,007 hits from 21,042 unique visitors, accounting for nearly 30,000 page views.  I had visitors from every state in the US and 158 nations around the world.  Visitors from the United States accounted for the vast majority of those hits, but the UK, Canada, Australia, India, China, and Germany also brought in large contingents.

Of my posts published in 2013, none made it to this year’s top ten list: five were from 2010,  four were published in 2011, and one was from 2012.  This year the top ranked article (The Moral Instinct) was a 2010 review of a very popular 2008 New York Time’s article by Steven Pinker.   This perennially popular piece ranked 5th last year, 4th in 2011 and 3rd in 2010.   Its bounce to the top this year is more of a testament to Pinker and the popularity of his piece that explores the universality of morals.  In that piece I wrote:

Pinker delves into the neurological factors associated with morality and the evolutionary evidence and arguments for an instinctual morality. He reviews several important studies that provide evidence for these hypotheses. But, he argues that morality is more than an inheritance – it is larger than that. It is contextually driven. He notes: “At the very least, the science tells us that even when our adversaries’ agenda is most baffling, they may not be amoral psychopaths but in the throes of a moral mind-set that appears to them to be every bit as mandatory and universal as ours does to us. Of course, some adversaries really are psychopaths, and others are so poisoned by a punitive moralization that they are beyond the pale of reason. ” He further contends “But in any conflict in which a meeting of the minds is not completely hopeless, a recognition that the other guy is acting from moral rather than venal reasons can be a first patch of common ground.

This article may have also remained popular because of its relevance with regard to the state of affairs in today’s political arena and the application of Jonathon Haidt’s increasingly popular work on the Moral Foundations Theory.  

The 2013 number two ranked piece Nonmoral Nature: It is what it is, is a review of one of Stephen Jay Gould’s most famous articles where he argued that there is no evidence of morality in nature, that in fact “nature as it plays out evolution’s dance, is entirely devoid of anything pertaining to morality or evil. We anthropomorphize when we apply these concepts. Even to suggest that nature is cruel is anthropomorphizing. Any true and deep look at the struggle for life that constantly dances in our midst can scarcely lead to any other conclusion but that nature is brutal, harsh, and nonmoral” (Gould).  Historically this has been a controversial topic and remains so in certain circles today.  This piece has remained popular over the years – ranking 4th last year and 2nd in 2011 and 2010.

Brain MRI

Brainwaves and Other Brain Measures – the 3rd ranking post this year ranked 2nd last year and 1st in 2011. This very popular piece takes a pragmatic, comparative, and colorful look at the various ways of measuring brain activity.  My 2012 article Happiness as Measured by GDP: Really?  is finally getting some attention.  Although it ranked 10th last year, it has climbed into the number four slot this year.  I contend that this is perhaps one of the most important articles I have written.

Proud as a Peacock By Mark Melnick

My critical article on the widely used Implicit Associations Test ranked 5th this year, 6th in 2012, and 4th in 2011. Last year’s number one piece on Conspicuous Consumption and the Peacock’s Tail  is one of my favorite pieces.  It addresses our inherent drive to advance one’s social standing while actually going nowhere on the hedonic treadmill.  It delves into the environmental costs of buying into the illusion of consumer materialism and its biological origins (the signaling instinct much like that of the Peacock’s tail).

I am excited to report that Poverty is a Neurotoxin is also finally gaining some traction.  Published in 2011 it has never achieved a top ranking; although, in my humble opinion, it is no less important.  Rounding out the top ten of 2013, my Hedgehog versus the Fox mindset piece ranked 8th this year, 9th last year, and 10th in 2011. One of my all time favorite posts from 2010,  What Plato, Descartes, and Kant Got Wrong: Reason Does not Rule made it back to the top ten list this year coming in 9th.  It was 7th in 2011 and 8th in 2010.  My 2011 post Where Does Prejudice Come From? ranked 10th this year, 7th last year, and 5th in 2011.

So here is the Top Ten list for 2013.

1. Moral Instinct  (2010) 4182 page views since published – All time ranking #5
2. Non Moral Nature: It is what it is (2010) 4616 page views since published – All time ranking #3
3. Brainwaves and Other Brain Measures (2011) 7941 page views since published – All time ranking #1
4. Happiness as Measured by GDP: Really? (2012) 1719 page views since published – All time ranking #8
5. IAT: Questions of Reliability and Validity  (2010) 2572 page views since published – All time ranking #6
6. Conspicuous Consumption & the Peacock’s Tail (2011) 7677 page views since published – All time ranking #2
7. Poverty is a Neurotoxin (2011) 960 page views since published – All time ranking #18
8. Are you a Hedgehog or a Fox?  (2010) 1702 page views since published – All time ranking #9
9. What Plato, Descartes, and Kant Got Wrong: Reason Does not Rule (2010) 1381 page views since published – All time ranking #12
10. Where Does Prejudice Come From?  (2011) 1625 page views since published – All time ranking #10

Rounding out the top ten All Time Most Popular Pieces are:

• Wicked! Things are NOT as they Seem (2012) 4485 page views since published – All time ranking #4
• Attribution Error (2010) 2263 page views since published – All time ranking #7

These top ranking articles represent the foundational issues that have driven me in my quest to understand how people think.   This cross section of my work is, in fact, a good starting point for those who are new to my blog.

There are several other 2013 posts that ranked outside this year’s top ten list; regardless, I believe they are important.  These other posts include:

1. Mind Pops: Memories from out of the Blue
2. Who Cheats More: The Rich or the Poor?
3. Crime, Punishment, and Entitlement: A Deeper Look
4. Cheaters
5. American Exceptionalism: I’m all for it!
6. Partisan Belief Superiority and Dogmatism as a Source of Political Gridlock

Maintaining relevance is an article, published in 2012, The Meek Shall Inherit The Earth: Our Microbiome, pertains to the collection of an estimated 100 trillion individual organisms (bacteria for the most part) thriving in and on your body that account for about three pounds of your total body weight (about the same weight as your brain).  These little creatures play a huge role in your physical and mental well being and we are just beginning to understand the extent of their reach.  Modern medicine in the future, will likely embrace the microbiotic ecosystem as a means of preventing and treating many illnesses (including treating some mental illnesses).  I have continued to update this piece with comments including links to new research on this topic.

Children of high socioeconomic status (SES) show more activity (dark green) in the prefrontal cortex (top) than do kids of low SES when confronted with a novel or unexpected stimulus. (Mark Kishiyama/UC Berkeley)

Although, not among the most popular articles this year, my pieces on the pernicious affects of poverty on child development from 2011 warrant ongoing attention.  If we truly wish to halt the cycle of poverty, then we need to devote early and evidenced based intervention services for children and families living in poverty.  As it turns out, poverty is a neurotoxin.  Knowing the information in this series should motivate us, as a society, to truly evaluate our current political and economic policies.

• Parenting May Matter: For Infants and the Economically Deprived 

• The Effects of Poverty on Brain Development 

• The Economic, Neurobiological, and Behavioral Implications of Poverty 

• Halting the negative Feedback Loop of Poverty 

• Poverty Preventing Preschools 

• Poverty is a Neurotoxin 

The bottom line:

The human brain, no matter how remarkable, is flawed in two fundamental ways.  First, the proclivities toward patternicity (pareidolia), hyperactive agency detection, and superstition, although once adaptive mechanisms, now lead to many errors of thought.  Since the age of enlightenment, when human-kind developed the scientific method, we have exponentially expanded our knowledge base regarding the workings of the world and the universe.  These leaps of knowledge have rendered those error prone proclivities unessential for survival.  Regardless, they have remained a dominant cognitive force.  Although our intuition and rapid cognitions (intuitions) have sustained us, and in many ways they still do, the subsequent everyday illusions impede us in important ways.

Secondly, we are prone to a multitude of cognitive biases that diminish and narrow our capacity to truly understand the world. Time after time I have written of the dangers of ideology with regard to its capacity to blindfold its disciples.  Often those blindfolds are absolutely essential to sustain the ideology.  And this is dangerous when truths and facts are denied or innocents are subjugated or brutalized.  As I discussed in Spinoza’s Conjecture:

 

“We all look at the world through our personal lenses of experience.  Our experiences shape our understanding of the world, and ultimately our understanding of [it], then filters what we take in.  The end result is that we may reject or ignore new and important information simply because it does not conform to our previously held beliefs.

Because of these innate tendencies, we must make additional effort to step away from what we believe to be true in order to discover what is indeed true.

The Hand of God as an example of pareidolia.

It is widely believed that as a society, we are heavily burdened by freeloaders who are content with living off the fruits of others’ labor. Inherent in this belief is the idea that the poor are more likely to be cheaters. This notion is core to the ideology that fuels the discontent of many on the conservative end of the political spectrum. I have recently written about cheating behavior in general, and how pervasive it is, particularly at the upper end of the economic spectrum. I have also written about corporate and white-collar crime and the egregious costs we all bare as a result of misconduct among the nation’s economic elite. When I sat down to write each of those two previous articles, my intent was to write something about a recent peer-reviewed paper that looked empirically at the relationship between cheating behavior and income level. The evidence substantiated in this series of studies challenges the belief that poor people are more inclined to cheat. In fact, the results turn this misconception upside down.

In this very interesting 2012 paper titled: Higher Social Class Predicts Increased Unethical Behavior, published in the Proceedings of the National Academy of Sciences (PNAS), the authors, Paul Piff, Daniel Stancato, Stephanie Côté, Rodolfo Mendoza-Denton, and Dacher Keltner empirically examine the relationship between relative wealth, propensity to engage in unethical behavior, and attitude about greed. Piff, et al. reviewed the relevant literature and hypothesized, based on a landslide of evidence, that affluent people, relative to low income people, will be more likely to engage in and condone unethical behavior and value greed. In their review of the literature they note that:

“Abundant resources and elevated rank allow upper-class individuals increased freedom and independence, giving rise to self-focused patterns of social cognition and behavior. Relative to lower-class individuals, upper-class individuals have been shown to be less cognizant of others and worse at identifying the emotions that others feel. Furthermore, upper-class individuals are more disengaged during social interactions — for example, checking their cell phones or doodling on a questionnaire — compared with their lower-class peers. Individuals from upper-class backgrounds are also less generous and altruistic. In one study, upper-class individuals proved more selfish in an economic game, keeping significantly more laboratory credits — which they believed would later be exchanged for cash — than did lower-class participants, who shared more of their credits with a stranger. These results parallel nationwide survey data showing that upper-class households donate a smaller proportion of their incomes to charity than do lower-class households. These findings suggest that upper-class individuals are particularly likely to value their own welfare over the welfare of others and, thus, may hold more positive attitudes toward greed.”

To test their hypotheses, these investigators devised seven studies to look at these relationships across a variety of contexts. Research subjects included more than 1,000 people from all walks of life. Studies 1 and 2 were naturalistic field studies whereby “Observers stood near the intersection, coded the status of approaching vehicles, and recorded [1] whether the driver cut off other vehicles by crossing the intersection before waiting their turn” and [2] “whether upper-class drivers are more likely to cut off pedestrians at a crosswalk.” Affluence was calibrated based on the make, age, and appearance of the vehicles driven – because vehicles have been established as a reliable indicator of a person’s “social rank and wealth.” People driving expensive (premium brands such as BMW, Lexus, Mercedes-Benz, etc.), late model (newish), and well cared for automobiles were deemed to be affluent – while those driving older, less expensive (i.e., Chevy, Dodge, etc.), and more poorly maintained automobiles, were deemed to be low income individuals.

Study 3 directly assessed the participant’s relative level of affluence and their subsequent proclivity toward a variety of unethical decisions (e.g., “participants read eight different scenarios that implicated an actor in unrightfully taking or benefiting from something, and reported the likelihood that they would engage in the behavior described“). Study 4 literally assessed whether there was a correlation between affluence and the willingness to take candy from a jar purportedly for children participating in a different study. Study 5 assessed the relationship between affluence and honesty in a role play involving a hypothetical scenario where participants were asked to engage in negotiations with a job candidate looking for long-term employment. The participants were told that the job they were filling was likely to be eliminated, and their honesty about sharing the instability of the job with applicants was assessed. Study 6 looked at actual cheating behavior on a game of chance “in which the computer presented them with one side of a six-sided die, ostensibly randomly, on five separate rolls. Participants were told that higher rolls would increase their chances of winning a cash prize and were asked to report their total score at the end of the game. In fact, die rolls were predetermined to sum up to 12. The extent to which participants reported a total exceeding 12 served as a direct behavioral measure of cheating.” The tendency to cheat on this game was also assessed as a function of affluence.

In each of these first six studies, the findings suggest that upper-income people, relative to low-income people, were statistically more likely to: (Study 1) cut off other drivers, (Study 2) disregard people in crosswalks, (Study 3) condone and report a likelihood to engage in similar unethical conduct, (Study 4) take candy from children, (Study 5) be dishonest in the role of hiring someone regarding the permanence of the position, and (Study 6) cheat on a game of chance. In addition, in studies 5 and 6, people of greater wealth were more likely to favor and value greed relative to their less affluent compatriots.

Study 7 was a bit more complicated and assessed the degree to which attitudes toward greed were responsive to pro-cheating priming. Individuals from across both high and low income groups were assigned to one of two conditions: (a) a greed neutral activity (listing three things they did that day), or (b) pro-greed priming (an activity where they were asked to list several positive attributes of greed). Participants were assessed regarding their attitude toward greed and self-reported propensity to engage in unethical behavior at work. Regardless of level of affluence, those exposed to pro-greed priming were more likely to engage in unethical behavior. Attitude about greed seems to play a crucial role in driving ethical behavior. The authors note that: “… upper-class individuals’ more favorable attitudes toward greed can help explain their propensity toward unethical behavior.” They also assert that throughout their lives, richer people are more likely to be educated and primed to be assertive with regard to accomplishing their own goals. Poorer people generally have negative feelings about greed and are thus less likely to behave unethically.

In these naturalistic and laboratory studies, affluent individuals were more likely to cheat or act unethically than were poor people, and to have positive feelings about greed. These results generalized across self-reported measures of affluence as well as objective measures. The implications of these findings are not to suggest that affluent people, as a whole, are unethical and greedy – nor does it suggest that the poor are uniformly ethical and less greedy. The bottom-line here is that relative to poor people, affluent people have a greater likelihood of engaging in unethical behavior and endorsing greed. These conclusions contrast a popular misconception about the poor and expand how we should think about cheating behavior in general.

It is important to note that this study will need replication in order to become firmly established; however, these findings are unidirectional and unambiguous. They are also consistent with what has been verified in the literature to date. Although there are examples of extraordinary philanthropy by affluent people such as Warren Buffet and Bill Gates, there are many other examples of systematic corruption and crime among the economic elite. On the other end of the spectrum there are those poor individuals who proudly game the system in such a way to take more than they contribute. I hear stories of such individuals with such regularity that these narratives take on the feel of urban legend. I routinely work with hard working individuals from the lowest end of the economic spectrum and in my more than 20 years of exposure to this population, I have only come across one family that fits this description. Meanwhile, my professional colleagues have to devote huge amounts of time to documenting Early Intervention and Preschool Services as a result of Medicaid Fraud perpetrated by affluent and unethical service providers who bill for services never rendered. In other words, my extensive personal anecdotes align with the findings of this series of studies.

It seems to me that it is indeed time to challenge the meme that poor people are lazy, freeloading, cheaters. At the same time it seems prudent to open our eyes to the misconduct of the affluent. The evidence certainly supports such a conclusion. This brings to mind a quote by John Adams:

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”

Reference:

Piff, P. K., Stancato, D. M., Côté, S., Mendoza-Denton, R., & Keltner, D. (2012). Higher social class predicts increased unethical behavior. Proceedings of the National Academy of Sciences (PNAS).

Nobody likes a cheater.  Such acts may stir deep feelings of loathing that erode trust and have ruinous consequences with regard to reputation and relationship.  It’s one of those things that is hard to overcome.  I’m not just talking about infidelity here.  I’m referring to a broader type that does include infidelity, but also includes things like pilfering, speeding, lying about one’s age, and other forms of dishonesty that benefit you at a cost to someone else.  Irrespective of the potential social costs, most people, given the opportunity, with little threat of detection, will and DO cheat.  Be honest with yourself here.  This shouldn’t be surprising.  What is surprising is the fact that altruism, or selflessness, the behavioral opposite of cheating, exists at all.

By virtue of the fact that human beings are the product of millions of years of evolution by means of natural selection, we are imbued with a selfishness that is hard to deny.   As distasteful as this may be, it is nonetheless true.  We are compelled by our selfish genes to survive, thrive, and replicate.  Within this context, cheating and selfishness make perfect sense and altruism makes little.  Yet we do exhibit altruism.  Why is this?  Steven Pinker wrote in How the Mind Works (1997, p 337):

Natural selection does not select public-mindedness; a selfish mutant would quickly out reproduce its altruistic competitors.  Any selfless behavior in the natural world needs a special explanation.  One explanation is reciprocation: a creature can extend help in return for help expected in the future.  But favor-trading is always vulnerable to cheaters.  For it to have evolved, it must be accompanied by a cognitive apparatus that remembers who has taken and ensures that they give in return.  The evolutionary biologist Robert Trivers had predicted that humans, the most conspicuous altruists in the animal kingdom, should have evolved a hypertrophied cheater-detection algorithm.

And indeed we have – this cognitive algorithm drives the emotional response we have toward cheaters.  Human beings are one of the few species that engage in altruism outside of their kin.  This is referred to as Reciprocal Altruism and clear links have been established between the demands of this type of social exchange and the origins of many human emotions (e.g., liking, anger, gratitude, sympathy, and guilt).  Pinker (1997) notes that “Collectively they make up a large part of the moral sense.”  We are inclined to engage in reciprocal altruism because we have the cognitive capacity to compute cost benefit analyses and the emotional capacity to respond in ways to encourage gains and discourage losses.  We have to be able to remember favors given and received and we must effectively calibrate reciprocation.  It is a delicate and intricate dance that if kept in balance does result in both individual and group benefits.

When benefits or favors are traded, both parties profit as long as the value of what they receive is greater than the value of what they give up.  Because most favors are not exchanged at the same time and they likely vary in degree of effort and value, a calculus is needed to keep the exchange in reciprocal balance.  This balance can tip in either direction and people “remember past treacheries or good turns and play accordingly.  They can feel sympathetic and extend good will,  feel aggrieved and seek revenge,  feel grateful and return a favor, or feel remorseful and make amends.”  (Pinker, 1997 p. 503).

It is important to note that there is a different calculus, a more flexible and enduring one that plays out in friendships and kin based, as well as intimate relationships.  “Tit-for-tat does not cement a friendship; it strains it.  Nothing can be more awkward for good friends than a business transaction between them, like the sale of a car.  The same is true for one’s best friend in life, a spouse.  The couples who keep close track of what each other has done for the other are the couples who are the least happy.” (Pinker, 1997 p. 507).  Healthy close relationships come with a feeling of indebtedness and spontaneous pleasure associated with contribution instead of anticipation of in-kind repayment.  This is true to a point however, and if one person takes too much, without giving back, the relationship is likely doomed.  In such healthy relationships, there tends to be compassionate and enduring love, free of ledgers, time cards, and cash register receipts.

So, we are hyper-vigilant cheater detectors, and our scrutiny of others’ cheating behavior varies based on a number of variables.  Certainly kinship and friendship play a part in our perception.  But in addition to what we understand about reciprocal altruism and cheating, we also know that our cheater detectors tend to be finely focused on people who are different from us.  Those outside our identified social groups (tribal moral communities) are scrutinized much more closely than those inside our circles – and they are examined with much more resolution than we direct toward our own conduct and toward those in the in-group.

This inclination is a byproduct of the universal and innate tendencies to be much more forgiving toward one’s own mistakes and more judgmental towards others’ transgressions.  This is the self-serving bias.  We also have a tendency to see exactly what we expect to see and miss or ignore things that don’t fit within our expectations.  These tendencies are explained by our inclinations toward confirmation bias and inattentional blindness.   Finally, there is the fundamental attribution error which leads us to blame others’ transgression on their internal personal attributes while we ignore important and contributing external environmental circumstances.

That is a lot to take in, but suffice it to say that we are much more likely to give ourselves and those similar to us, a break when it comes to cheating.  We are much less forgiving toward outsiders, particularly those that seem to hold different values, norms, or customs.  This is even true within a society where there is, to a substantial extent, social cohesion; but, where differences exist with regard to beliefs or ideologies.  These truths are self evident – just look at the rancor between Liberals and Conservatives in the United States.  But it also helps explain the racial and ethnic tensions within and across this country toward Hispanics, African Americans, Muslims, and particularly, the poor.

Currently, much blame for this country’s financial woes has been heaped onto the poor due to “entitlement spending.”  These recipients of social safety net spending are often defined as cheaters and freeloaders.  There is no doubt that there is, and shall forever be, a small contingent of citizens who are completely comfortable with getting a free ride.  It would be foolish to argue otherwise.  This is a legitimate problem.

On the other hand, I suggest that we must be willing to acknowledge the prevalence of cheating across the economic spectrum and refocus our microscope on the costs of cheating by corporations, white collar criminals, and those whom we tend to give a pass because they are similar to us.  In my previous article, Crime & Punishment and Entitlements: A Deeper Perspective, I discussed the egregious costs of our prejudicial criminal justice system and the entitlement mentality rampant in corporations and those at the upper end of the economic spectrum.  I submitted that article with the intent of opening eyes to the wider hypocrisy that pervades this country and the erroneously sharpened focus on a small fraction of our fellow “freeloading” countrymen.  If you believe that the infamous 47% of Americans are truly freeloaders, I suggest that you take an objective look at the data from that group (from FactCheck.org):

• 22 percent [or around 47% of the 47%] receive senior tax benefits — the extra standard deduction for seniors, the exclusion of a portion of Social Security benefits, and the credit for seniors. Most of them are older people on Social Security whose adjusted gross income is less than $25,000.
• 15.2 percent [or 32% of the 47%] receive tax credits for children and the working poor. That includes the child tax credit and the earned income tax credit. The child tax credit was enacted under Democratic President Bill Clinton, but it doubled under Republican President George W. Bush. The earned income tax credit was enacted under Republican President Gerald Ford, and was expanded under presidents of both parties. Republican President Ronald Reagan once praised it as “one of the best antipoverty programs this country’s ever seen.” As a result of various tax expenditures, about two thirds of households with children making between $40,000 and $50,000 owed no federal income taxes.
• The rest [21% of the 47%] ended up owing no federal income tax due to various tax expenditures such as education credits, itemized deductions or reduced rates on capital gains and dividends. Most of this group are in the middle to upper income brackets. In fact, the TPC [Tax Policy Center] estimates there are about 7,000 families and individuals who earn $1 million a year or more and still pay no federal income tax.

According to the US Federal Budget, in 2012 we spent about $187 billion on traditional welfare programs (e.g., food and housing supplementation and Temporary Assistance for Needy Families), accounting for 5% of the total $3.7 trillion budget.   An additional $333 billion (or 8.9% of the budget) was spent on Medicaid (healthcare for the poor and disabled).  In total about fourteen cents (14¢) of every tax dollar you pay goes to the poor.

For relative comparison, in 2012, $925.2 billion (or 25% of the 2012 budget or 25¢ of every tax dollar) went to defense, $805.6 billion (21.6% or about 22¢ of every tax dollar) went out in Social Security income for seniors citizens, $492.3 billion (13.2% or 13¢ of each tax dollar) went to Medicare (healthcare for our seniors), and $121.1 billion (3.2% or 3¢) went toward education.  The remaining expenses include unemployment, building roads and bridges, government operating costs, public safety, government supported research, interest payments, and so on.

For further comparison, according to a report from the Conservative think tank The Cato Institute, in 2006 $92 billion (3.5% of the 2006 budget or about 4¢ of every tax dollar) went to corporate subsidies.  This “Corporate Welfare” was defined by Cato as “any federal spending program that provides payments or unique benefits and advantages to specific companies or industries.”   Cato indicated that corporations such as “Boeing, Xerox, IBM, Motorola, Dow Chemical, General Electric and others” were recipients of your tax dollars and Cato further noted that such companies “have received millions in taxpayer-funded benefits through programs like the Advanced Technology Program and the Export-Import Bank.”  Additionally, it should be noted, that between 2002 and 2008, tax breaks totaling $53.9 billion and $16.3 billion in direct spending for a total of $70.2 billion were directed to companies in the fossil fuel industries (e.g, Exxon-Mobile, Shell, Chevron).

Source: http://awesome.good.is/transparency/web/1012/subsidize-this/flat.html

Clearly that 14¢ of every tax dollar has triggered much contempt in a significant proportion of our population.  Many outspoken Conservative and Tea Party folks heavily focus on the this portion of the budget and the “entitled” individuals who allegedly, willingly and lazily, live off your hard earned money.  We must acknowledge that these angered individuals are endowed with this tendency as a natural result of our altruistic tendencies and our subsequent finely tuned cheater detection neural software.  And I submit, that this software has been hijacked or perhaps even hacked by the those whose gains are ignored as long as you focus your anger at the poor.  It serves the very specific financial and security interests of the wealthy when Americans direct such anger toward those at the bottom of the spectrum rather than those at the top.  Next time you come across an economic “freeloader” I challenge you to really think about the cheating that occurs across the spectrum, and ask yourself whether there is a chance that your anger has been manipulated and perhaps even misdirected.  Coming together on this issue will likely result in more targeted and effectual reforms that will benefit us all.  The splinters that currently exist keep our collective eyes off the ball.  The result is an ever widening disparity between the wealthiest 1% and the rest of us.

The true costs of crime are difficult to calculate.  Different types of crimes inflict substantially varying societal costs.  Violent crimes alone cost Americans about $50 billion dollars a year according to a report from the Center for American Progress.¹  It is estimated that the costs of pain and suffering borne by the victims of violence are several times higher than this $50 billion figure.¹

There is no doubt that violent crime in the US is a major problem.  Murder is certainly not a uniquely American act, but as in other things, we Americans excel at it.  The U.S. murder rate is nearly three times the rate that it is in Canada and more than four times the rate that it is in the United Kingdom.¹  And although violent crime captures our attention and makes us fear one another, its relative economic impact is perhaps one half the cost of so called “White-Collar” crimes committed by our affluent brethren.   Federal Bureau of Investigation (FBI) estimates of white-collar crime come in at $300 billion dollars a year.²  Bernie Madoff’s Ponzi Scheme alone was estimated to cost his investors somewhere in the range of $50 billion dollars.³  And what was the cost to the American Taxpayers for the 2008 Financial Crisis?  An article in Bloomberg Businessweek tallies the total costs to American taxpayers at $12.8 trillion.  What portion of that cost could be attributed to white-collar crime?

Granted, the crisis was caused by numerous factors including pressures in the 1990s on Fannie Mae and Freddie Mac from Clinton Administration officials to increase national home ownership rates,⁴ as well as the 1999 repeal of the Glass-Steagall Act (eliminating banking barriers allowing banks to be both investment and depository banks).  But opaquely risky mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs) were sold around the world with little understanding of the associated risks.  These CDOs and MBSs essentially bundled bad debts in the form of subprime mortgages that were sold to people for homes that they could not afford.  Then the housing bubble burst and upwards of 27 million mortgages⁵ had been issued for homes whose values were well below the debt obligation and ballooning payments forced many Americans to default.  This perfect storm of contributing factors was a product of greed, deregulation, lack of understanding of risk due to the complex nature of financial derivatives, and so on.  But it was also, as seems evident today, a product of criminal behavior.  In a 2010 New York Times article by Peter Henning it was reported that:

 

At a hearing before the Senate Judiciary Committee last week, Senator Ted Kaufman of Delaware summed up the frustration on Capitol Hill with the lack of any identifiable villains for the financial troubles of the last two years. “We have seen very little in the way of senior officer or boardroom-level prosecutions of the people on Wall Street who brought this country to the brink of financial ruin,” Mr. Kaufman said. “Why is that?”

 

Judge Ellen Segal Huvelle of the Federal District Court in Washington expressed similar frustration with the settlement between the Securities and Exchange Commission and Citigroup over the bank’s misstatements in 2007 regarding its exposure to subprime mortgage-backed securities. In its complaint, the S.E.C. refers repeatedly to “senior management” receiving information about increased losses in its portfolio from problems with subprime mortgages, but none were named in its complaint.

The United State’s prisons are filled with “criminals” because politicians have to take a “tough on crime” stand in order to get elected by their constituents, us; however, we must take a closer look at who in particular resides in our prisons and assess to what degree these white collar and corporate criminals are actually held to account.

According to a report from the U.S. Bureau of Justice Statistics (BJS), at years end in 2011 over 6,977,700 adults were under correctional supervision or in jail or in prison.   About 4,814,200 offenders were supervised in the community on probation or parole.   About 2,239,800 were incarcerated in state or federal prisons or local jails.   According to a report from the Office of Juvenile Justice and Delinquency Prevention in 2010, just under 71,000 juvenile offenders were held in residential placement facilities. These are big numbers, but let’s put them in relative terms.  From a recent BJS Report:

• About 2.9% of adults in the U.S. (or 1 in every 34 adults) were under some form of correctional supervision at year end 2011, a rate comparable to 1998 (1 in every 34).
• About 1 in every 107 adults was incarcerated in prison or jail.

How does this compare to other nations?  Our incarceration rates far outpace any other modern industrial nation and are only comparable to the pre World War II rates in the Soviet Union’s Gulag system.  From the National Council on Crime and Delinquency Fact Sheet (2006):

• The US rate of incarceration is the highest in the world.
• The US has less than 5% of the world’s population but over 23% of the worlds incarcerated people. 
• Compared to the world’s other most populous countries, the 2.2 million people currently incarcerated in the US is 153% higher than Russia, 505% higher than Brazil, 550% higher than India, and over 2,000% higher than Indonesia, Bangladesh, or Nigeria (ICPS, 2006). 

According to a breakdown of the Federal and State Prisoner Population from ProCon.org, in 2008 violent criminals accounted for about 47% of the total State and Federal Prison Population, while drug offenders constituted 22%, property thieves made up 17%, drunk drivers, immigration offenders, and other public order offenders accounted for 12%, and juveniles and other unspecified offenders made up the remaining 1%.  These numbers were derived from the U.S. Bureau of Justice Statistics.  There is no category for white-collar crime; although, within the property crime statistics, at the Federal level, there is a category listed as fraud. But even in these Federal Prisons, the number of people convicted of fraud is a fraction of 6%, or well under 11,000 Federal Penitentiary inhabitants.

Now let’s look at incarceration rates by race and ethnicity.  Again from the Bureau of Justice Statistics, in 2010, White males were incarcerated at the rate of 678 inmates per 100,000 U.S. residents of the same race and gender.  Using the same relative comparison groups, Hispanic males were incarcerated at the rate of 1,755 inmates per 100,000 Hispanic males and black (non-Hispanic) males were incarcerated at the rate of 4,347 inmates per 100,000 black males.  African Americans (13% of the US Population) make up about 40% of the prison population and Hispanics (16.7% of the US Population) account for about 20% according to 2010 US Census Data.  These rates are hugely disproportionate.  Let’s contrast this data to the following information on white-collar crime from the U.S. Department of Justice,  Federal Bureau of Investigation, Criminal Justice Information Services (CJIS) Division:

 

The [National Incident Based Reporting System] (NIBRS) data for 1997 through 1999 show white-collar crime offenders are, on average, in their late-twenties to early-thirties, which is only slightly older than most other offenders captured in NIBRS. The majority of white-collar crime offenders are white males, except for those who committed embezzlement. However, in comparison to offenders committing property crimes, there is a higher proportion of females committing these white-collar offenses.

 

…much of the investigation and regulation of corporate white-collar crime is left to regulatory agencies and professional associations (American Medical Association, American Bar Association, etc.) and not to the police or other law enforcement agencies. White-collar offenses, in these cases, probably will be reported to the [Unifrom Crime Reports] (UCR) Program only if criminal charges are filed, which is extremely rare in instances of corporate crime. Corporate crime is usually handled within the regulatory agency (sanctions, cease-and-desist orders, etc.), or corporations are made the subject of civil cases.

A quote from Noam Chomsky seems appropriate here:

 

“For the powerful, crimes are those that others commit.”

 

So, is it that Corporate Crime and other forms of white-collar crime fall largely outside the scope of the law?  Not entirely.  Individuals like Bernie Madoff, whose crimes cost his wealthy customers a great deal, are in prison.  But what about Corporate criminals?  Here is a case in point recently reported by Christina Rexrode and Larry Neumeister in the Associated Press, where corporate criminals are seemingly given a GET OUT OF JAIL FREE card.

 

When the Justice Department announced its record $1.9 billion settlement against British bank HSBC last week, prosecutors called it a powerful blow to a dysfunctional institution accused of laundering money for Iran, Libya and Mexico’s murderous drug cartels.

 

But to some former federal prosecutors, it was only the latest case of the government stopping short of bringing criminal money laundering charges against a big bank or its executives, at least in part on the rationale that such prosecutions could be devastating enough to cause such banks to fail.

 

They say it sounds a lot like the “too big to fail” meme that kept big but sickly banks alive on the support of taxpayer-funded bailouts. In these cases, they call it, “Too big to jail.”

Something seems askew here.  These disproportionate incarceration rates go hand in glove with the prejudice directed toward the poor and non-whites in our communities.  How is it that American’s give corporate criminals a pass and at the same time celebrate liberty and freedom while incarcerating the poor and our minority citizens at rates that typify the Soviet Gulag?  This all drips of palpable hypocrisy.  The economic costs alone seem to justify a colossal reorganization of our priorities.

As Conservatives and Liberals battle contentiously over important issues, it seems to me that the vitriolic banter just keeps the American eye off the factors that truly harm us.  A couple points are clear to me.  First, as long as corporations have legal rights as individuals, but limited accountability, and secondly, as long as money equates to political power, things will not change.  As we bicker over ideological perspectives that define the political poles, and as Americans direct blame and scorn toward the people at the lowest end of the economic spectrum, we miss the true essence of who is entitled and who is TRULY destroying this great nation.

Footnotes:

1. Shapiro, R. J., and Hassett, K. A., (2012).   The Economic Benefits of Reducing Violent Crime: A Case Study of 8 American Cities.  Center for American Progress.

2. Cornell Law School. White Collar Crime

3. Lenzner, R. (2008).   Bernie Madoff’s $50 Billion Ponzi Scheme. Forbes.com

4. Holmes, Steven A. (September 30, 1999). “Fannie Mae Eases Credit To Aid Mortgage Lending”. The New York Times

5. Wallison, P. (2011).  The True Story of the Financial Crisis.  The American Spectator: spectator.org