How can we stop rewarding psychopathy?

Oct 1, JDN 24578028

A couple of weeks ago The New York Times ran an interesting article about how entrepreneurs were often juvenile delinquents, who then often turn into white-collar criminals. They didn’t quite connect the dots, though; they talked about the relevant trait driving this behavior as “rule-breaking”, when it is probably better defined as psychopathy. People like Martin Shkreli aren’t just “rule-breakers”; they are psychopaths. While only about 1% of humans in general are psychopaths, somewhere between 3% and 4% of business executives are psychopaths. I was unable to find any specific data assessing the prevalence of psychopathy among politicians, but if you just read the Hare checklist, it’s not hard to see that psychopathic traits are overrepresented among politicians as well.

This is obviously the result of selection bias; as a society, we are systematically appointing psychopaths to positions of wealth and power. Why are we doing this? How can we stop?

One very important factor here that may be especially difficult to deal with is desire. We generally think that in a free society, people should be allowed to seek out the sort of life they want to live. But one of the reasons that psychopaths are more likely to become rich and powerful is precisely that they want it more.

To most of us, being rich is probably something we want, but not the most important thing to us. We’d accept being poor if it meant we could be happy, surrounded by friends and family who love us, and made a great contribution to society. We would like to be rich, but it’s more important that we be good people. But to many psychopaths, being rich is the one single thing they care about. All those other considerations are irrelevant.

With power, matters are even more extreme: Most people actually seem convinced that they don’t want power at all. They associate power with corruption and cruelty (because, you know, so many of the people in power are psychopaths!), and they want no part of it.

So the saying goes: “Power tends to corrupt, and absolute power corrupts absolutely.” Does it, now? Did power corrupt George Washington and Abraham Lincoln? Did it corrupt Mahatma Gandhi and Nelson Mandela? I’m not saying that any of these men were without flaws, even serious ones—but was it power that made them so? Who would they have been, and more importantly, what would they have done, if they hadn’t had power? Would the world really have been better off if Abraham Lincoln and Nelson Mandela had stayed out of politics? I don’t think so.

Part of what we need, therefore, is to convince good people that wanting power is not inherently bad. Power just means the ability to do things; it’s what you do that matters. You should want power—the power to right wrongs, mend injustices, uplift humanity’s future. Thinking that the world would be better if you were in charge not only isn’t a bad thing—it is quite likely to be true. If you are not a psychopath, then the world would probably be better off if you were in charge of it.

Of course, that depends partly on what “in charge of the world” even means; it’s not like we have a global government, after all. But even suppose you were granted the power of an absolute dictatorship over all of humanity; what would you do with that power? My guess is that you’d probably do what I would do: Start by using that power to correct the greatest injustices, then gradually cede power to a permanent global democracy. That wouldn’t just be a good thing; it would be quite literally and without a doubt the best thing that ever happened. Of course, it would be all the better if we never built such a dictatorship in the first place; but mainly that’s because of the sort of people who tend to become dictators. A benevolent dictatorship really would be a wonderful thing; the problem is that dictators almost never remain benevolent. Dictatorship is simply too enticing to psychopaths.

And what if you don’t think you’re competent enough in policy to make such decisions? Simple: You don’t make them yourself, you delegate them to responsible and trustworthy people to make them for you. Recognizing your own limitations is one of the most important differences between a typical leader and a good leader.

Desire isn’t the only factor here, however. Even though psychopaths tend to seek wealth and power with more zeal than others, there are still a lot of good people trying to seek wealth and power. We need to look very carefully at the process of how we select our leaders.

Let’s start with the private sector. How are managers chosen? Mainly, by managers above them. What criteria do they use? Mostly, they use similarity. Managers choose other managers who are “like them”—middle-aged straight White men with psychopathic tendencies.

This is something that could be rectified with regulation; we could require businesses to choose a more diverse array of managers that is more representative of the population at large. While this would no doubt trigger many complaints of “government interference” and “inefficiency”, in fact it almost certainly would increase the long-term profitability of most corporations. Study after study after study shows that increased diversity, particularly including more equal representation of women, results in better business performance. A recent MIT study found that switching from an all-male or all-female management population to a 50-50 male/female split could increase profits by as much as forty percent. The reason boards of directors aren’t including more diversity is that they ultimately care more about protecting their old boys’ club (and increasing their own compensation, of course) than they do about maximizing profits for their shareholders.

I think it would actually be entirely reasonable to include regulations about psychopathy in particular; designate certain industries (such as lobbying and finance; I would not include medicine, as psychopaths actually seem to make pretty good neurosurgeons!) as “systematically vital” and require psychopathy screening tests as part of their licensing process. This is no small matter, and definitely does represent an incursion into civil liberties; but given the enormous potential benefits, I don’t think it can be dismissed out of hand. We do license professions; why shouldn’t at least a minimal capacity for empathy and ethical behavior be part of that licensing process?

Where the civil liberty argument becomes overwhelming is in politics. I don’t think we can justify any restrictions on who should be allowed to run for office. Frankly, I think even the age limits should be struck from the Constitution; you should be allowed to run for President at 18 if you want. Requiring psychological tests for political office borders on dystopian.

That means we need to somehow reform either the campaign system, the voting system, or the behavior of voters themselves.

Of course, we should reform all three. Let’s start with the voting system itself, as that is the simplest: We should be using range voting, and we should abolish the Electoral College. Districts should be replaced by proportional representation through reweighted range voting, eliminating gerrymandering once and for all without question.

The campaign system is trickier. We could start by eliminating or tightly capping private and corporate campaign donations, and replace them with a system similar to the “Democracy Vouchers” being tested in Seattle. The basic idea is simple and beautiful: Everyone gets an equal amount of vouchers to give to whatever candidates they like, and then all the vouchers can be redeemed for campaign financing from public funds. It’s like everyone giving a donation (or monetary voting), but everyone has the same amount of “money”.

This would not solve all the problems, however. There is still an oligopoly of news media distorting our political discourse. There is still astonishingly bad journalism even in our most respected outlets, like the way the New York Times was obsessed with Comey’s letter and CNN’s wall-to-wall coverage of totally unfounded speculation about a missing airliner.

Then again, CNN’s ratings skyrocketed during that period. This shows that the problems run much deeper than a handful of bad journalists or corrupt media companies. These companies are, to a surprisingly large degree, just trying to cater to what their audience has said it wants, just “giving the people what they want”.

Our fundamental challenge, therefore, is to change what the people want. We have to somehow convince the public at large—or at least a big enough segment of the public at large—that they don’t really want TV news that spends hours telling them nothing and they don’t really want to elect the candidate who is the tallest or has the nicest hair. And we have to get them to actually change the way they behave accordingly.

When it comes to that part, I have no idea what to do. A voting population that is capable of electing Donald Trump—Electoral College nonsense notwithstanding, he won sixty million votes—is one that I honestly have no idea how to interface with at all. But we must try.

A tale of two storms

Sep 24, JDN 2458021

There were two severe storm events this past week; one you probably heard a great deal about, the other, probably not. The first was Hurricane Irma, which hit the United States and did most of its damage in Florida; the second was Typhoon Doksuri, which hit Southeast Asia and did most of its damage in Vietnam.

You might expect that this post is going to give you more bad news. Well, I have a surprise for you: The news is actually mostly good.

The death tolls from both storms were astonishingly small. The hurricane is estimated to have killed at least 84 people, while the typhoon has killed at least 26. This result is nothing less than heroism. The valiant efforts of thousands of meteorologists and emergency responders around the world has saved thousands of lives, and did so both in the wealthy United States and in impoverished Vietnam.

When I started this post, I had expected to see that the emergency response in Vietnam would be much worse, and fatalities would be far higher; I am delighted to report that nothing of the sort was the case, and Vietnam, despite their per-capita GDP PPP of under $6,000, has made emergency response a sufficiently high priority that they saved their people just about as well as Florida did.

To get a sense of what might have happened without them, consider that 1.5 million homes in Florida were leveled by the hurricane, and over 100,000 homes were damaged by the typhoon. Vietnam is a country of 94 million people. Florida has a population of 20 million. (The reason Florida determines so many elections is that it is by far the most populous swing state.) Without weather forecasting and emergency response, these death figures would have been in the tens of thousands, not the dozens.

Indeed, if you know statistics and demographics well, these figures become even more astonishing: These death rates were almost indistinguishable from statistical noise.

Vietnam’s baseline death rate is about 5.9 per 1,000, meaning that they experience about 560,000 deaths in any given year. This means that over 1500 people die in Vietnam on a normal day.

Florida’s baseline death rate is about 6.6 per 1,000, actually a bit higher than Vietnam’s, because Florida’s population skews so much toward the elderly. Therefore Florida experiences about 130,000 deaths per year, or 360 deaths on a normal day.

In both Vietnam and Florida, this makes the daily death probability for any given person about 0.0017%. A random process with a fixed probability of 0.0017% over a population of n people will result in an average of 0.0017n events, but with some variation around that number. The standard deviation is actually sqrt(p(1-p)n) = 0.004 sqrt(n). When n = 20,000,000 (Florida), this results in a standard deviation of 18. When n = 94,000,000 (Vietnam), this results in a standard deviation of 40.

This means that the 26 additional deaths in Vietnam were within one standard deviation of average! They basically are indistinguishable from statistical noise. There have been over a hundred days in Vietnam where an extra 26 people happened to die, just in the past year. Weather forecasting took what could have been a historic disaster and turned it into just another bad day.

The 84 additional deaths in Florida are over four standard deviations away from average, so they are definitely distinguishable from statistical noise—but this still means that Florida’s total death rate for the year will only tick up by 0.6%.

It is common in such tragedies to point out in grave tones that “one death is too many”, but I maintain that this is not actually moral wisdom but empty platitude. No conceivable policy is ever going to reduce death rates to zero, and the people who died of heart attacks or brain aneurysms are every bit as dead as the people who died from hurricanes or terrorist attacks. Instead of focusing on the handful of people who died because they didn’t heed warnings or simply got extraordinarily unlucky, I think we should be focusing on the thousands of people who survived because our weather forecasters and emergency responders did their jobs so exceptionally well. Of course if we can reduce the numbers even further, we should; but from where I’m sitting, our emergency response system has a lot to be proud of.

Of course, the economic damage of the storms was substantially greater. The losses in destroyed housing and infrastructure in Florida are projected at over $80 billion. Vietnam is much poorer, so there simply isn’t as much infrastructure to destroy; total damage is unlikely to exceed $10 billion. Florida’s GDP is $926 billion, so they are losing 8.6%; while Vietnam’s GDP is $220 billion, so they are still losing 4.5%. And of course the damage isn’t evenly spread across everyone; those hardest hit will lose perhaps their entire net wealth, while others will feel absolutely nothing.

But economic damage is fleeting. Indeed, if we spend the government money we should be, and take the opportunity to rebuild this infrastructure better than it was before, the long-run economic impact could be positive. Even 8.6% of GDP is less than five years of normal economic growth—and there were years in the 1950s where we did it in a single year. The 4.6% that Vietnam lost, they should make back within a year of their current economic growth.

Thank goodness.

Building a wider tent, revisited

Sep 17, JDN 2458014

At a reader’s suggestion, I am expanding upon the argument I made a few weeks ago that political coalitions are strongest when they are willing to accept some disagreement. I made that argument with numbers, which is likely to convince someone like me; but I know that many other people don’t really think that way, so it may help to provide some visuals as well.

60% of this rectangle is filled in red.

Rectangle_1

This represents the proportion of the population that agrees with you on some issue. For concreteness but to avoid making this any more political than it already is, I’m going to pick silly issues. So let’s have this first issue be about which side of the road we should drive on. Let’s say your view is that we should drive on the right. 60% of people agree that we should drive on the right. The other 40% think we should drive on the left.

Now let’s consider another issue. Let’s say this one is about putting pineapples on pizza. You, and 60% of people, agree that pineapples should not be put on pizza. The other 40% think we should put pineapples on pizza.

For now, let’s assume those two issues are independent, that someone’s opinions on driving and pizza are unrelated. Then we can fill 60% of the rectangle in blue, but it should be a perpendicular portion because the two issues aren’t related:

Rectangle_2

Those who agree with you on driving but not pizza (that would include me, by the way) are in red, those who agree with you on pizza but not driving are in blue, those who agree with you on both are in purple, and those who disagree with you on both are in white. You should already be able to see that less than half the population agrees with you on both issues, even though more than half agrees on each.

Let’s add a third issue, which we will color in green. This one can be the question of whether Star Trek is better than Star Wars. Let’s say that 60% of the population agrees with you that Star Trek is better, while 40% think that Star Wars is better. Let’s also assume that this is independent of opinions on both driving and pizza.

Rectangle_3

This is already starting to get unwieldy; there are now eight distinct regions. The white region (8) is comprised of people who disagree with you on everything. The red (6), blue (4), and green (7) regions each have people agree with you on exactly one issue. The blue-green (3), purple (2), and brown (5) regions have people agree with you on two issues. Only those in the dark-green region (1) agree with you on everything.

As you can see, the proportion of people who agree with you on all issues is fairly small, even though the majority of the population agrees with you on any given issue.

If we keep adding issues, this effect gets even stronger. I’m going to change the color-coding now to simplify things. Now, blue will indicate the people who agree with you on all issues, green the people who agree on all but one issue, yellow the people who agree on all but two issues, and red the people who disagree with you on three or more issues.

For three issues, that looks like this, which you can compare to the previous diagram:

Rectangle_4

Now let’s add a fourth issue. Let’s say 60% of people agree with you that socks should not be worn with sandals, but 40% think that socks should be worn with sandals. The blue region gets smaller:

Rectangle_5

How about a fifth issue? Let’s say 60% of people agree with you that cats are better than dogs, while 40% think that dogs are better than cats. The blue region continues to shrink:

Rectangle_6

How about a sixth issue?

Rectangle_7

And finally, a seventh issue?

Rectangle_8

Now the majority of the space is covered by red, meaning that most of the population disagrees with you on at least three issues.

To recap:

By the time there were two issues, the majority of the population disagreed with you on at least one issue.

By the time there were four issues, the majority of the population disagreed with you on at least two issues.

By the time there were seven issues, the majority of the population disagreed with you on at least three issues.

This despite the fact that the majority of the population always agrees with you on any given issue!

If you only welcomed people into your coalition who agree on every single issue (the blue region), you wouldn’t win election if there were even two issues. If you only welcomed those who disagree on at most one (blue or green), you’d stop winning if there were at least four issues. And if there were at least seven issues, you couldn’t even win by allowing those who disagree on at most two issues (blue, green, yellow).

Now, this argument very much does rely upon the different opinions being independent, which in real politics is not the case. So let’s introduce some correlations and see how this changes the result.

Suppose that once someone agrees with you about driving on the right side of the road, they are 90% likely to agree on pizza, Star Trek, sandals, and cats.

Rectangle_9
That makes things look a lot better for you; by including one level of disagreement, you could dominate every election. But notice that even in this case, if you exclude all disagreement, you will continue to lose elections.

With enough issues, even with very strong correlations you can get the same effect. Suppose there are 20 issues, and if you agree on the first one, there is a 99% chance you’ll agree on each of the others. You are still only getting about half the electorate if you don’t allow any disagreement! Due to the very high correlation, if someone disagrees with you on a few things, they usually disagree with you on many things; yet you’re still better off including some disagreement in your coalition.

Rectangle_10

Obviously, you shouldn’t include people in your coalition who actively oppose its core mission. Even if they aren’t actively trying to undermine you, at some point, the disagreement becomes so large that you’ve got to cut them loose. But in a pluralistic democracy, ideological purism is a surefire recipe for electoral failure. You need to allow at least some disagreement.

This isn’t even getting into the possibility that you might be wrong about some issues, and by including those who disagree with you, you may broaden your horizons and correct your mistakes. I’ve thus far assumed you are completely correct and in the majority on every single issue, and yet you still can’t win elections with complex policy mixes unless you include people who disagree with you.

I think I know what the Great Filter is now

Sep 3, JDN 2458000

One of the most plausible solutions to the Fermi Paradox of why we have not found any other intelligent life in the universe is called the Great Filter: Somewhere in the process of evolving from unicellular prokaryotes to becoming an interstellar civilization, there is some highly-probable event that breaks the process, a “filter” that screens out all but the luckiest species—or perhaps literally all of them.

I previously thought that this filter was the invention of nuclear weapons; I now realize that this theory is incomplete. Nuclear weapons by themselves are only an existential threat because they co-exist with widespread irrationality and bigotry. The Great Filter is the combination of the two.

Yet there is a deep reason why we would expect that this is precisely the combination that would emerge in most species (as it has certainly emerged in our own): The rationality of a species is not uniform. Some individuals in a species will always be more rational than others, so as a species increases its level of rationality, it does not do so all at once.

Indeed, the processes of economic development and scientific advancement that make a species more rational are unlikely to be spread evenly; some cultures will develop faster than others, and some individuals within a given culture will be further along than others. While the mean level of rationality increases, the variance will also tend to increase.

On some arbitrary and oversimplified scale where 1 is the level of rationality needed to maintain a hunter-gatherer tribe, and 20 is the level of rationality needed to invent nuclear weapons, the distribution of rationality in a population starts something like this:

Great_Filter_1

Most of the population is between levels 1 and 3, which we might think of as lying between the bare minimum for a tribe to survive and the level at which one can start to make advances in knowledge and culture.

Then, as the society advances, it goes through a phase like this:

Great_Filter_2

This is about where we were in Periclean Athens. Most of the population is between levels 2 and 8. Level 2 used to be the average level of rationality back when we were hunter-gatherers. Level 8 is the level of philosophers like Archimedes and Pythagoras.

Today, our society looks like this:
Great_Filter_3

Most of the society is between levels 4 and 20. As I said, level 20 is the point at which it becomes feasible to develop nuclear weapons. Some of the world’s people are extremely intelligent and rational, and almost everyone is more rational than even the smartest people in hunter-gatherer times, but now there is enormous variation.

Where on this chart are racism and nationalism? Importantly, I think they are above the level of rationality that most people had in ancient times. Even Greek philosophers had attitudes toward slaves and other cultures that the modern KKK would find repulsive. I think on this scale racism is about a 10 and nationalism is about a 12.

If we had managed to uniformly increase the rationality of our society, with everyone gaining at the same rate, our distribution would instead look like this:
Great_Filter_4

If that were the case, we’d be fine. The lowest level of rationality widespread in the population would be 14, which is already beyond racism and nationalism. (Maybe it’s about the level of humanities professors today? That makes them substantially below quantum physicists who are 20 by construction… but hey, still almost twice as good as the Greek philosophers they revere.) We would have our nuclear technology, but it would not endanger our future—we wouldn’t even use it for weapons, we’d use it for power generation and space travel. Indeed, this lower-variance high-rationality state seems to be about what they have the Star Trek universe.

But since we didn’t, a large chunk of our population is between 10 and 12—that is, still racist or nationalist. We have the nuclear weapons, and we have people who might actually be willing to use them.

Great_Filter_5

I think this is what happens to most advanced civilizations around the galaxy. By the time they invent space travel, they have also invented nuclear weapons—but they still have their equivalent of racism and nationalism. And most of the time, the two combine into a volatile mix that results in the destruction or regression of their entire civilization.

If this is right, then we may be living at the most important moment in human history. It may be right here, right now, that we have the only chance we’ll ever get to turn the tide. We have to find a way to reduce the variance, to raise the rest of the world’s population past nationalism to a cosmopolitan morality. And we may have very little time.

Think of this as a moral recession

August 27, JDN 2457993

The Great Depression was, without doubt, the worst macroeconomic event of the last 200 years. Over 30 million people became unemployed. Unemployment exceeded 20%. Standard of living fell by as much as a third in the United States. Political unrest spread across the world, and the collapsing government of Germany ultimately became the Third Reich and triggered the Second World War If we ignore the world war, however, the effect on mortality rates was surprisingly small. (“Other than that, Mrs. Lincoln, how was the play?”)

And yet, how long do you suppose it took for economic growth to repair the damage? 80 years? 50 years? 30 years? 20 years? Try ten to fifteen. By 1940, the US, US, Germany, and Japan all had a per-capita GDP at least as high as in 1930. By 1945, every country in Europe had a per-capita GDP at least as high as they did before the Great Depression.

The moral of this story is this: Recessions are bad, and can have far-reaching consequences; but ultimately what really matters in the long run is growth.

Assuming the same growth otherwise, a country that had a recession as large as the Great Depression would be about 70% as rich as one that didn’t.

But over 100 years, a country that experienced 3% growth instead of 2% growth would be over two and a half times richer.

Therefore, in terms of standard of living only, if you were given the choice between having a Great Depression but otherwise growing at 3%, and having no recessions but growing at 2%, your grandchildren will be better off if you chose the former. (Of course, given the possibility of political unrest or even war, the depression could very well end up worse.)

With that in mind, I want you to think of the last few years—and especially the last few months—as a moral recession. Donald Trump being President of the United States is clearly a step backward for human civilization, and it seems to have breathed new life into some of the worst ideologies our society has ever harbored, from extreme misogyny, homophobia, right-wing nationalism, and White supremacism to outright Neo-Nazism. When one of the central debates in our public discourse is what level of violence is justifiable against Nazis under what circumstances, something has gone terribly, terribly wrong.

But much as recessions are overwhelmed in the long run by economic growth, there is reason to be confident that this moral backslide is temporary and will be similarly overwhelmed by humanity’s long-run moral progress.

What moral progress, you ask? Let’s remind ourselves.

Just 100 years ago, women could not vote in the United States.

160 years ago, slavery was legal in 15 US states.

Just 3 years ago, same-sex marriage was illegal in 14 US states. Yes, you read that number correctly. I said three. There are gay couples graduating high school and getting married now who as freshmen didn’t think they would be allowed to get married.

That’s just the United States. What about the rest of the world?

100 years ago, almost all of the world’s countries were dictatorships. Today, half of the world’s countries are democracies. Indeed, thanks to India, the majority of the world’s population now lives under democracy.

35 years ago, the Soviet Union still ruled most of Eastern Europe and Northern Asia with an iron fist (or should I say “curtain”?).

30 years ago, the number of human beings in extreme poverty—note I said number, not just rate; the world population was two-thirds what it is today—was twice as large as it is today.

Over the last 65 years, the global death rate due to war has fallen from 250 per million to just 10 per million.

The global literacy rate has risen from 40% to 80% in just 50 years.

World life expectancy has increased by 6 years in just the last 20 years.

We are living in a golden age. Do not forget that.

Indeed, if there is anything that could destroy all these astonishing achievements, I think it would be our failure to appreciate them.

If you listen to what these Neo-Nazi White supremacists say about their grievances, they sound like the spoiled children of millionaires (I mean, they elected one President, after all). They are outraged because they only get 90% of what they want instead of 100%—or even outraged not because they didn’t get what they wanted but because someone else they don’t know also did.

If you listen to the far left, their complaints don’t make much more sense. If you didn’t actually know any statistics, you’d think that life is just as bad for Black people in America today as it was under Jim Crow or even slavery. Well, it’s not even close. I’m not saying racism is gone; it’s definitely still here. But the civil rights movement has made absolutely enormous strides, from banning school segregation and housing redlining to reforming prison sentences and instituting affirmative action programs. Simply the fact that “racist” is now widely considered a terrible thing to be is a major accomplishment in itself. A typical Black person today, despite having only about 60% of the income of a typical White person, is still richer than a typical White person was just 50 years ago. While the 71% high school completion rate Black people currently have may not sound great, it’s much higher than the 50% rate that the whole US population had as recently as 1950.

Yes, there are some things that aren’t going very well right now. The two that I think are most important are climate change and income inequality. As both the global mean temperature anomaly and the world top 1% income share continue to rise, millions of people will suffer and die needlessly from diseases of poverty and natural disasters.

And of course if Neo-Nazis manage to take hold of the US government and try to repeat the Third Reich, that could be literally the worst thing that ever happened. If it triggered a nuclear war, it unquestionably would be literally the worst thing that ever happened. Both these events are unlikely—but not nearly as unlikely as they should be. (Five Thirty Eight interviewed several nuclear experts who estimated a probability of imminent nuclear war at a horrifying five percent.) So I certainly don’t want to make anyone complacent about these very grave problems.

But I worry also that we go too far the other direction, and fail to celebrate the truly amazing progress humanity has made thus far. We hear so often that we are treading water, getting nowhere, or even falling backward, that we begin to feel as though the fight for moral progress is utterly hopeless. If all these centuries of fighting for justice really had gotten us nowhere, the only sensible thing to do at this point would be to give up. But on the contrary, we have made enormous progress in an incredibly short period of time. We are on the verge of finally winning this fight. The last thing we want to do now is give up.

Several of the world’s largest banks are known to have committed large-scale fraud. Why have we done so little about it?

July 16, JDN 2457951

In 2014, JPMorgan Chase paid a settlement of $614 million for fraudulent mortgage lending contributing to the crisis; but this was spare change compared to the $16.5 billion Bank of America paid in settlements for their fradulent mortgages.

In 2015, Citibank paid $700 million in restitution and $35 million in penalties for fraudulent advertising of “payment protection” services.

In 2016, Wells Fargo paid $190 in settlements for defrauding their customers with fake accounts.

Even PayPal has paid $25 million in settlements over abuses of their “PayPal Credit” system.
In 2016, Goldman Sachs paid $5.1 billion in settlements over their fraudulent sales of mortgage-backed securities.
But the worst offender of course is HSBC, which has paid $2.5 billion in settlements over fraud, as well as $1.9 billion in settlements for laundering money for terrorists. The US Justice Department has kept their money-laundering protections classified because they’re so bad that simply revealing them to the public could result in vast amounts of criminal abuse.
These are some of the world’s largest banks. JPMorgan Chase alone owns 8.0% of all investment banking worldwide; Goldman Sachs owns 6.6%; Citi owns 4.9%; Wells Fargo 2.5%; and HSBC 1.8%. That means that between them, these five corporations—all proven to have engaged in large-scale fraud—own almost one-fourth of all the world’s investment banking assets.

What shocks me the most about this is that hardly anyone seems to care. It’s seen as “normal”, as “business as usual” that a quarter of the world’s investment banking system is owned by white-collar criminals. When the issue is even brought up, often the complaint seems to be that the government is being somehow overzealous. The Economist even went so far as to characterize the prosecution of Wall Street fraud as a “shakedown”. Apparently the idea that our world’s most profitable companies shouldn’t be able to launder money for terrorists is just ridiculous. These are rich people; you expect them to follow rules? What is this, some kind of democracy?

Is this just always how it has been? Has corruption always been so thoroughly infused with finance that we don’t even know how to separate them? Has the oligarchy of the top 0.01% become so strong that we can’t even bring ourselves to challenge them when they commit literal treason? For, in case you’ve forgotten, that is what money-laundering for terrorists is: HSBC gave aid and comfort to the enemies of the free world. Like “freedom” and “terrorism”, the word “treason” has been so overused that we begin to forget its meaning; but one of the groups that HSBC gladly loaned money to is an organization that has financed Hezbollah and Al-Qaeda. These are people that American and British soldiers have died fighting against, and when a British bank was found colluding with them, the penalty was… a few weeks of profits, no personal responsibility, and not a single day of prison time. The settlement was in fact less than the profits gained from the criminal enterprise, so this wasn’t even a fine; it was a tax. Our response to treason was to impose a tax.

And this of course was not the result of some newfound leniency in American government in general. No, we are still the nation that imprisons 700 out of every 100,000 people, the nation with more prisoners than any other nation on Earth. Our police officers still kill young Black men with impunity, including at least three dozen unarmed Black men every year, many of them for no apparent reason at all. (The precise number is still unknown, as the police refuse to keep an official database of all the citizens they kill.) Decades of “law and order” politicians promising to stop the “rising crime” (that is actually falling) have made the United States very close to a police state, especially in poor neighborhoods that are primarily inhabited by Black and Hispanic people. We don’t even have an especially high crime rate, except for gun homicides (and that because we have so many guns, also more than any other nation on Earth). We are, if anything, an especially vindictive society, cruel, unforgiving, and violent towards those we perceive as transgressors.

Except, that is, when the criminals are rich. Even the racial biases seem to go away in such circumstances; there is no reasonable doubt as to the guilt of O.J. Simpson or Bill Cosby, but Simpson only ended up in prison years later on a completely unrelated offense, and after Cosby’s mistrial it’s unclear if he’ll ever see any prison time. I don’t see how either man could have been less punished for his crimes had he been White; but can anyone seriously doubt that both men would be punished more had they not been rich?

I do not think that capitalism is an irredeemable system. I think that, in themselves, free markets are very useful, and we should not remove or restrict them unnecessarily. But capitalism isn’t supposed to be a system where the rich can do whatever they want and the poor have to accept it. Capitalism is supposed to be a system where everyone is free to do as they choose, unless they are harming others—and the rules are supposed to be the same for everyone. A free market is not one where you can buy the right to take away other people’s freedom.

Is this just some utopian idealism? It would surely be utopian to imagine a world where fraud never happens, that much is true. Someone, somewhere, will always be defrauding someone else. But a world where fraud is punished most of the time? Where our most powerful institutions are still subject to the basic rule of law? Is that a pipe dream as well?

This is a battle for the soul of America

July 9, JDN 2457944

At the time of writing, I just got back from a protest march against President Trump in Santa Ana (the featured photo is one I took at the march). I had intended to go to the much larger sister protest in Los Angeles, but the logistics were too daunting. On the upside, presumably the marginal impact of my attendance was higher at the smaller event.

Protest marches are not a common pastime of mine; I am much more of an ivory-tower policy wonk than a boots-on-the-ground political activist. The way that other people seem to be allergic to statistics, I am allergic to a lack of statistics when broad claims are made with minimal evidence. Even when I basically agree with everything being said, I still feel vaguely uncomfortable marching and chanting in unison (and constantly reminded of that scene from Life of Brian). But I made an exception for this one, because Trump represents a threat to the soul of American democracy.

We have had bad leaders many times before—even awful leaders, even leaders whose bad decisions resulted in the needless deaths of thousands. But not since the end of the Civil War have we had leaders who so directly threatened the core institutions of America itself.

We must keep reminding ourselves: This is not normal. This is not normal! Donald Trump’s casual corruption, overwhelming narcissism, authoritarianism, greed, and utter incompetence (not to mention his taste in decor) make him more like Idi Amin or Hugo Chavez than like George H.W. Bush or Ronald Reagan. (Even the comparison with Vladimir Putin would be too flattering to Trump; Putin at least is competent.) He has personally publicly insulted over 300 people, places, and things—and counting.

Trump lies almost constantly, surrounds himself with family members and sycophants, refuses to listen to intelligence briefings, and personally demeans and even threatens journalists who criticize him. Every day it seems like there is a new scandal, more outrageous than the last; and after so long, this almost seems like a strategy. Every day he finds some new way to offend and undermine the basic norms of our society, and eventually he hopes to wear us down until we give up fighting.

It is certainly an exaggeration, and perhaps a dangerous one, to say that Donald Trump is the next Adolf Hitler. But there are important historical parallels between the rise of Trump and the rise of many other populist authoritarian demagogues. He casually violates democratic norms of civility, honesty, and transparency, and incentivizes the rest of us to do the same—a temptation we must resist. Political scientists and economists are now issuing public warnings that our democratic institutions are not as strong as we may think (though, to be fair, others argue that they are indeed strong enough).

It was an agonizingly close Presidential election. Even the tiniest differences could have flipped enough states to change the outcome. If we’d had a better voting system, it would not have happened; a simple plurality vote would have elected Hillary Clinton, and as I argued in a previous post, range voting would probably have chosen Bernie Sanders. Therefore, we must not take this result as a complete indictment of American society or a complete failure of American democracy. But let it shake us out of our complacency; democracy is only as strong as the will of its citizens to defend it.