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The U.S. Needs to Crack Down on White-Collar Crime

208 points by IBM 8y ago

Animats 8y ago
What's needed is to make cracking down on white-collar crime profitable. Like the setup for drug task forces.
- tptacek 8y ago
  Isn't it already? Possibly even more so than drug task forces? https://www.nytimes.com/2016/02/07/your-money/vanguard-a-champion-of-low-fees-faces-a-peculiar-tax-challenge.html https://www.nytimes.com/2016/02/07/your-money/vanguard-a-cha...
  - harryh 8y ago
    The vanguard transfer pricing thing is my favorite conspiracy theory but it's actually true story on the internet.
  - tialaramex 8y ago
    Maybe I lack relevant local knowledge (I am not a US citizen) but seems like this describes a situation where a government agency had discretion to perhaps do something legal but immoral back in 2016. Did they, in fact? That is, did the IRS tell Vanguard it owes a large new tax bill on a "transfer pricing" rationale? The UK's GAAR has this trick called a "double reasonableness test" which it uses to get rid of some types of tax _avoidance_ and that seems like an appropriate legal rule here if, in fact, the IRS does abuse this discretion. The double reasonableness test asks this: Could any reasonable person (not you, the jury member, judge or whatever, but some other reasonable person you're capable of imagining) think that this way of doing things was reasonable ? Only if the answer is "No", which it will be only for the most extraordinarily tortured ways of avoiding tax, then this method of avoiding tax is prohibited. You don't go to jail or anything, your avoidance trick just doesn't work and you owe the taxes as usual.
    - AnthonyMouse 8y ago
      What this is really exposing is a facet of the sham of "transfer pricing" in general. The problem with transfer pricing is that "market price" is a context-dependent volatile fiction. If you buy a jar of peanut butter, it might cost $2 at one store and $2.50 at another on the other side of town. Which one is the market price? The difference is 25%, which at scale is enough to consume most companies' entire profit margin. And the answer is both, because the less expensive one is on the outskirts of town and the other is in the center of town where rents are higher and you pay a premium for the convenience. Which is one of the ways international companies avoid tax. You have a 10% profit margin internationally, so you overpay/underpay by 10% for everything from your sister company and make zero profit in the high tax jurisdiction, but the entire difference is within the "market price" margin of error. It's even possible to justify the difference by making note of some value add feature/service you did or didn't have that justifies a higher or lower price. The entire concept is a farce because the error margins are larger than typical profit margins. Which is how you get bizarre nonsense situations like this. If Vanguard is charging less than others had historically, are they charging less than the market price, or that just the new market price?
      - tptacek 8y ago
        It's much more bizarre than that. Vanguard is organized upside-down from most funds companies. Instead of a company that owns mutual funds, Vanguard funds own the management services company (and investors in turn own the funds). This aligns the incentives of Vanguard with its investors --- which is exactly what you want from a fund manager. Vanguard is in trouble for "charging" the funds below-market rate on the services provided by the management company. But the only reason there are charges to pay attention to at all is that Vanguard deliberately organized itself to return as much money as possible to investors.
        AnthonyMouse 8y ago
        It's still kind of the same thing. Suppose you open a car dealership that gives every person who buys a car a share of the dealership. The next thing you know that dealership has the best service and the lowest prices and makes no profits, because all the owners are also customers and they care less about getting a $10 dividend than about service quality and price. So then the argument is they're under-charging themselves and they owe tax on the difference between what they charged themselves and the fair market value. But it turns out all the customers love this ownership structure and having to compete with it has caused all the other dealerships to lose business and cut prices, and two new independent dealerships with the same structure sprang up and are now charging similar prices, meanwhile several of the incumbents with the old structure have gone out of business. So the question is, what's the market price? It's clearly lower than it was, even the old incumbents that are still around are charging less, and losing market share while doing it. If there are now multiple companies offering the razor thin margins, isn't that the new market price? It's a price available to any member of the public and it's what anybody has to compete with if they want to enter the market. The argument that there is a difference between what they're charging and the market price is ignoring the fact that their aggressive competition has lowered the market price down to what they're charging. But if you try to compare with what rates were like in 1975 then you get a squirrely result. It's the same problem as with any of it. The grey area covers the entire map. The price they're charging is reasonable -- someone could charge it and operate a sustainable business, and several people do. But somebody else argues that it used to be higher. They're both right, and that's why the entire concept is a farce.
- mulmen 8y ago
  The drug war has been disproportionally devastating along racial and to a lesser extent economic lines and ineffective at its stated goal. Why would we want to reuse this failed strategy to fight another kind of crime?
  - freehunter 8y ago
    Just because the overarching goal of a project is awful doesn't mean every detail about the project is awful. There are lessons to be learned from every failure, and like it or not the war on drugs funds itself quite well through asset forfeiture. Case in point: no one would argue the Nazi regime was anything approaching "good", but when the war was done, we didn't throw away the V2 rocket and start research from scratch. We threw out all the horrible shit the Nazis did but kept their wildly successful rocket. Likewise, it's possible to throw away the racist bullshit that perpetuates the drug war but use it's funding mechanism to fund prosecution of other crimes that would otherwise be financially infeasible to prosecute otherwise. If someone is convicted of insider trading, take all the money they gained from it and use it to prosecute other insider trading crimes.
    - mulmen 8y ago
      Wow, edgy. The end justifies the means eh? What about the part where the war on drugs doesn’t actually reduce drug use? Sure it funds itself by sealing money from innocent people but that’s just another negative externality. It was not necessary for the Nazis to kill millions of people to develop rockets. Oversimplifying that period of human history doesn’t make reusing failed law enforcement programs a better idea.
      - freehunter 8y ago
        I don't understand what exactly you're arguing. I would appreciate it if you'd explain clearly exactly what you are arguing for or against and how it relates to the comments you're replying to. Neither I nor Animats ever stated that the war on drugs (or Nazism for that matter) were good things. I think that's entirely clear from even a cursory reading of our comments. In fact, I even stated that you can throw away all the bad stuff but keep one good thing. It sounds to me like you're arguing that since the war on drugs is bad, we should never do anything affiliated with the war on drugs again. That's silly, and isn't an argument to anything anyone even came close to saying. Computers and cell phones are used in the war on drugs, should we get rid of them too? Again, you're massively misrepresenting every argument that's been stated in this thread and using it to hold the moral high ground with the easy "Nazis are bad" argument. Of fucking course they are. Maybe read past that? Because it's not edgy. It's not "ends justify the means". It's an actual fucking argument that you're completely ignoring for an easy win. Shame on you. You should aspire to be better than that.
- saalweachter 8y ago
  At ~current funding levels, the IRS brings in ~$3 for every $1 spent on it. The federal government could bring in more tax dollars just by funding the IRS at a higher level; it doesn't, for reasons.
  - AnthonyMouse 8y ago
    > At ~current funding levels, the IRS brings in ~$3 for every $1 spent on it. The federal government could bring in more tax dollars just by funding the IRS at a higher level; it doesn't, for reasons. Here are some of those reasons. $3 for every $1 is an extremely misleading way of putting it, as though the IRS is a business and everything is good as long as it's turning a profit. A better way of putting it is that collecting taxes through enforcement has ~33% overhead, which is high. By comparison, the overhead of normal IRS tax collection is a fraction of a percent. It also only accounts for the government's side of the expense, not the cost (and stress) imposed on innocent taxpayers who get audited to no avail in order to catch the smaller number of people who were actually committing tax fraud, and who are almost always small business owners because they're the ones with unusual tax returns. So the actual cost is even higher and is paid by a group of innocent people who create a disproportionately large amount of economic value while being at high risk of becoming unviable when you impose large surprise costs and time commitments on them like that. The IRS also prioritizes its enforcement to maximize effectiveness, which means they're already taking the low hanging fruit and increased enforcement would be at the margin rather than at the existing average. For the average to be at parity you would need to be doing a lot of audits that cost more than the revenue they generate in order to cancel out the revenue gained from the net-positive enforcement that is already occurring. It's possible that we could actually raise government income by doing less enforcement, because $3 is the average. It would be a net gain to eliminate the ones where we're spending $1 to raise $.50 (or $0) as long as we keep the ones where we spend $1 to raise $20.
    - mattnewton 8y ago
      We could easily solve the small buisiness problem by making the audit process happen at the government’s expense and probably still make money. We don’t have the government just tell you what you owe (like many other nations) because of the tax prep industry lobbyist and people vested on existing loopholes. I don’t believe the driving force is protecting small buisinesses from Audits- anecdotal, but small businesses in my family are still audited frequently. I believe it has to do with how unpopular the IRS is with the conservatives for ideological reasons, and they currently control the government. Our president bragged about how dodging taxes was an admirable quality- that kind of attitude is the driving force in american rhetoric, not protecting small buisiness owners.
drb91 8y ago
Obligatory Chickenshit Club reference: https://books.google.com/books/about/The_Chickenshit_Club.html?id=kOkqDwAAQBAJ&source=kp_book_description https://books.google.com/books/about/The_Chickenshit_Club.ht...
- nothrabannosir 8y ago
  I've been meaning to read this book, is it actually good? Is it reliable, or are the contents controversial?
  - justtopost 8y ago
    Why are those mutually exclusive in your mind?
    - nothrabannosir 8y ago
      Controversial means i have to do a lot of research to determine whence the controversy and which side to trust, if any. (Which I don’t have the domain knowledge nor time for.) Lack thereof, many people agreeing on the contents, is a sign that you can read the book and (sort of) trust it. Nothing guarantees nothing, cogito ergo sum and all that, but it’s a good heuristic. “In my mind,” of course ;)
  - jsoc815 8y ago
    > is it actually good? While it may be, I found it difficult to get into. I felt like I was reading a long rant that was peppered w/ interesting facts here and there. I put it down years ago with the intent to try again. I've not gotten back to it yet. A book I recommend that does touch on the S&L scandal is Lying for Money (Dan Davies). The Outlaw Bank (Beaty & Gwynne) was also an awesome read. As for the greater topic of white collar crime, it's a key ingredient of the cake, forever to be baked in. My professional advise to folks is simply to be aware of that and act accordingly. Can't say much more than that on the matter.
- beautifulfreak 8y ago
  Another important book is "The Best Way to Rob a Bank is to Own One." The author appeared on Bill Moyers Journal: https://www.pbs.org/moyers/journal/04032009/watch.html https://www.pbs.org/moyers/journal/04032009/watch.html
rayiner 8y ago
White collar crimes are problematic. I once saw a case where someone was convicted for selling prescription sleeping pills. It shouldn't be illegal to sell under the counter pills, I thought, but otherwise it was hard to fault the prosecution. The accused was caught trying to sell the pills to an undercover officer, fled from the police, and apprehended with a wide variety of illegal substances on his person. There was little doubt that he was at least guilty of the conduct of which he was accused. White collar crimes are murkier. There is, for example, nothing illegal about getting the upper hand in a transaction. But it can be illegal based on little more than what the seller knew or was thinking at the time of the sale. Even things like false claims to the government often turn on little more than the characterization of certain transactions. A great deal of the white collar prosecutions I've seen have left me unsettled--the evidence was murky or subject to different characterizations, and the "wrong" often turned on the unknowable--the accused's knowledge or intent.
- Waterluvian 8y ago
  I'm a bit surprised to find someone suggesting that selling prescription pills under the counter shouldn't be illegal. Do you mind elaborating on your perspective?
  - jstanley 8y ago
    If there's a willing buyer, and a willing seller, and the goods aren't stolen, and the seller isn't lying about what the goods are, then who is the victim? If there's no victim, there's no crime. (And, yes, identical logic does apply equally to illegal drugs).
    - rustcharm 8y ago
      And assuming insurance didn't pay for the pills (this would fall under the category of "stolen" or at least "misappropriated")
    - Waterluvian 8y ago
      Oh okay I understand that perspective. Thanks.
themagician 8y ago
You'd have to completely reframe the penalty for crimes to be percentage based instead of fixed amounts. Even when caught the penalties are often so low that they don't matter, so white collar criminals go right back to it. When you can routinely make $10 million doing something a $1 million fine the one time you get caught just isn't a big deal. The cost-benefit analysis almost always favors the criminal for white collar crimes (or any non-violent crime, really) when you have money. If I had $100m+ I wouldn't really pay attention to the law either.
- harryh 8y ago
  What is an actual example where you can make more money committing a crime than you would be forced to pay back if you are caught and convicted? I don't think your assertion is true.
  - goliatone 8y ago
    Maybe if you have money you get caught but not convicted? Thinking about banks laundering money for drug cartels
  - Retric 8y ago
    It's not about criminal convictions. In theory it's just a civil case with a criminal case to follow. Which is why SEC fines are often less than the net befit. But, the actual number of criminal cases is rather low. EX: "In June 2009, the SEC sued Angelo Mozilo, former CEO of mortgage lender Countrywide Financial, and two other former officers, charging that they misled investors about the quality of Countrywide's loans while knowing the company was fueling its growth by letting its underwriting guidelines deteriorate and originating a growing number of risky subprime loans. In October 2010, the SEC settled the lawsuit and Mozilo was required to pay a fraction of the $521.5 million he had earned, just $67.5 million in penalties" https://en.wikipedia.org/wiki/List_of_major_SEC_enforcement_actions_(2009%E2%80%9312) https://en.wikipedia.org/wiki/List_of_major_SEC_enforcement_...
    - deleted 8y ago
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zekevermillion 8y ago
We don't need a "crackdown". The problem with our approach to financial crimes is that it is based almost entirely on crackdowns -- splashy press releases that are supposed to deter all the thousands of other financial crimes that we lack resources to prosecute. Sometimes this leads to injustice, e.g., see the documentary film Abacus: Small Enough to Jail. The only bank to be prosecuted criminally for shenanigans in the subprime era. What we do need is vastly more resources for financial regulators, as well as courts. Yes the laws and regs could also be improved, but that is a harder problem. The easy problem is that the people doing good work to combat financial crimes only have the staffing and money to go after a small, small fraction of likely targets. And the courts do not have what they need to handle a high volume of increasingly complex, technical subject-matter.
- Eridrus 8y ago
  This is probably true for the IRS. I'm less sure this is true for th SEC. From the admittedly limited amount I have read about insider trading cases, it seems like the courts have interpreted the law extremely narrowly, and this has basically legalised many common forms of insider trading where there is no explicit quid pro quo. Similarly to how we have interpreted corruption.
- hannasanarion 8y ago
  Financial regulators aren't the only ones relevant here. There work is useless if there's nobody available to investigate it and bring charges. That used to be the FBI's main job, but since 2001 they've been mostly ignoring white collar crimes to focus on counterterrorism.
- liftbigweights 8y ago
  > Abacus: Small Enough to Jail. My goodness that documentary had me so infuriated. If people haven't seen it, I highly recommend it. > The only bank to be prosecuted criminally for shenanigans in the subprime era. That's the amazing part. Out of all the multinational "too big to fail" banks in NYC, they went after a small community bank. Just on optics it looks terrible, but the bank they went after actually had very low numbers of defaults and foreclosures. That was as clear a case of bullying as I've seen. They went after the smallest bank they could find to intimidate them and force them to settle so that they can tell the press the banks were punished for the financial crisis. Which would have been a farce had they succeeded.
cozzyd 8y ago
Monetary fines are not enough deterrent in many cases. Even short stints in prison might be better.
- cronix 8y ago
  I totally agree with this. Take the recent Tesla fiasco. Do you think a $20M fine means a damn thing to Musk? That's like $0.01 for most people. Now a $20M fine and a year in prison would make them think twice. More often than not, they make more in the commission of their crimes than they are fined, so they still come out in the black. In other words, they aren't truly punished.
  - Kaveren 8y ago
    I don't think Elon Musk deserves to go to prison for any length of time for that. I understand that he may have been very hasty and made fraudulent claims to investors (arguable considering you can't tell his state of mind). The United States needs to reduce its prison population, not increase it. Suggesting he be banned from serving as CEO would be much more reasonable, though I think the fine was more than enough.
    - forapurpose 8y ago
      > The United States needs to reduce its prison population, not increase it. I don't think most people are concerned with CEOs of large corporations overflowing the prisons.
      - Kaveren 8y ago
        It's about a mindset of the purpose and necessity of imprisoning so many people, not an individual case. Aside from that, do you believe that Elon Musk in particular deserves to have his freedom restricted, be in a potentially dangerous situation (even in low security), and be locked away from society because of a series of tweets that heavily jumped the gun and stated funding as "secured" when it wasn't? Being barred from serving as Chairman for three years and being forced to step down in addition to a $20m fine doesn't seem to satisfy some people's bloodlust, I have my doubts that being forced to step down as Tesla CEO would.
pjc50 8y ago
Well, yes: if you leave enough crime by the well-connected alone for long enough, in a country with poor election integrity and unlimited campaign finance spending, then you get a country run by gangsters. It came about pretty rapidly in Russia where there was no established democracy to displace.
- jjeaff 8y ago
  While there have recently been some issues with some elections in the US, we definitely don't have an "election integrity" issue. There is very little evidence that any elections in the US have been affected by fraud by any significant amount.
  - telchar 8y ago
    To be fair, there is also a significant lack of evidence that they haven't. It is difficult to collect data in this area because of the setup of the electoral system (both its federated nature and the lack of possible verification of individual votes). This together with the tight margins of modern American elections means potentially significant fraud could hide in the noise. In-person fraud would be hard to hide but electronic fraud is possible and there are interested, capable parties out there (e.g Russia) who shouldn't be discounted. So to say that 'we definitely don't have an "election integrity" issue' isn't correct. There is nothing definite about it - we just have a consensus that we don't have a problem. You could say the same about every data security breach until they were discovered. I have noticed that there is a significant cultural interest in propagating the idea that our elections are sound so I tend to take the idea with a grain of salt as long as our system is as vulnerable as it is.
  - cowkingdeluxe 8y ago
    There are many ways to negatively affect election integrity, both illegal and legal. For example, in Georgia, US, one of the candidates himself blocked 53,000 voter registrations just 3 weeks before the election. The demographics of the 53,000 is 70% black. https://www.npr.org/2018/10/13/657109536/georgia-puts-53-000-voter-applications-on-hold-weeks-before-election https://www.npr.org/2018/10/13/657109536/georgia-puts-53-000... Gerrymandering, strict voter id laws (e.g. requiring drivers license but removing all but one DMV in the entire county in opponent's strongholds) and similar are also various ways to negatively affect election integrity.
deleted 8y ago
[deleted]
jwatte 8y ago
If we have laws that we don't enforce, then we should strike them from the books. If we are not willing to fund enforcement of a law, we should not pass it. This will show us what we really value as a society.
clackanon 8y ago
My screenname here is an anonymous throwaway. This is evidence of conservative opinions not being welcome here at all.
clackanon 8y ago
I think if the US approach to crime was different, that this situation might be altogether different. As it stands, right now, in "Corporate America" is less forgiving than God, assuming you're religious.
ikeboy 8y ago
Relevant Twitter thread by Matt Levine https://twitter.com/matt_levine/status/1033185120520417280 https://twitter.com/matt_levine/status/1033185120520417280 Tldr: "cracking down on fraud" will mostly harm poor people
teslaberry 8y ago
the entire u.s. socio economic system us defined by usury cascades ( interest rate financing of publuc /private activities) that ultimately are paid off by long term rises in cost of living ( via money printing) . the u.s. id also built on theft of labor ( payroll and EARNED income tax) the tax system is designed to emcourage speculation as well as the over burdening of local labor upon the federal rather than state government munipial bonds are federally tax free. the supreme court ruled in the 70s that states can block imported usurous loans from out of state to their local real estate markets. the clintons eliminated glass steagal and unconstitutional deprived unsecured (educational) debt from being dischareable in bankruptcy. bushs 2005 bankruptcy act instituionalized further deterioration of bankruptcy rights. empires are buult upon a sytem of human promises , that means human debt. when the debt is abstracted by third partes for the purpose of making further profit via secodary mechanisms such as financialization and speculation for its own sake, the empire is eventually reduced to operating as a casino. our empires business is legalizing white collar 'crime' and making it into a series of redistribution games run out of new york and washington dc. its not posdible to fix' the system. we need dictatorship, at least temporarily. democracy is broken.
pontifier 8y ago
We need to punish judicial corruption with the death penalty. Judicial corruption endangers the entire basis of our courts, and is tantamount to treason.

208 points by IBM 8y ago

Animats 8y ago

What's needed is to make cracking down on white-collar crime profitable. Like the setup for drug task forces.

tptacek 8y ago
Isn't it already? Possibly even more so than drug task forces? https://www.nytimes.com/2016/02/07/your-money/vanguard-a-champion-of-low-fees-faces-a-peculiar-tax-challenge.html https://www.nytimes.com/2016/02/07/your-money/vanguard-a-cha...
- harryh 8y ago
  The vanguard transfer pricing thing is my favorite conspiracy theory but it's actually true story on the internet.
- tialaramex 8y ago
  Maybe I lack relevant local knowledge (I am not a US citizen) but seems like this describes a situation where a government agency had discretion to perhaps do something legal but immoral back in 2016. Did they, in fact? That is, did the IRS tell Vanguard it owes a large new tax bill on a "transfer pricing" rationale? The UK's GAAR has this trick called a "double reasonableness test" which it uses to get rid of some types of tax _avoidance_ and that seems like an appropriate legal rule here if, in fact, the IRS does abuse this discretion. The double reasonableness test asks this: Could any reasonable person (not you, the jury member, judge or whatever, but some other reasonable person you're capable of imagining) think that this way of doing things was reasonable ? Only if the answer is "No", which it will be only for the most extraordinarily tortured ways of avoiding tax, then this method of avoiding tax is prohibited. You don't go to jail or anything, your avoidance trick just doesn't work and you owe the taxes as usual.
  - AnthonyMouse 8y ago
    What this is really exposing is a facet of the sham of "transfer pricing" in general. The problem with transfer pricing is that "market price" is a context-dependent volatile fiction. If you buy a jar of peanut butter, it might cost $2 at one store and $2.50 at another on the other side of town. Which one is the market price? The difference is 25%, which at scale is enough to consume most companies' entire profit margin. And the answer is both, because the less expensive one is on the outskirts of town and the other is in the center of town where rents are higher and you pay a premium for the convenience. Which is one of the ways international companies avoid tax. You have a 10% profit margin internationally, so you overpay/underpay by 10% for everything from your sister company and make zero profit in the high tax jurisdiction, but the entire difference is within the "market price" margin of error. It's even possible to justify the difference by making note of some value add feature/service you did or didn't have that justifies a higher or lower price. The entire concept is a farce because the error margins are larger than typical profit margins. Which is how you get bizarre nonsense situations like this. If Vanguard is charging less than others had historically, are they charging less than the market price, or that just the new market price?
    - tptacek 8y ago
      It's much more bizarre than that. Vanguard is organized upside-down from most funds companies. Instead of a company that owns mutual funds, Vanguard funds own the management services company (and investors in turn own the funds). This aligns the incentives of Vanguard with its investors --- which is exactly what you want from a fund manager. Vanguard is in trouble for "charging" the funds below-market rate on the services provided by the management company. But the only reason there are charges to pay attention to at all is that Vanguard deliberately organized itself to return as much money as possible to investors.
      - AnthonyMouse 8y ago
        It's still kind of the same thing. Suppose you open a car dealership that gives every person who buys a car a share of the dealership. The next thing you know that dealership has the best service and the lowest prices and makes no profits, because all the owners are also customers and they care less about getting a $10 dividend than about service quality and price. So then the argument is they're under-charging themselves and they owe tax on the difference between what they charged themselves and the fair market value. But it turns out all the customers love this ownership structure and having to compete with it has caused all the other dealerships to lose business and cut prices, and two new independent dealerships with the same structure sprang up and are now charging similar prices, meanwhile several of the incumbents with the old structure have gone out of business. So the question is, what's the market price? It's clearly lower than it was, even the old incumbents that are still around are charging less, and losing market share while doing it. If there are now multiple companies offering the razor thin margins, isn't that the new market price? It's a price available to any member of the public and it's what anybody has to compete with if they want to enter the market. The argument that there is a difference between what they're charging and the market price is ignoring the fact that their aggressive competition has lowered the market price down to what they're charging. But if you try to compare with what rates were like in 1975 then you get a squirrely result. It's the same problem as with any of it. The grey area covers the entire map. The price they're charging is reasonable -- someone could charge it and operate a sustainable business, and several people do. But somebody else argues that it used to be higher. They're both right, and that's why the entire concept is a farce.
mulmen 8y ago
The drug war has been disproportionally devastating along racial and to a lesser extent economic lines and ineffective at its stated goal. Why would we want to reuse this failed strategy to fight another kind of crime?
- freehunter 8y ago
  Just because the overarching goal of a project is awful doesn't mean every detail about the project is awful. There are lessons to be learned from every failure, and like it or not the war on drugs funds itself quite well through asset forfeiture. Case in point: no one would argue the Nazi regime was anything approaching "good", but when the war was done, we didn't throw away the V2 rocket and start research from scratch. We threw out all the horrible shit the Nazis did but kept their wildly successful rocket. Likewise, it's possible to throw away the racist bullshit that perpetuates the drug war but use it's funding mechanism to fund prosecution of other crimes that would otherwise be financially infeasible to prosecute otherwise. If someone is convicted of insider trading, take all the money they gained from it and use it to prosecute other insider trading crimes.
  - mulmen 8y ago
    Wow, edgy. The end justifies the means eh? What about the part where the war on drugs doesn’t actually reduce drug use? Sure it funds itself by sealing money from innocent people but that’s just another negative externality. It was not necessary for the Nazis to kill millions of people to develop rockets. Oversimplifying that period of human history doesn’t make reusing failed law enforcement programs a better idea.
    - freehunter 8y ago
      I don't understand what exactly you're arguing. I would appreciate it if you'd explain clearly exactly what you are arguing for or against and how it relates to the comments you're replying to. Neither I nor Animats ever stated that the war on drugs (or Nazism for that matter) were good things. I think that's entirely clear from even a cursory reading of our comments. In fact, I even stated that you can throw away all the bad stuff but keep one good thing. It sounds to me like you're arguing that since the war on drugs is bad, we should never do anything affiliated with the war on drugs again. That's silly, and isn't an argument to anything anyone even came close to saying. Computers and cell phones are used in the war on drugs, should we get rid of them too? Again, you're massively misrepresenting every argument that's been stated in this thread and using it to hold the moral high ground with the easy "Nazis are bad" argument. Of fucking course they are. Maybe read past that? Because it's not edgy. It's not "ends justify the means". It's an actual fucking argument that you're completely ignoring for an easy win. Shame on you. You should aspire to be better than that.
saalweachter 8y ago
At ~current funding levels, the IRS brings in ~$3 for every $1 spent on it. The federal government could bring in more tax dollars just by funding the IRS at a higher level; it doesn't, for reasons.
- AnthonyMouse 8y ago
  > At ~current funding levels, the IRS brings in ~$3 for every $1 spent on it. The federal government could bring in more tax dollars just by funding the IRS at a higher level; it doesn't, for reasons. Here are some of those reasons. $3 for every $1 is an extremely misleading way of putting it, as though the IRS is a business and everything is good as long as it's turning a profit. A better way of putting it is that collecting taxes through enforcement has ~33% overhead, which is high. By comparison, the overhead of normal IRS tax collection is a fraction of a percent. It also only accounts for the government's side of the expense, not the cost (and stress) imposed on innocent taxpayers who get audited to no avail in order to catch the smaller number of people who were actually committing tax fraud, and who are almost always small business owners because they're the ones with unusual tax returns. So the actual cost is even higher and is paid by a group of innocent people who create a disproportionately large amount of economic value while being at high risk of becoming unviable when you impose large surprise costs and time commitments on them like that. The IRS also prioritizes its enforcement to maximize effectiveness, which means they're already taking the low hanging fruit and increased enforcement would be at the margin rather than at the existing average. For the average to be at parity you would need to be doing a lot of audits that cost more than the revenue they generate in order to cancel out the revenue gained from the net-positive enforcement that is already occurring. It's possible that we could actually raise government income by doing less enforcement, because $3 is the average. It would be a net gain to eliminate the ones where we're spending $1 to raise $.50 (or $0) as long as we keep the ones where we spend $1 to raise $20.
  - mattnewton 8y ago
    We could easily solve the small buisiness problem by making the audit process happen at the government’s expense and probably still make money. We don’t have the government just tell you what you owe (like many other nations) because of the tax prep industry lobbyist and people vested on existing loopholes. I don’t believe the driving force is protecting small buisinesses from Audits- anecdotal, but small businesses in my family are still audited frequently. I believe it has to do with how unpopular the IRS is with the conservatives for ideological reasons, and they currently control the government. Our president bragged about how dodging taxes was an admirable quality- that kind of attitude is the driving force in american rhetoric, not protecting small buisiness owners.

drb91 8y ago

Obligatory Chickenshit Club reference: https://books.google.com/books/about/The_Chickenshit_Club.html?id=kOkqDwAAQBAJ&source=kp_book_description https://books.google.com/books/about/The_Chickenshit_Club.ht...

nothrabannosir 8y ago
I've been meaning to read this book, is it actually good? Is it reliable, or are the contents controversial?
- justtopost 8y ago
  Why are those mutually exclusive in your mind?
  - nothrabannosir 8y ago
    Controversial means i have to do a lot of research to determine whence the controversy and which side to trust, if any. (Which I don’t have the domain knowledge nor time for.) Lack thereof, many people agreeing on the contents, is a sign that you can read the book and (sort of) trust it. Nothing guarantees nothing, cogito ergo sum and all that, but it’s a good heuristic. “In my mind,” of course ;)
- jsoc815 8y ago
  > is it actually good? While it may be, I found it difficult to get into. I felt like I was reading a long rant that was peppered w/ interesting facts here and there. I put it down years ago with the intent to try again. I've not gotten back to it yet. A book I recommend that does touch on the S&L scandal is Lying for Money (Dan Davies). The Outlaw Bank (Beaty & Gwynne) was also an awesome read. As for the greater topic of white collar crime, it's a key ingredient of the cake, forever to be baked in. My professional advise to folks is simply to be aware of that and act accordingly. Can't say much more than that on the matter.
beautifulfreak 8y ago
Another important book is "The Best Way to Rob a Bank is to Own One." The author appeared on Bill Moyers Journal: https://www.pbs.org/moyers/journal/04032009/watch.html https://www.pbs.org/moyers/journal/04032009/watch.html

rayiner 8y ago

White collar crimes are problematic. I once saw a case where someone was convicted for selling prescription sleeping pills. It shouldn't be illegal to sell under the counter pills, I thought, but otherwise it was hard to fault the prosecution. The accused was caught trying to sell the pills to an undercover officer, fled from the police, and apprehended with a wide variety of illegal substances on his person. There was little doubt that he was at least guilty of the conduct of which he was accused. White collar crimes are murkier. There is, for example, nothing illegal about getting the upper hand in a transaction. But it can be illegal based on little more than what the seller knew or was thinking at the time of the sale. Even things like false claims to the government often turn on little more than the characterization of certain transactions. A great deal of the white collar prosecutions I've seen have left me unsettled--the evidence was murky or subject to different characterizations, and the "wrong" often turned on the unknowable--the accused's knowledge or intent.

Waterluvian 8y ago
I'm a bit surprised to find someone suggesting that selling prescription pills under the counter shouldn't be illegal. Do you mind elaborating on your perspective?
- jstanley 8y ago
  If there's a willing buyer, and a willing seller, and the goods aren't stolen, and the seller isn't lying about what the goods are, then who is the victim? If there's no victim, there's no crime. (And, yes, identical logic does apply equally to illegal drugs).
  - rustcharm 8y ago
    And assuming insurance didn't pay for the pills (this would fall under the category of "stolen" or at least "misappropriated")
  - Waterluvian 8y ago
    Oh okay I understand that perspective. Thanks.

themagician 8y ago

You'd have to completely reframe the penalty for crimes to be percentage based instead of fixed amounts. Even when caught the penalties are often so low that they don't matter, so white collar criminals go right back to it. When you can routinely make $10 million doing something a $1 million fine the one time you get caught just isn't a big deal. The cost-benefit analysis almost always favors the criminal for white collar crimes (or any non-violent crime, really) when you have money. If I had $100m+ I wouldn't really pay attention to the law either.

harryh 8y ago
What is an actual example where you can make more money committing a crime than you would be forced to pay back if you are caught and convicted? I don't think your assertion is true.
- goliatone 8y ago
  Maybe if you have money you get caught but not convicted? Thinking about banks laundering money for drug cartels
- Retric 8y ago
  It's not about criminal convictions. In theory it's just a civil case with a criminal case to follow. Which is why SEC fines are often less than the net befit. But, the actual number of criminal cases is rather low. EX: "In June 2009, the SEC sued Angelo Mozilo, former CEO of mortgage lender Countrywide Financial, and two other former officers, charging that they misled investors about the quality of Countrywide's loans while knowing the company was fueling its growth by letting its underwriting guidelines deteriorate and originating a growing number of risky subprime loans. In October 2010, the SEC settled the lawsuit and Mozilo was required to pay a fraction of the $521.5 million he had earned, just $67.5 million in penalties" https://en.wikipedia.org/wiki/List_of_major_SEC_enforcement_actions_(2009%E2%80%9312) https://en.wikipedia.org/wiki/List_of_major_SEC_enforcement_...
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zekevermillion 8y ago

We don't need a "crackdown". The problem with our approach to financial crimes is that it is based almost entirely on crackdowns -- splashy press releases that are supposed to deter all the thousands of other financial crimes that we lack resources to prosecute. Sometimes this leads to injustice, e.g., see the documentary film Abacus: Small Enough to Jail. The only bank to be prosecuted criminally for shenanigans in the subprime era. What we do need is vastly more resources for financial regulators, as well as courts. Yes the laws and regs could also be improved, but that is a harder problem. The easy problem is that the people doing good work to combat financial crimes only have the staffing and money to go after a small, small fraction of likely targets. And the courts do not have what they need to handle a high volume of increasingly complex, technical subject-matter.

Eridrus 8y ago
This is probably true for the IRS. I'm less sure this is true for th SEC. From the admittedly limited amount I have read about insider trading cases, it seems like the courts have interpreted the law extremely narrowly, and this has basically legalised many common forms of insider trading where there is no explicit quid pro quo. Similarly to how we have interpreted corruption.
hannasanarion 8y ago
Financial regulators aren't the only ones relevant here. There work is useless if there's nobody available to investigate it and bring charges. That used to be the FBI's main job, but since 2001 they've been mostly ignoring white collar crimes to focus on counterterrorism.
liftbigweights 8y ago
> Abacus: Small Enough to Jail. My goodness that documentary had me so infuriated. If people haven't seen it, I highly recommend it. > The only bank to be prosecuted criminally for shenanigans in the subprime era. That's the amazing part. Out of all the multinational "too big to fail" banks in NYC, they went after a small community bank. Just on optics it looks terrible, but the bank they went after actually had very low numbers of defaults and foreclosures. That was as clear a case of bullying as I've seen. They went after the smallest bank they could find to intimidate them and force them to settle so that they can tell the press the banks were punished for the financial crisis. Which would have been a farce had they succeeded.

cozzyd 8y ago

Monetary fines are not enough deterrent in many cases. Even short stints in prison might be better.

cronix 8y ago
I totally agree with this. Take the recent Tesla fiasco. Do you think a $20M fine means a damn thing to Musk? That's like $0.01 for most people. Now a $20M fine and a year in prison would make them think twice. More often than not, they make more in the commission of their crimes than they are fined, so they still come out in the black. In other words, they aren't truly punished.
- Kaveren 8y ago
  I don't think Elon Musk deserves to go to prison for any length of time for that. I understand that he may have been very hasty and made fraudulent claims to investors (arguable considering you can't tell his state of mind). The United States needs to reduce its prison population, not increase it. Suggesting he be banned from serving as CEO would be much more reasonable, though I think the fine was more than enough.
  - forapurpose 8y ago
    > The United States needs to reduce its prison population, not increase it. I don't think most people are concerned with CEOs of large corporations overflowing the prisons.
    - Kaveren 8y ago
      It's about a mindset of the purpose and necessity of imprisoning so many people, not an individual case. Aside from that, do you believe that Elon Musk in particular deserves to have his freedom restricted, be in a potentially dangerous situation (even in low security), and be locked away from society because of a series of tweets that heavily jumped the gun and stated funding as "secured" when it wasn't? Being barred from serving as Chairman for three years and being forced to step down in addition to a $20m fine doesn't seem to satisfy some people's bloodlust, I have my doubts that being forced to step down as Tesla CEO would.

pjc50 8y ago

Well, yes: if you leave enough crime by the well-connected alone for long enough, in a country with poor election integrity and unlimited campaign finance spending, then you get a country run by gangsters. It came about pretty rapidly in Russia where there was no established democracy to displace.

jjeaff 8y ago
While there have recently been some issues with some elections in the US, we definitely don't have an "election integrity" issue. There is very little evidence that any elections in the US have been affected by fraud by any significant amount.
- telchar 8y ago
  To be fair, there is also a significant lack of evidence that they haven't. It is difficult to collect data in this area because of the setup of the electoral system (both its federated nature and the lack of possible verification of individual votes). This together with the tight margins of modern American elections means potentially significant fraud could hide in the noise. In-person fraud would be hard to hide but electronic fraud is possible and there are interested, capable parties out there (e.g Russia) who shouldn't be discounted. So to say that 'we definitely don't have an "election integrity" issue' isn't correct. There is nothing definite about it - we just have a consensus that we don't have a problem. You could say the same about every data security breach until they were discovered. I have noticed that there is a significant cultural interest in propagating the idea that our elections are sound so I tend to take the idea with a grain of salt as long as our system is as vulnerable as it is.
- cowkingdeluxe 8y ago
  There are many ways to negatively affect election integrity, both illegal and legal. For example, in Georgia, US, one of the candidates himself blocked 53,000 voter registrations just 3 weeks before the election. The demographics of the 53,000 is 70% black. https://www.npr.org/2018/10/13/657109536/georgia-puts-53-000-voter-applications-on-hold-weeks-before-election https://www.npr.org/2018/10/13/657109536/georgia-puts-53-000... Gerrymandering, strict voter id laws (e.g. requiring drivers license but removing all but one DMV in the entire county in opponent's strongholds) and similar are also various ways to negatively affect election integrity.

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jwatte 8y ago

If we have laws that we don't enforce, then we should strike them from the books. If we are not willing to fund enforcement of a law, we should not pass it. This will show us what we really value as a society.

clackanon 8y ago

My screenname here is an anonymous throwaway. This is evidence of conservative opinions not being welcome here at all.

clackanon 8y ago

I think if the US approach to crime was different, that this situation might be altogether different. As it stands, right now, in "Corporate America" is less forgiving than God, assuming you're religious.

ikeboy 8y ago

Relevant Twitter thread by Matt Levine https://twitter.com/matt_levine/status/1033185120520417280 https://twitter.com/matt_levine/status/1033185120520417280 Tldr: "cracking down on fraud" will mostly harm poor people

teslaberry 8y ago

the entire u.s. socio economic system us defined by usury cascades ( interest rate financing of publuc /private activities) that ultimately are paid off by long term rises in cost of living ( via money printing) . the u.s. id also built on theft of labor ( payroll and EARNED income tax) the tax system is designed to emcourage speculation as well as the over burdening of local labor upon the federal rather than state government munipial bonds are federally tax free. the supreme court ruled in the 70s that states can block imported usurous loans from out of state to their local real estate markets. the clintons eliminated glass steagal and unconstitutional deprived unsecured (educational) debt from being dischareable in bankruptcy. bushs 2005 bankruptcy act instituionalized further deterioration of bankruptcy rights. empires are buult upon a sytem of human promises , that means human debt. when the debt is abstracted by third partes for the purpose of making further profit via secodary mechanisms such as financialization and speculation for its own sake, the empire is eventually reduced to operating as a casino. our empires business is legalizing white collar 'crime' and making it into a series of redistribution games run out of new york and washington dc. its not posdible to fix' the system. we need dictatorship, at least temporarily. democracy is broken.

pontifier 8y ago

We need to punish judicial corruption with the death penalty. Judicial corruption endangers the entire basis of our courts, and is tantamount to treason.