The Divide: American Injustice in the Age of the Wealth Gap

by Matt Taibbi

  This goes far beyond the oft-quoted liberal cliché about how we now have “two Americas,” one for the rich and one for the poor, with different sets of laws and different levels of punishment (or more to the point, nonpunishment) for each. The rich have always gotten breaks and the poor have always had to swim upstream. The new truth is infinitely darker and more twisted.

  The new truth is a sci-fi movie, a dystopia. And in this sci-fi world the issues aren’t justice and injustice, but biology and mortality. We have a giant, meat-grinding bureaucracy that literally alters the physical makeup of its citizens, systematically grinding down the losers into a smaller, meeker, lower race of animal while aggrandizing the winners, making them bigger than life, impervious, super-people.

  Again, the poor have always faced the sharp end of the stick. And the rich have always fought ferociously to protect their privilege, not just in America but everywhere.

  What’s different now is that these quaint old inequities have become internalized in that “second government”—a vast system of increasingly unmanageable bureaucracies, spanning both the public and the private sectors. These inscrutable, irrational structures, crisscrossing back and forth between the worlds of debt and banking and law enforcement, are growing up organically around the pounding twin impulses that drive modern America: burning hatred of all losers and the poor, and breathless, abject worship of the rich, even the talentless and undeserving rich.

  No one is managing these bureaucracies anymore. They are managing us. Just as corporations are brainless machines for making profits, this sweepingly complex system of public-private bureaucracies that constitutes our modern politics is just a giant, brainless machine for creating social inequity.

  It mechanically, automatically keeps the poor poor, devours money from the middle class, and sends it upward. And because it’s fueled by the irrepressibly rising vapor of our darkest hidden values, it attacks people without money, particularly nonwhite people, with a weirdly venomous kind of hatred, treating them like they’re already guilty of something, which of course they are—namely, being that which we’re all afraid of becoming.

  In the Orwellian dystopia the original sin was thoughtcrime, but in our new corporate dystopia the secret inner crime is need, particularly financial need. People in America hide financial need like they hide sexual perversions.

  Why? Because there’s a direct correlation between need and rights. The more you need, the more you owe, the fewer rights you have.

  Conversely, the less you need, the more you have, the more of a free citizen you get to be. On the extreme ends of this spectrum it is literally a crime to be poor, while a person with enough money literally cannot be prosecuted for certain kinds of crimes.

  What keeps the poor poor and rushes the money upward is the complexity of the bureaucracy. If you’re the wrong kind of person and you get caught up in the criminal justice system, or stuck in the welfare bureaucracy, or mired in debt, you can’t get out without navigating a maze so complex and dispiriting and irrational that it can’t possibly even be mapped. It’s not brains that you need to get through it, but time, energy, strength. You have to stand on line after line, send letter after letter, make call after call.

  And if you want to change even the smallest law, in your home state or in Washington, you need an army of thousands of lobbyists to get it done. And even in the rare case that you succeed, you then need to commit to ten years or more of furiously boring legal battles and inane bureaucratic rule-writing sessions and fend off tens or hundreds of thousands of pages of dissenting reports and comment letters and policy papers, all developed mechanically by an industry that responds not by human decision, but bureaucratic reflex.

  On the other side of the coin, the secret to conquering the financial bureaucracy isn’t savvy and business sense, or the ability to spot a good entrepreneurial idea. Instead, it’s pure bureaucratic force, the ability to throw a hundred lawyers at every problem, to file a thousand motions and never get tired, to file ten thousand, a hundred thousand, a million lawsuits.

  In other words, you need to be a bureaucracy in order to survive one. This is the overwhelming narrative of modern American economics, that the individual, particularly the individual without a lot of money, is inherently overmatched. He’s a loser. And if he falls into any part of the machine, he goes straight to the bottom.

  And then there’s the most disturbing truth of all. People assume that a system that favors the rich likes rich people. This isn’t true. Our bureaucracies respond to the money rich people have, and they bend to the legal might the rich can hire, but they don’t give a damn about rich people. You can be rich and still fall into any one of a dozen financial/legal meat grinders, from an erroneously collapsed credit score to a robo-signed foreclosure to a stolen identity to a retirement account vaporized by institutional theft and fraud.

  The system eats up rich people, too, because it’s not concerned with protecting any individuals, even the rich ones. These bureaucracies accomplish just two things: they make small piles of money smaller and big piles of money bigger. It’s a system that doesn’t care whose hands end up holding the bag, or how long those hands get to hold the bag. It just relentlessly creates and punishes losers, who get to sit beneath an ever-narrowing group of winners, who may or may not stay on top for long.

  What does get preserved, in all cases, is a small constellation of sprawling, interconnected financial companies, whose names and managements may change (Bear becomes Chase, Wachovia becomes Wells Fargo, etc.), but whose entrenched influence remains the same. In other words, this is a machine that loves and protects money but somehow hates all people.

  Of course, this mechanism hates some people more than others. In particular, it hates black people. Again, this is not so much about skin color as it is about culture. There’s a cultural spectrum these bureaucracies are attuned to that roughly ranges from black poverty to white wealth. Where you are on that spectrum determines how much of a citizen you get to be.

  Things that are jailable crimes on one end of that spectrum become speeding tickets on the other. We find white people on the jail end and black people on the speeding ticket end, but for the most part … well, for the most part, you know what I mean. That winking understanding we all share about who gets the book thrown at him and who doesn’t, that’s where American racism has gone: unspoken and hidden, but bureaucratized and automated, and therefore more powerful than ever.

  And nowhere do we see the outlines of that thing more clearly than in the prosecution of fraud. We generally define fraud as lying to trick someone out of money. At the top end of American society, we’ve found out in recent years that lying for profit is actually considered a virtue, and a certain sector of the population fiercely defends its right to earn a living that way.

  When a former Goldman Sachs executive named Greg Smith publicly resigned in the pages of The New York Times, claiming that his company routinely screwed its own clients (derided within the firm as “muppets”) and misled them into buying crappy deals, Smith was blasted by the financial community for being a “Kumbaya”-singing weenie who felt sorry for people who didn’t deserve anyone’s pity—people too stupid not to know when they’re being screwed.

  John Mack, the former head of Morgan Stanley, blasted the Times for even printing the Smith letter, saying, “Last time I checked, we were in business to be profitable.” Mack, incidentally, had once been involved in an insider trading case—for a multimillion-dollar commission, he appeared to have tipped off a hedge fund trader that GE was acquiring a company called Heller Financial, allowing the hedge fund to buy Heller stock before the merger and thus steal from GE shareholders, who made significantly less than they would have without the tip. But Mack was never charged; high-ranking officials at the SEC, citing his “powerful political connections,” intervened to prevent his investigation.

  Mack in other words was the perfect symbol of the idea, generally accepted on Wall Street, that lying an
d cheating to make money is acceptable. The code word for this concept is “sophistication,” meaning that it’s okay to screw certain kinds of investors because, after all, anyone doing business with Goldman Sachs should be “sophisticated” enough to look out for that sort of thing.

  When Goldman executive Fabrice Tourre testified before the Senate in the wake of the notorious Abacus scandal, he used the term “sophisticated” four times. In two letters to the SEC about the same case, in which Goldman helped a hedge fund swindler named John Paulson dump more than a billion dollars of worthless mortgage-based assets on a pair of European banks, Goldman’s lawyers used the word a hilarious twenty-three times.

  But poor people don’t get to use the sophistication defense, and the definition of fraud in their corner of the world is vastly different than the one on Wall Street. A person on public assistance essentially has to make lengthy regular reports about his situation in life and include in those reports a wealth of personal information. He then spends his entire life being scanned by bankers, social workers, agents of the district attorney’s office, even neighbors and traffic cops, for any evidence of inconsistency in his statements.

  The entire world becomes a legal minefield. If you’re poor and on public assistance, just about anything you do that defines you as a living human being can turn into the basis of a fraud case. Getting laid can be fraud. Getting sick can be fraud. Putting your kids in day care can be fraud. Not “sounding poor” can be fraud.

  Well, so what? If you don’t want to be charged with fraud, just don’t lie, then. Right?

  That would be true if our legal system made any sense. But our legal system does not make sense. Our legal system is insane.

  When she was sixteen, just before she was about to deliver her first baby, Markisha Powell got high on meth. The baby’s father, a sailor in the navy, was away at sea. She was freaking out, she was wild, and she was stupid. Getting high just before labor so upset her family and friends that she ended up facing a kind of all-out intervention. The father came home to San Diego from sea and there was a court proceeding even before the baby was born.

  “I lost custody of the baby,” she says now. “They let me hold him after he was born, then they took him away.”

  Markisha is thirty-two years old now, very thin, with her hair kept in an elaborate African-style cut, with tight braids wrapping around her head in concentric circles, from low on her forehead all the way up into a topknot. She has a pretty face, but she’s been homeless and you can see the years. When I first met her she was wearing a long-sleeved black shirt on a very warm day, and she kept her hands all the way inside the sleeves, fidgeting and pushing the sleeves out straight with her thumbs from time to time as she talked.

  There’s no way to explain the lunacy of the criminal justice system/welfare state—call it the “poverty bureaucracy” for short—unless you see it from the point of view of the people in the system. I spent a year following a few people in different parts of the country and watched as they tried to receive their benefits on the one hand and avoid being prosecuted for fraud on the other. Both activities turn out to be essentially full-time jobs.

  A quick aside about the point of this exercise. This was never about welfare. You can have almost any opinion about welfare, you can be bitterly opposed to its very existence, and you could and perhaps should still find what goes on with welfare fraud prosecution in America crazy, even shocking.

  Because the issue here isn’t the efficacy of the welfare state. This is about fairness. Do we treat people the same way everywhere? How does a poor person end up getting arrested for fraud, and does the state have the same playbook for rich people?

  The obvious answer is no, but you have to see the difference up close, at a day-to-day level, to really grasp the breadth of the gap. When you see, up close, where the awesome power of the American criminal justice space station is directed, you will begin scratching your head, no matter what you think of people on welfare.

  Back to Markisha: after the disaster of losing that first child, she went right out and did the same thing over and over again, having three more children with three more fathers and losing custody of them all because she was getting high, selling drugs, and perhaps worse. Then she told a story about something that happened to her in 2003.

  She’d just met the father of her youngest son, and the way she tells it is that he pulled up in his red Honda as she was “walking to her mother’s house” on the street. He asked if she wanted a ride, she says now, and she said yes, because, “I didn’t want to walk, you know?”

  So she hopped in the car with this forty-something man, an engineer named Eric who makes high-end fish tanks, and he gave the twenty-year-old Markisha the proverbial ride to her proverbial mother’s house. One part of this story is certainly true, however: during all those years when Markisha was dealing and getting high, the one connection she kept with anything like family life was with her mother. She visited her mother constantly, even during her wildest periods. And so in 2003, just after Markisha had met this man, whom her mother actually liked, her mother laid down the law.

  “She told me that I had to get clean, had to get off the streets, had to stop hanging out with the wrong people,” Markisha says.

  So she did. She entered a detox clinic called the House of Metamorphosis in the spring of 2003. She was in there with her aunt, her father’s sister, who also had a problem. The first two weeks she was in the program were the longest she’d ever gone without being in touch with her mother, who grew frantic. Finally Markisha called after two weeks and told her mother where she was. A few days later Mom showed up at the clinic and told Markisha that she was glad she was getting clean, that she’d be back the following Saturday.

  “She told me she’d bring me some things,” Markisha says now. “So I waited.”

  But next Saturday came and went. The following morning, Markisha got a call from the head of the program, who was in an office across the street from the dorm. Reflexively, Markisha assumed she was in trouble or being tossed from the clinic. “I thought I’d done something wrong,” she says. “I thought they were mad.”

  But then she got over there and the program chief, a young white woman, was sitting there with Markisha’s aunt. They told Markisha that her mother had died, from a burst blood vessel in her leg.

  “I about destroyed the office,” she says now. “I was tearing stuff off the walls.… I couldn’t stop crying.”

  When she finally got out of the program, she found herself in charge of her five younger siblings, with one as young as seven years old. Her mother’s husband, her stepfather, was on dialysis and in no shape to take care of anyone. Markisha’s boyfriend Eric, the forty-year-old with the Honda, set her up in an apartment, and the two of them lived together for a while with all Markisha’s brothers and sisters. During this time Markisha was clean and even got a square job, working as a receptionist in a time-share real estate office.

  In 2005 Markisha and Eric had another baby. She was having problems taking care of some of her older siblings, and even convinced some of her uncles and aunts to take on the older teenagers, but aside from that, life was more or less bearable. Then one day, when her new baby son was nine months old, she got a call at work from the state-run day care clinic that was taking care of him. Eric, they told her, had not come to pick him up.

  “They start telling me they’re going to call CPS on me if nobody comes,” Markisha says. “Like they’re going to take the baby away. Now, I didn’t have the car, the boy’s father had the car. I called him and got no answer. So I asked my bosses if I could leave early; they let me, and I took the bus and went and got him.”

  Markisha went home to the apartment. She liked that apartment. With the money she’d earned from the job, she’d recently bought a new bed and some other furniture. She turned the key, went inside, and on that new bed, she found Eric, naked, with another woman, also naked.

  Markisha recounts matter-of-factly: “I th
rew the girl out on the street naked. Then I went back inside and started beating his ass up.”

  In stories like this you’d usually hear someone say “I tossed her out on the street,” and in reality that would mean the woman is rudely asked to leave, or maybe has a door slammed in her face. But Markisha literally tosses this girl out on the street naked. When I ask how she managed it, she shrugs.

  “I just drug her out by her legs, then I closed the door. Then I went back upstairs and dealt with Captain Save-a-Bitch, who was trying to get her her things. I wasn’t about to give her her clothes back. And I was like, ‘Dang, you couldn’t even pick up your own son?’ ”

  Markisha “beat his ass” for a good long while and then grabbed her son and walked outside in a daze. She was moving out, but she didn’t know where to yet. She sat down on a stoop with her boy and zoned out. Within minutes, police came. They arrested her and hit her with a domestic violence charge. And that was how she lost custody of her fifth child.

  After that incident, she ended up back on the streets and back on meth. She was homeless for four months in the spring and summer of 2011, and it would take me a while to find out where exactly she was during that time (more on that later). Finally, in the summer of 2011 she got arrested again. As part of her court settlement, she had to go into a program. And she got clean.

  When she came out of detox, she and her youngest son’s father made up, although they didn’t get back together. “We sort of ping-ponged it around,” she says. Her main goal was to get her youngest son back. Markisha doesn’t talk about her other children much; the world pretty much begins and ends with her youngest. Getting him back became the entire focus of her life—and she has a hard time focusing.

  Anyway, the boy’s father made her a deal: if you can get your own home, and keep it, I’ll let you have your son.

  It was at that moment that Markisha decided to apply for CalWORKs. She’d rented a room in an apartment she shared with a barber in her neighborhood, and she needed some help paying for it. CalWORKs meant three hundred dollars a month, plus food stamps. So she went to the local welfare office—a “Family Resource Center,” known as an FRC—and walked inside. She was barely sober, emotionally a wreck, literally penniless, and her entire ambition in life was to keep and maintain a room and a half in a rundown section of west San Diego without having to sell her body to pay the rent.