The Two Faces of a Police State

Sheltering Tax Evaders, Financial Swindlers, and Money Launderers
while Policing the Citizens

By James Petras
Dissident Voice
August 08, 2012

Never in the history of the United States have we witnessed crimes
committed on the scale and scope of the present day by both
private and state elites.

An economist of impeccable credentials, James Henry, former chief
economist at the prestigious consulting firm McKinsey & Company,
has researched and documented tax evasion.

He found that the super-wealthy and their families have as
much as $32 trillion (USD) of hidden assets in offshore tax
havens, representing up to $280 billion in lost income tax
revenue!

This study excluded such non-financial assets as real estate,
precious metals, jewels, yachts, race horses, luxury vehicles
and so on. Of the $32 trillion in hidden assets, $23 trillion is
held by the super-rich of North America and Europe.

A recent report by a United Nations Special Committee on Money
Laundering found that US and European banks laundered over
$300 billion a year, including $30 billion just from the Mexican
drug cartels.

New reports on the multi-billion dollar financial swindles involving
the major banks in the US and Europe are published each week.

England’s leading banks, including Barclay’s and a host of others,
have been identified as having rigged the LIBOR, or inter-bank
lending rate, for years in order to maximize profits.

The Bank of New York, JP Morgan, HSBC, Wachovia and
Citibank are among scores of banks, which have been
charged with laundering drug money and other illicit
funds according to investigations from the US Senate
Banking Committees.

Multi-national corporations receive federal bailout funds and tax
exemptions and then, in violation of publicized agreements with
the government, relocate plants and jobs in Asia and Mexico.

Major investment houses, like Goldman Sachs, have conned
investors for years to invest in ‘garbage’ equities while the
brokers pumped and dumped the worthless stocks.

Jon Corzine, CEO of MF Global (as well as a former CEO of Goldman
Sachs, former US Senator and Governor of New Jersey) claimed that
he “cannot account” for $1.6 billion in lost client investors funds
from the collapse of MF Global in 2011.

Despite the growth of an enormous police state apparatus, the
proliferation of investigatory agencies, Congressional hearings and
over 400,000 employees at the Department of Homeland Security,
not a single banker has gone to jail.

In the most egregious cases, a bank like Barclay’s will pay a minor
fine for having facilitated tax evasion and engaging in speculative
swindles.

At the same time, the principle ‘miscreant’ in the LIBOR swindle,
Chief Operating Officer (COO) of Barclay’s Bank, Jerry Del Missier,
will receive a severance payout of $13 million dollars.

In contrast to the ‘lax’ law enforcement practiced by the
burgeoning police state with regard to the swindles of the
banking, corporate and billionaire elites, it has intensified
political repression of citizens and immigrants who have
not committed any crime against public safety and order.

Millions of immigrants have been seized from their homes and
work-places, jailed, beaten and deported. Hundreds of Hispanic
and Afro-American neighborhoods have been the target of police
raids, shootouts and killings.

In such neighborhoods, the local and federal police operate
with impunity – as was illustrated by shocking videos of the
police shootings and brutality against unarmed civilians in
Anaheim, California.

Muslims, South Asians, Arabs, Iranians and others are racially
profiled, arbitrarily arrested and prosecuted for participating in
charities and humanitarian foundations or simply for attending
religious institutions.

Over 40 million Americans engaged in lawful political activity are
currently under surveillance, spied upon and frequently harassed.

The Two Faces of the US Government: Impunity and Repression

Overwhelming documentation supports the notion that the
US police and judicial system has totally broken down when
it comes to enforcing the law of the land regarding crimes
among the financial, banking, corporate elite.

Trillion-dollar tax-evaders, billionaire financial swindlers and
multi-billionaire money launderers are almost never sent to jail.

While some may pay a fine, none have their illicit earnings seized
even though many are repeat criminals.

Recidivism among financial criminals is rife because the penalties
are so light, the profit are so high and the investigations are
infrequent, superficial and inconsequential.

The United Nations Office on Drugs and Crime (UNODC) reported
that $1.6 trillion was laundered, mostly in Western banks, in 2009,
one fifth coming directly from the drug trade.

The bulk of income from the cocaine trade was generated in North
America ($35 billion), two-thirds of which were laundered in North
American banks.

The failure to prosecute bankers engaged in a critical link of the
drug trade is not due to ‘lack of information’, nor is it due to the
‘laxness’ on the part of regulators and law enforcement.

The reason is that the banks are too big to prosecute and the
bankers are too rich to jail. Effective law-enforcement would
lead to the prosecution of all the leading banks and bankers,
which would sharply reduce profits.

Jailing the top bankers would close the ‘revolving door’, the
golden portal through which government regulators secure their
own wealth and fortune by joining private investment houses
after leaving ‘public’ service.

The assets of the ten biggest banks in the US form a sizeable share
of the US economy. The boards of directors of the biggest banks
inter-lock with all major corporate sectors.

The top and middle financial officials and their counterparts
in the corporate sector, as well as their principle stockholders
and bondholders, are among the country’s biggest tax evaders.

While the Security and Exchange Commission, the Treasury
Department and the Senate Banking Committee all make a
public pretense of investigating high financial crimes, their
real function is to protect these institutions from any efforts
to transform their structure, operations and role in the US
economy.

The fines, which were recently levied, are high by previous
standards but still only amount to, at most, a couple of weeks’
profits.

The lack of ‘judicial will’, the breakdown of the entire regulatory
system and the flaunting of financial power is manifested in the
‘golden parachutes’ routinely awarded to criminal CEOs following
their exposure and ‘resignation’.

This is due to the enormous political power the financial elite
exercise over the state, judiciary and the economy.

Political Power and the Demise of ‘Law and Order’

With regard to financial crimes, the doctrine guiding state
policy is ‘too rich for jail, too big to fail’, which translates
into multi-trillion dollar treasury bailouts of bankrupt
kleptocratic financial institutions and a high level of state
tolerance for billionaire tax-evaders, swindlers and money
launderers.

Because of the total breakdown of law enforcement toward
financial crimes, there are high levels of repeat offenders in
what one British financial official describes as ‘cynical (and
cyclical) greed’.

The current ‘banner’ under which the financial elite have seized
total control over the state, the budget and the economy has been
‘change’.

This refers to the deregulation of the financial system, the
massive expansion of tax loopholes, the free flight of profits
to overseas tax havens and the dramatic shift of ‘law enforcement’
from prosecuting the banks laundering the illicit earnings of
drug and criminal cartels to pursuing so-called ‘terrorist states’.

The ‘state of law’ has become a lawless state.

Financial ‘changes’ have permitted and even promoted
repeated swindles, which have defrauded millions and
impoverished hundreds of millions.

There are 20 million mortgage holders who have lost their
homes or have been unable to maintain payments; tens of
millions of middle class and working class taxpayers who
were forced to pay higher taxes and lose vital social
services because of upper class and corporate tax evasion.

The laundering of billions of dollars in drug cartel and criminal
wealth by the biggest banks has led to the deterioration of
neighborhoods and rising crime, which has destabilized middle
and working class family life.

Conclusion

The ascendancy of a criminal financial elite and its complicit,
accommodating state has led to the breakdown of law and order,
the degradation and discrediting of the entire regulatory network
and judicial system.

This has led to a national system of ‘unequal injustice’ where
critical citizens are prosecuted for exercising their constitutional
rights while criminal elites operate with impunity.

The harshest enforcement of police state fiats are applied
against hundreds of thousands of immigrants, Muslims and
human rights activists, while financial swindlers are courted
at Presidential campaign fund raisers.

It is not surprising today that many workers and middle class
citizens consider themselves to be ‘conservative’ and ‘against
change’.

Indeed, the majority wants to ‘conserve’ Social Security, public
education, pensions, job stability, and federal medical plans,
such as MEDICARE and MEDICAID against ‘radical’ elite advocates
of ‘change’ who want to privatize Social Security and education,
end MEDICARE, and slash MEDICAID.

Workers and the middle class demand stability of jobs and
neighborhoods and stable prices against run-away inflation
of medical care and education.

Wage and salaried citizens support law and order, especially when
it means the prosecution of billionaire tax evaders, criminal money-
launderering bankers and swindlers, who, at most, pay a minor
fine, issue an excuse or ‘apology’ and then proceed to repeat their
swindles.

The radical ‘changes’ promoted by the elite, have devastated
life for millions of Americans in every region, occupation and
age group.

They have destabilized family life by undermining job security
while undermining neighborhoods by laundering drug profits.

Above all they have totally perverted the entire system of justice
where the ‘criminals are made respectable and the respectable
treated as criminals’.

The first defense of the majority is to resist ‘elite change’ and
to conserve the remnants of the welfare state.

The goal of ‘conservative’ resistance will be to transform the entire
corrupt legal system of ‘functional criminality’ into a system of
‘equality before the law’.

That will require a fundamental shift in political power, at the local
and regional level, from the bankers’ boardrooms to neighborhood
and workplace councils, from compliant elite-appointed judges and
regulators to real representatives elected by the majority groaning
under our current system of injustice.


James Petras, a former Professor of Sociology at Binghamton
University, New York, owns a 50-year membership in the class
struggle, is an adviser to the landless and jobless in Brazil and
Argentina, and is co-author of Globalization Unmasked (Zed Books).

http://dissidentvoice.org/2012/08/the-two-faces-of-a-police-
state/