Chapter 5:  The Department of Corrections: How Financial Criminals Can Learn Empathy for Their Victims

jail fence

The Punitive context:  POVERTY SCHOOL

Poverty School is a large fenced penal colony set aside in a quite remote area of the U.S. The heavy chain link fence is 20 feet high, topped by six feet of inward-leaning razor wire, and is electrified to a degree slightly less than lethal for a human body provided the body is not barefoot on wet ground. The region has four seasons which cannot be called altogether pleasant year around as, normally, summers are a suffering steamy bake and winters are bitterly, mercilessly, windy and cold. Spring and fall are unusually brief.


The colony, notably deficient in natural resources, has few trees and a generally weedy, ugly topography that is considerably eroded. It is constructed over a vast, isolated old strip mine plowed through once-green mountains whose mountaintops were all blasted off many years ago into the clear burbling streams that used to flow through the verdant vanished valleys. In violation of federal regulations, the area was never re-seeded.


Nothing is found inside the colony besides raw nature and the inmates. These latter consist mainly of white collar criminals, almost exclusively from the world of high finance and banking plus a sprinkling of mine owners, politicians and others, who have been indicted and convicted after perpetrating an exceedingly wide variety of manipulative money schemes and displaying Pervasive Predatory Behavior (PPB), i.e., the financial equivalent of the more common Persistent Felony Offender (PFO) which prosecutors so often call upon in criminal courts across the nation.


Prominent among their various innovative crimes are inventing and selling so-called “derivatives” – particularly those known as “swaps,” along with a growing host of other “monetized financial instruments” – which are then marketed under various misleading labels and representations. Trial courts reveal that most such criminal schemes exhibit two things in common:  they 1) produced nothing whatsoever of value other than profits to the perpetrators, and 2) harmed other persons by causing them to lose savings, investments, mortgaged homes, and so forth, which would not otherwise have been at risk absent the greed-induced scheming manipulations – which is all simply to say that these white-collar brigands made trouble where there was no trouble.


It is universally understood by lawmakers, police enforcers, juries, judges and victims that the convicted inmates have been found guilty of increasing poverty and trouble to higher levels than existed previously. One intent of Poverty School is that the inmates will eventually, sometime during their sojourn, arrive at this understanding also. Most do.


There is further agreement that, since law breakers so convicted obviously cannot have felt any empathetic appreciation of the distress and misery felt by so many of their fellow humans as a result of the increased poverty and trouble they have caused, it therefore is desirable that they learn to feel, first hand, and to internalize, such distress and misery within themselves in order that they may attain the virtue of empathy, thereby becoming more human and less subject to the temptations that could so harm others ever again.


The Department of Corrections periodically delivers to the single heavily-guarded entry gate a minimal quantity of poor quality foodstuffs and cheapo used clothing, plus, once in a while, miscellaneous scrap building materials and pasteboard boxes. Inmates are free to use these latter – if they can claim such materials before others do, or take them by force – to construct their own shelters in lieu of sleeping in the open or, alternatively, renting shelter in hovels constructed by previous inmates that are now controlled and rented out by current inmates. Most prove to be not very good at building something real. As to the grungy food and trashy clothing deliveries, inmates are absolutely free to decide among themselves on the manner in which these commodities will be “traded,” meaning “distributed” according to the arcane language of economics – e.g., via pricing and retail sale, via rental, or other means of their own devising including violence – as well as deciding who among themselves will control these transactions. Someone always does.


Each arriving inmate is given a meager one-time handout of cash, which, if not immediately stolen, is substantially inadequate for acquiring a subsistence level of such moldy food, mildewy clothing and tarpaper shelter as may happen to be available in the colony at any given time. With certain exceptions, first-time convicts typically are sentenced to one year in the colony, subsisting however they can, among other prisoners who are very much like themselves – all having been convicted of comparable financial frauds and money-related crimes of greed that knowingly exploit and parasitize other people whom they either did or did not know, and often both.


Recidivists who incur a second conviction are usually sentenced to reside in the colony for an additional two years. These are relatively rare. Even more rare are third-time convictions, which, in any case, activate a quite different scenario as explained below.


Within the colony there are no laws whatsoever, thus nothing is illegal. But there are three rules:


The Garden Rule provides that any inmate who freely elects to devote time and effort to constructing or maintaining a garden will be rewarded by earning extra cash, at a rated value of one-365th (one day’s pay) of the original meager handout, for each ten-hour day so devoted. The inmates themselves keep the books on this enterprise. Cheating is rare.


The Homicide Rule requires that every murder of an inmate by another inmate – an activity quite legal within the colony, since there are no laws – must be reported to the Department of Corrections, specifying who was murdered and the reason(s) for which he was murdered. There is no interest in the murderer, only the murderee. Any inmate may make this report and has dual incentives to do so which are 1) a one-365th cash bonus equal to ten hours work, as under the Garden Rule, and 2) the Department of Corrections’ ironclad promise to cancel the immediate next delivery of wilted foodstuffs, ragged clothing and building material scraps whenever it is eventually, inevitably, discovered that a murder has gone unreported.


The Department ensures that all such murder reports are posted on a massive bulletin board standing on four-by-fours close by the gate, just outside the fence, where they can be easily read by inmates who care to read them. As incentive to check the board regularly the Department also frequently posts reports, each by named inmate, on the dollar value of that inmate’s personal assets and possessions which have been confiscated in toto for pro rata distribution among the victimized persons whose savings, homes, equity and so forth were lost due to the inmate’s crimes which led to the incarceration.


The Exit Rule requires that every inmate must leave the colony on the last day of his sentence, whatever that sentence may be – one year, two, whatever. The exit rule exists expressly to ensure that certain inmates who so enjoy the laissez faire prison environment as to want to remain permanently therein – i.e., those who over-quickly learn the ways of the colony and thereby thrive in pauper’s wealth, power and influence relative to the other pauperized inmates – are denied the perverse gratification of doing so. After serving two sentences in Poverty School, a recidivist may not return to the colony. Upon incurring a third conviction, he must instead be incarcerated among the really hard cases at the second educational facility – Gambling School.


The Punitive context:  GAMBLING SCHOOL

Gambling School’s physical facility is substantially different than that of Poverty School. The prison colony in its entirety is securely enclosed under one vast corrugated tin roof which leaks. Everywhere throughout the acres under that roof are seemingly endless hundreds of gambling devices – one vast casino stretching from end to end of the colony. The walls, of thick reinforced concrete, contain no windows and but one door which is heavily guarded. The roof’s many leaks are never directly over the gambling machines.


This uninsulated place is poorly heated in winter, unremittingly hot in summer. There is no privacy and no place to hide. There are no bedrooms and no beds. A few flimsy tables hold gambling devices, but none at all are available for eating the usually soggy food available only from undersized and poorly maintained dispensing machines which are few, hard to find, and frequently moved about. There are no chairs anywhere, as all activities in the casino are designed to be accomplished while standing. A few urinals and unpleasantly cold metal prison-style commodes, insufficient in number for the inmate population, are affixed to the walls in open public areas every hundred fifty yards.


With inmates and other contents, Gambling School’s casino is crowded. It is impossible to go from any point to any other point without passing through endless confusedly winding corridors densely packed with slot machines, electronic roulette and blackjack, and dozens more of the normal accoutrements of gambling casinos so routinely rigged to favor the house. In Gambling School, rigging to favor the house is triple the usual fix.


Inmates consist entirely of white collar criminals – primarily but not exclusively Ponzi artists, speculators, ex-corporate CEOs, CFOs and bright boys from the rarified world of stock and futures trading and investments, reinsurance, hedge funds and suchlike – all indicted and convicted after displaying pervasive predatory behavior (PPB) including, but not limited to, insider trading and/or selling an incredible variety of manipulated stocks, securitized derivatives and other outrageously unethical and criminally deceptive devices, and/or acquiring obscene wealth (defined as a ratio, prescribed by periodic national referendum, of total acquired personal monetary value relative to the combined average annual per capita  income of all Americans subsisting below the official poverty line, plus the middle class) primarily through devious corporate mergers, hostile takeovers, raiding the wealth and eliminating the jobs from newly acquired subsidiaries, unearned free stock options and irrationally golden contracts which were wholly unrelated to corporate performance or to serving the public common good.


As defined in law, “outrageously unethical and criminally deceptive devices” have five things in common:  they 1) did nothing whatsoever to benefit the common good; 2) produced nothing whatsoever of value other than profits to the perpetrators, 3) often destroyed the value of prospering companies and the jobs of their employees, 4) harmed other persons by depriving them of otherwise minimally at-risk stocks, bonds, several varieties of securities, investments and simple savings subject to the vagaries of Wall Street and comparable free trading arenas around the world, and 5) harmed the entire populations of the United States and other nations by precipitating or materially contributing to the bust cycles by which routine capitalist activities and incentives are distinguished at frequent but not precisely predictable intervals averaging about twelve to fourteen years. Public prosecutors strongly favor these five legal definitions, as any combination of them generally ensures conviction in court.


It is understood by all concerned, except the inmates themselves, that the convicted inmates have been found guilty of creating more poverty and havoc than previously existed, have displayed pervasive predatory behavior (PPB), and made trouble where there was no trouble. All are further agreed that, since law breakers so convicted self-evidently cannot possibly have felt any empathy for the distress and misery felt by so many of their fellow humans as a result of the poverty, havoc and trouble they have caused, it therefore is desirable that they learn first hand to feel and internalize such distress, misery, poverty, havoc and trouble within themselves in order that they may, as in Poverty School, perhaps become more human and thereby not be tempted to so harm others ever again…maybe (which also means maybe not).


Each arriving inmate is given a small one-time handout of cash, which is substantially inadequate for acquiring a subsistence level of such food as may be available in the vending machines at any given time, but which might be increased by gambling. Most inmates quickly learn that might also means might not. Begging is frowned upon.


Within the casino there are no laws, so nothing is illegal. But there are three rules:


The Left-Ear Rule. Every person convicted and sentenced to the casino will, during the first day after arrival in the casino, have his left ear surgically amputated.


The Right-Ear Rule. A recidivist who is convicted and sentenced to the casino a second time will have his right ear surgically amputated immediately after arrival in the casino. Thereby, every other inmate may plainly see that the now-earless inmate has repeatedly violated the educational intent of Gambling School, which intent is reflected in large colorful posters placed ubiquitously throughout the casino depicting an earless person in prison garb and bearing the slogan: “What, you didn’t hear us again?”


The Permanent Fix Rule. Any person convicted and sentenced to the casino a third time is, upon arrival, placed in a steel-barred open-air cell called The Ayn Rand Selfish Room which is located immediately inside the entrance for all to observe. Twenty four hours later that person is removed, ushered into a nondescript panel pickup and driven away, never to be seen or heard of again. Where such prisoners are taken is widely thought to be Top Secret, but – by various discrete psychological devices – the Department of Corrections encourages a rumor mill whereby inmates are led to speculate on whence their late colleague has disappeared, and the nature of his fate.


Deftly insinuated into these gossipy speculations is a widely believed rumor that the amputation treatment has been exacted once again, but this time involving that procedure, widely abhorred by human males, whereby veterinarians render male dogs more pleasant, more tame – more “neutral” as it were – vis-à-vis their instinctive competitive drive for dominance which so often leads to ill tempers, getting into fights, selfishly hoarding bones, and indiscriminantly peeing on vertical things to self-validate what they perceive as their territory. Rumor asserts that this dread measure applies to all whose third-time strikeout highlights personal failure to learn empathy for the wellbeing of their fellow man


In a further and unique blending of neurophysiology with behavioral psychology, the rumors discreetly encourage inmates to believe such treatment may (may) extend to any remaining genitalia of more than two and one-half inches length even at half staff. This is said to be mandatory for all whose conviction includes at least one count of selling short.


Where hedge funds place unusually large short bets, the sheer weight of downward pressure on a stock or an index can make it fail; in times of stock market crisis – in the autumn of 2008, for example – some stock exchanges introduced temporary bans on short selling to prevent… collapsing. These moves caused fierce debate, with some arguing that the market should be allowed to operate freely; others maintained that short-sellers are invariably also short-term players who should be discouraged.

Daniel Conaghan and Dan Smith, The Book of Money

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