PUNISHING
REPEAT OFFENDERS
In 1964,
William Rummel received three years in prison after being convicted of a felony
involving the fraudulent use of a credit card to obtain $80 worth of goods.
Five years later, he passed a forged check in the amount of $28.36 and received
four years. In 1973, Rummel was convicted of a third felony -- obtaining
$120.75 by false pretenses for accepting payment to fix an air conditioner that
he never returned to repair. Rummel received a mandatory life sentence
under Texas' recidivist statute. He challenged this sentence on the
grounds that it violated the 8th Amendment’s prohibition of cruel
and unusual punishment by being grossly disproportionate to the crime.
In Rummel
v Estelle (1980) the Supreme Court affirmed Rummel’s life sentence for the
theft of less than $230 that never involved force or the threat of force.
Justice Louis Powell’s dissent noted that “it is difficult to imagine
felonies that pose less danger to the peace and good order of a civilized
society than the three crimes committed by the petitioner” (445 US 263, 295).
However, Justice William Rehnquist’s majority opinion stated there was an
“interest, expressed in all recidivist statutes, in dealing in a harsher
manner with those who by repeated criminal acts have shown that they are simply
incapable of conforming to the norms of society as established by its criminal
law” (445 US at 263). After “having twice imprisoned him for felonies,
Texas was entitled to place upon Rummel the onus of one who is simply unable to
bring his conduct within the social norms prescribed by the criminal law” (
445 US at 284).
Now consider the case of General Electric, which is not considered an habitual
criminal offender after committing diverse crimes over many decades. In the
1950s, GE and several companies agreed in advance on the sealed bids they
submitted for heavy electrical equipment. This price-fixing defeated the
purpose of competitive bidding, costing taxpayers and consumers as much as a
billion dollars. GE was fined $437,000 – a tax-deductible business
expense – the equivalent of a person earning $175,000 a year getting a $3
ticket. Two executives spent only 30 days in jail, even though one
defendant had commented that the price-fixing “had become so common and gone
on for so many years that we lost sight of the fact that it was illegal”.
In the
1970s, GE made illegal campaign contributions to Richard Nixon’s Presidential
campaign. Widespread illegal discrimination against minorities and women
resulted in a $32 million settlement. Also during this time, three former GE
nuclear engineers – including one who worked for the company for 23 years and
managed the nuclear complaint department – resigned to draw attention to
serious design defects in the plans for the Mark III nuclear reactor because the
standard practice was “sell first, test later”.
In 1981, GE
was convicted of paying a $1.25 million bribe to a Puerto Rican official to
obtain a power plant contract. GE has plead guilty to felonies involving
the illegal procurement of highly classified defense documents. In 1985,
it plead guilty to 108 counts of felony fraud involving defense contracts
related to the Minuteman missile. In spite of a new code of ethics, GE
would be convicted in three more criminal cases over the next years, plus paying
$3.5 million to settle cases involving retaliation against four whistle-blowers
who helped reveal the defense fraud. (They subsequently lobbied Congress
to weaken the False Claims Act.) In 1988, the government returned another
317 indictments against GE for fraud in a $21 million computer contract.
In 1989,
GE’s stock brokerage firm would pay a $275,000 civil fine for discriminating
against low income consumers, which was the largest fine ever under the Equal
Credit Opportunity Act. A 1990 jury convicted GE of fraud for cheating on
a $254 million contract for battlefield computers and journalist William Greider
reports that the $27.2 million fine included money to “settle government
complaints that it had padded bids on two hundred other military and space
contracts”.
Because of
tax changes they lobbied for and the Reagan tax cuts generally, GE paid no taxes
between 1981 and 1983 when their net profits were $6.5 billion. In fact,
in a classic example of corporate welfare, they received a tax rebate of $283
million during a time of high national deficits even though they eliminated
50,000 jobs in the United States by closing 73 plants and offices. Further,
“Citizen GE” is one of the prime environmental polluters and is identified
as responsible for contributing to the damage of forty-seven sites in need of
environmental cleanup.
Currently,
GE advertises that it ‘brings good things to life’ and owns NBC television.
Even though felons usually loose political rights, GE’s political action
committee contributes hundreds of thousands to Congress each year. In
spite of having been convicted of defrauding every branch of the military
multiple times, GE frequently is invited to testify before Congress. If
their revenue were compared to the Gross Domestic Product of countries, they
would be the 53rd largest economy in the world. In 1997, GE’s
CEO Jack Welch Jr. made $8,800,797 in salary, bonus, and other compensations
He had an additional $18,783,000 in stock options for a total yearly pay package
of $27,583,797. Jack Welch Jr. also has $182,243,818 in unexercised stock
options from previous years (Executive Paywatch http://www.paywatch.org).
‘Three strikes and you’re out’ does not apply to GE, which is still
at bat after hundreds of felony convictions.
March
2003 - life
sentence for stealing three golf clubs worth $400 each because of prior
burglaries upheld by Supreme Court in Ewing v California. Meanwhile, Ken
Lay and other corrupt CEOs don't have any criminal charges filed against
them.
|
|
|
May 2002, Washington
Post: Study: Contracts Given To Repeat Violators
- Large Firms Benefit Despite Infractions
In fiscal 1999, the latest year for which data was available, 43 of the largest contractors won $185 billion in government business; over the last 12 years, 30 of them paid $3.4 billion in fines, settlements and restitution, according to the Project on Government Oversight (POGO).
Over the last 12 years, the report said, only one contractor, General Electric's aircraft division, was suspended from bidding -- for five days. POGO found that 16 of the 43 contractors examined had been convicted of 28 criminal violations; four of the top 10 have at least two criminal convictions.
ADDITIONAL RESOURCES:
Bibliography on class
in film and media studies
Is
Bill Cosby Right or Is the Black Middle Class Out of Touch? (NPR interview
with Dyson + book excerpt)
NY
Times series on class - many topics like health, marriage, religion, etc
Census Bureau - current info on Poverty,
Poverty Guidelines and Income. The Global Rich List
places income figures in a global perspective and is good for understanding the privilege from living in the
developed ('1st' world).
Wealth
inequality charts and CEO
pay charts (faireconomy.org); more on CEO
Compensation (Forbes magazine)
Bush Has A Cabinet Full of Wealth:
One-Third Top $10 Million Mark by Thomas B. Edsall (Washington Post) - When Vice President Cheney and the 14 other statutory members of President Bush's Cabinet meet, 10 of them have one thing in common: They are millionaires.
In fact, one-third of the Cabinet members, according to their financial disclosure statements, are in the $10 million-plus range, while another third are in the $1 million to $5 million range.
The heaviest hitter is former Alcoa chief executive Paul H. O'Neill, now the treasury secretary. He is worth between $67 million and $253 million. Disclosure forms do not give specific price valuations for holdings, but instead require officials to state whether an asset is worth from, for example, $100,000 to $250,000, or $5 million to $25 million.
Gap Between Rich and Poor Grows:
Fed Report Details Families' Income Situations By Albert B. Crenshaw (Washington Post,
23 January 2003; Page E01): The rising economic tide of the late 1990s lifted the boats of almost all American families but also sharply increased the wealth gap between the rich and the rest of society, according to a survey released yesterday by the Federal Reserve.
The net worth of most families -- the value of their assets minus their debts -- also rose strongly, with the median climbing 10.4 percent, to $86,100, over the three-year survey period. Among blacks it rose 13.1 percent, to $19,000 from $16,800.
But the net worth of the wealthiest families climbed even more. The median among those in the top 10 percent leapt to $833,600 from $492,400, while the mean soared to $2.26 million, from $1.68 million three years before. These families' median income leapt 19.3 percent, to $169,600, during the same period. The median is the midpoint for a group; the mean is the arithmetical average.
Jared Bernstein of the Economic Policy Institute noted that in 1992, the net worth of the families in the top 10 percent was 13 times that of the families in the next-to-lowest 20 percent.
That ratio was about the same in 1998, he said, but by 2001 it had climbed to 22.4.
Number of millionaires hits record:
The ranks of Americans worth $1 million grew 21% in 2004; the $5 million club grew even
faster. By Les Christie (CNN.com/Money 25 May 2005)
Federal
Reserve's Survey of Consumer Finances - detailed statistical look at income,
wealth & assets of households - I'd highly recommend Kennickell, Rolling
Tide: Changes in the Distribution of Wealth in the U.S. 1989-2001 (51 page/.pdf)
- which contains some analysis of Black-White wealth differences. Also, Aizcorbe,
Kennickell, and . Moore, Recent Changes in U.S. Family Finances: Evidence from the 1998 and 2001 Survey of Consumer Finances.
(32 page/.pdf)
See also The
Wealth of Hispanic Households, 1996 - 2002 by the Pew Hispanic Center (Click
on 'Complete Report'). Note that the Pew Center uses a slightly different data
set than the Federal Reserve Board, so the reports are not completely
comparable. The survey used in the Pew Center analsysis over-sample low income
and says that it may miss of the wealthiest people (whites) and thus show a more
equal distribution of white wealth than really exists.
|
