America is increasingly looking like a banana republic, especially concerning politics, where our leaders are for sale to the highest bidder, and consequently legislation, enforcement and policy are also up for sale. The rich and powerful increasingly can do what they want, while the little guy is expected to follow the rules. In fact the little guy is increasingly getting whacked by a whole host of draconian and petty rules that he did not even know existed.
For those who can buy influence, however, the rules are different. Probably the biggest example of this is our financial industry where fraud with impunity has become a way of life. They know that the government is not going to lower the boom on them if they habitually break the law, so they continue to do so, knowing that at worst they will get a slap on the wrist. The worst was probably the way the robo-signing scandal was treated with kid gloves.
I like this excerpt from the National Memo
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Why Inequality Matters: 3 Ways The Mortgage Crisis Has Undermined Our Legal System
February 17th, 2012 5:06 pm Bruce Judson
…The stakes here are enormous. They extend beyond the housing market to the nature of American society itself. The banks’ blatant malfeasance with regard to the robo-mortgage scandal and other foreclosure-related activities has been a clear example of unequal enforcement of the laws.
Sustainable capitalism requires that all participants in a contract or bargain believe their interests will be enforced equally by the courts: Capitalism requires that Lady Justice wear a blindfold. When powerful players are permitted to alter established rules at will, capitalism ultimately collapses. Contracts and the idea of a fair bargain become meaningless as less powerful parties to an agreement know their rights will not be enforced. Over time, citizens lose faith in government and their own ability to thrive in what becomes a corrupt economy. This uncertainty leads the small businesses, which are so often cited as important to our economy, to shy away from new activities that might put them at the risk of unequal treatment.
President Obama has declared economic inequality to be “the defining issue of our generation.” I agree, but I am terrified that the most recent news related to the housing settlement is not the definition the president intends.
Bruce Judson is Entrepreneur-in-Residence at the Yale Entrepreneurial Institute and a former Senior Faculty Fellow at the Yale School of Management.