Janine Wedel - Unaccountable - How Elite Power Brokers Corrupt Our Finances, Freedom, and Security

In a major investment in nonfinancial business, enabled by special exemptions granted by the Federal Reserve Board, manipulation by “Goldman and other financial players [of the aluminum market] has cost American consumers more than $5 billion over the last three years, say former industry executives, analysts and consultants.” David Kocieniewski, “A Shuffle of Aluminum, But to Banks, Pure Gold.” New York Times, July 20, 2013.

61. Kocieniewski, op. cit.

62. For the definition of a flexian, see Wedel, Shadow Elite, pp. 15-19. For examples of flexians, see this book, Shadow Elite , and Janine R. Wedel, “Is the Government in Charge, or is it the Shadow Elite?” Huffington Post , January 7, 2010 (http://www.huffingtonpost.com/janine-r-wedel/who-can-you-trust-tom-das_b_414403.html); and Arianna Huffington, “The First HuffPost Book Club Pick of 2010: Shadow Elite by Janine Wedel.” Huffington Post , January 6, 2010 (http://www.huffingtonpost.com/arianna-huffington/the-first-huffpost-book-c_b_412999.html).

63. Louise Story and Annie Lowrey, “The Fed, Lawrence Summers, and Money.” New York Times, August 11, 2013 (http://www.nytimes.com/2013/08/11/business/economy/the-fed-lawrence-summers-and-money.html).

64. See, for example, Story and Lowrey, op. cit.; Damian Paletta and Jon Hilsenrath, “Summers Faces Hit on Potential Fed Nod Over His Wall Street Ties.” Wall Street Journal, July 26, 2013 (http://online.wsj.com/article/SB10001424127887323971204578630061896947112.html); Louise Story, “A Rich Education for Summers (after Harvard).” New York Times, April 6, 2009 (http://www.nytimes.com/2009/04/06/business/06summers.html?pagewanted=all); and Lawrence Summers, “Austerity Would Hurt U.S. Jobs and Growth.” Washington Post, June 2, 2013 (http://articles.washingtonpost.com/2013-06-02/opinions/39697948_1_revenue-collection-deficit-financing-deficit-reduction).

65. Kris Benson, “Breaking: Goldman Sachs Did Not Break Any of Those Laws It Wrote.” Wonkette, August 10, 2012 (http://wonkette.com/480740/breaking-goldman-sachs-did-not-break-any-of-those-laws-it-wrote).

66. Susan Strange, The Retreat of the State . Cambridge, U.K.: Cambridge University Press, 1996. I argue that ethics have become disconnected from the mores of a larger public or community and detached from the authority that states and international organizations, boards of directors, and even shareholders once provided. (See Chapter 10 and Janine R. Wedel, “Rethinking Corruption in an Age of Ambiguity.” Annual Review of Law and Social Science, vol. 8, 2012, pp. 453-498.)

67. E-mail, May 9, 2014, from John Clarke, emeritus professor, Faculty of Social Sciences, The Open University.

CHAPTER 2

1. Hugh Son, “Bank of America CEO Faces Shareholder Ire Amid Protests.” Bloomberg News, May 9, 2012 (http://www.bloomberg.com/news/2012-05-09/bank-of-america-meets-shareholders-as-protests-swirl.html).

2. In centrally planned systems, where political authorities made decisions about production and distribution, demand outpaced supply. The Hungarian-born economist János Kornai, calls this an “economy of shortage.” (János Kornai, Economics of Shortage , Amsterdam, the Netherlands: North-Holland Press, 1980.) In shortage economies, too much money chased too few goods.

3. The term was coined in Claudia Honegger, Sighard Neckel, and Chantal Magnin, Strukturierte Verantwortungslosigkeit: Berichte aus der Bankenwelt . Berlin: Suhrkamp Verlag GmbH und Co. KG, 2010.

4. Of course, Weber expounds on bureaucracy as an ideal type.

Weber dealt with bureaucracy in both government and private enterprise. For instance, he wrote as follows: “The management of the modern office is based upon written documents (‘the files’), which are preserved in their original or draft form. There is, therefore, a staff of subaltern officials and scribes of all sorts. The body of officials actively engaged in a ‘public’ office, along with the respective apparatus of material implements and the files, makes up a ‘bureau.’ In private enterprise, ‘the bureau’ is often called ‘the office’.” (Max Weber, “Bureaucracy,” Hans H. Gerth and C. Wright Mills, eds., From Max Weber. New York: Oxford University Press, 1946, p. 197.)

5. If followed in letter and spirit, some scholars argue, bureaucracy would produce an organization with self-paralyzing routines. Anthropologists who expound on bureaucracy include: Don Handelman, Models and Mirrors: Toward an Anthropology of Public Events. New York and Oxford: Berghahn Books, 1998; Michael Herzfeld, Cultural Intimacy: Social Poetics in the Nation-State . New York and London: Routledge, 2005; Philip Parnell, “The Composite State,” Ethnography in Unstable Places: Everyday Lives in Contexts of Dramatic Political Change , Carol J. Greenhouse, Elizabeth Mertz, and Kay B. Warren, eds. Durham and London: Duke University Press, 2002.

With regard to bureaucracy in practice in the United States, see, for instance, two key works published several decades ago that address how American consumers complain when dissatisfied with a product or service (Laura Nader, ed., No Access to Law: Alternatives to the American Judicial System. New York: Academic Press, 1980; and Arthur Best, When Consumers Complain. New York: Columbia University Press, 1981). A chapter on complaint letters in anthropologist Nader’s edited book explains that while there is a huge range in the content and form of the letters, they nonetheless convey a “common theme—a loss of trust” (p. 161). As one reviewer writes: “Experience with incompetent plumbers, dishonest professionals, derelict and corrupt officials, deceptive advertisers, and unresponsive merchants has sapped consumers’ confidence in the market and eroded their previously held assumption that most people and most organizations can be presumed to be concerned and responsible and able” (Susan S. Silbey, “Review Essay: Who Speaks for the Consumer? Nader’s No Access to Law and Best’s When Consumers Complain ,” American Bar Foundation Research Journal, no. 2, American Bar Foundation, 1984, pp. 455-456).

6. Jamil Afaqi e-mail to Janine Wedel, January 8, 2014. My thanks to Afaqi for discussion and insights on these points.

Stripping the customer of individuality adversely affects him, according to sociologist Barry Schwartz. In Queuing and Waiting (Chicago: University of Chicago Press, 1975, p. 30), he writes:

To be kept waiting—especially to be kept waiting for an unusually long while—is to be the subject of an assertion that one’s own time (and, therefore, one’s social worth) is less valuable than the time and worth of the one who imposes the wait.

Afaqi asserts that one’s sense of personal worthlessness is heightened when queuing is virtual—such as on the computer or telephone—as there is nothing tangible to grasp on to (Afaqi e-mail, January 8, 2014).

7. In addition to Tett, sociologist of finance Donald MacKenzie, who has studied how market participants create “knowledge about financial instruments” (Donald MacKenzie, “The Credit Crisis as a Problem in the Sociology of Knowledge.” American Journal of Sociology , vol. 116, no. 6, May 2011, p. 1778), argues that “The organizational division of labor inside credit rating agencies” played a crucial part in the financial crisis. He adds: “what I have found is more often reminiscent of the rigidities and barriers to information flow in the background of the Challenger disaster (Vaughan 1996)” (Diane Vaughan, The Challenger Launch Decision: Risky Technology, Culture, and Deviance at NASA . Chicago: University of Chicago Press, 1996, p. 1831).