Dishonesty Today

One factor that has rarely been mentioned in the national discussion about the current recession is the rise of dishonesty. There have always been crooks and liars, of course, but for centuries if not longer, lies and thievery have been socially disapproved. In the 21st century United States, however, blatant dishonesty has become commonplace not only by people who are sociopathic, needy, or crazy, but also by society’s leaders—our most important politicians and businessmen, leading corporations, and others whose attainments formerly earned them public respect.

Although it may not be politically correct, I also observe that this normalization of dishonesty is taking place largely under Republican auspices. Obviously, Democrats have their usual complement of crooks and liars, just as Republicans do. But what we are seeing today is something extraordinary. A political scientist friend, deeply immersed in contemporary politics and a former liberal Republican, says that what has happened is the takeover of the Republican Party by the South, and with it the traditional Southern political style which is rooted in dishonesty. He's usually right about such things, but in any event the national success of dishonesty reflects its one-sided nature. If the Democrats used dishonesty as a normal tool of political competition the way Republicans do, they would not be reduced to ineffectual sputtering whenever the Republicans perpetrate another lie. Yet time and again, that has been their reaction to Republican lies. We have seen this with the Swift Boat ads, with Republican propaganda about the healthcare bill, and with their outlandish claims about President Obama, just to mention a few of the better known examples. The Democrats remain perpetually surprised and shocked by such lies, still taking honesty and honor as the norm.

The spread of blatant dishonesty to the highest reaches of private society, which traditionally consists largely of Republicans, has occurred in step with the Republican use of dishonesty for political ends. Republican policies have been highly influential in creating the current atmosphere in which dishonesty is accepted as a normal part of the “game.” For example, George W. Bush’s administration refused to pursue illegal offshore entities and practices that allowed corporations to avoid billions of dollars in taxes, and gutted the enforcement capabilities of the SEC as well as of the EPA, OSHA, the Bureau of Mine Safety, the FDA, the FCC, and the Consumer Product Regulatory Commission.

The current recession traces almost entirely to dishonesty practiced by the largely Republican financial establishment. At its base were the firms that extended mortgage loans to people they knew to be unqualified. They then sold those loans to highly respected financial intermediaries who, with little examination, packaged and sold them to professional investors with unfounded assurances that they were safe, supported by the lies of rating agencies that had examined them only formally, and in some cases hardly understood them. The investors, in turn, falsely assured the pensioners, workmen, and others who depended on their expertise that they were working hard to protect their assets. The investment advisers who got their institutions to buy these securities fought tooth and nail against regulatory requirements designed to provide transparency, and won important victories like preventing the Commodity Futures Trading Corp. from regulating the “shadow” financial structure that had become the largest of these institutions.

Finally, what prompted this note from me was a Wall St. Journal article of April 9, 2010, stating that according to a NY Federal Reserve Bank study, all the major banks have, for the last 5 quarters, submitted false statements about their loan levels, with the falsehood designed to make their riskiness seem less than it truly was. The article states that the false submissions were not criminal in nature since, at the moment of submission, they were technically true. But when Al Capone “proved” that he was not a crime boss because his tax returns showed only a small income, he was convicted of perjury if not of other crimes. Why, then, should a banker escape prosecution for perjury if he reports in a sworn statement that his hands are clean, simply by virtue of handing off his excessive loans for one or two days?

It is time that we start severely punishing the liars, cheats and thieves at the upper levels of society. Let’s make it once again socially disgraceful to engage in such behavior.