How Wall Street Turned America Into Incarceration Nation
The U.S. leads the world in prisoners with 2.27 million in jail and more than 4.8 million on parole. Minorities have been especially hard hit, forming 39.4% of the prison population, with one in three black men expected to serve time during their lifetimes.
How is it that our land, supposedly the beacon of freedom and democracy for the rest of the world, puts so many of its own people into prison?
We usually attribute the prisoner increase to a combination of overt racism and Nixon's war on drugs, followed by Rockefeller's "three strikes" legislation in New York, and then the 1984 Sentencing Reform Act with its mandatory sentences. While racism and these laws certainly provide ample opportunity to incarcerate millions for violating senseless prohibition laws, they do not tell the whole story.
Racism was just as virulent, if not more so, long before the dramatic rise in prisoners set in during the 1980s and 1990s. Just because there are draconian laws on the books, it doesn't explain why they are so dutifully enforced. It also doesn't explain why so many are willing to risk prison, knowing the increasing odds of getting caught.
If we dig deeper, we'll see that the rise in incarceration corresponds with the rise of financialization and the dramatic increase in Wall Street incomes. Of course, just because trend lines on charts rise and fall together doesn't mean one causes the other. But this correspondence is much more than coincidence.
In fact, we could show you a dozen other trends lines about financialization, wealth and the rising incomes of America's elites that follow the same patterns over similar years as the incarceration rate. What is the connection?
'Unleashing' Wall Street destroys manufacturing, older urban areas and black America's upward mobility
By the end of the 1970s, our policy establishment embarked upon a new experiment to shock the nation out of stagflation (the crushing combination of high unemployment and high inflation). To do so, neo-liberal economists successfully argued that Wall Street should be deregulated and that taxes on the wealthy should be cut to spur new entrepreneurial activity that would enrich us all.
Entrepreneurial activity certainly increased, and with a vengeance. Rather than create new jobs and industries that would promote shared prosperity, a new and invigorated Wall Street set about to devastate American manufacturing. Its goal was, and still is, to make money from money, not to make money by producing tangible goods and services. Wall Street's main product for America is debt. And its profits derive from loading up the country with it, and then collecting compound interest.
Wave after wave of financial corporate raiders (now politely called private equity firms) swooped in to suck the cash flow out of healthy manufacturing facilities. Wall Street, freed from its New Deal shackles, loaded companies up with debt, cut R&D, raided pension funds, slashed wages and benefits, and decimated well-paying jobs in the U.S. while shipping many abroad. The released cash flow was used to pay back the financiers, buy up stock to drive up its price, and pay out dividends. Nearly half the raided companies failed as America's heartland in a few short years turned into the Rust Belt.
But Wall Street prospered as its profits rose to account for nearly 40% of all corporate profits by 2003, up from less than 10 percent in 1982 (It would take more space than we have here to explain why this had little to do with "unfair" foreign competition. We could also show that so called free-trade agreements were designed by financiers to promote their interests, not ours.)