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A Different Legal System for the Rich: Imagine Getting Off Easy for Hit-and-Run Because You Run a Hedge Fund

It's not just the recession that's killing the middle class -- it's how the legal system is being used to establish a two-tiered society.
 
 
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Our lopsided wealth distribution makes the U.S. look more like a banana republic than one of the richest, most highly developed nations in the world. But having a small, wealthy elite living it up among a nation of struggling workers doesn't make a country a banana republic. In a true plutocracy, you also need a bifurcated legal system, with one philosophy of justice for the wealthy and another for the little guy.

While that’s the case to (greatly) varying degrees in every justice system in human history, in a banana republic that class divide is systemic -- it’s baked into the cake. And that may be exactly what’s developing, gradually, in the United States.

Recently, a modest crime that made big headlines provided an eye-opening anecdote. In July, Dr. Steven Milo, a surgeon, was riding his bicycle on a Colorado road when he was struck from behind by a Mercedes. According to the Vail Daily, Milo “suffered spinal cord injuries, bleeding from his brain and damage to his knee and scapula,” causing “disabling spinal headaches” and requiring “multiple surgeries for a herniated disc and plastic surgery to fix the scars he suffered in the accident.” His attorney said Milo “will have lifetime pain.”

The driver of the Mercedes took off, stopping later not to call for help for Milo, left bleeding at the scene, but for service for his damaged luxury sedan. In Milo’s words, the man “fled and left me for dead on the highway,” a serious felony.

Or it would be if you or I had committed the offense. But the driver that day was 52-year-old Martin Joel Erzinger, a Morgan Stanley Smith Barney money manager who oversees more than a billion in assets for “ultra high net worth individuals, their families and foundations.” District Attorney Mark Hurlbert was apparently concerned with Erzinger’s future -- SEC rules would have required him to disclose the felony within 30 days of being convicted, which might have cost him his job -- and decided to accept a misdemeanor plea, over the objections of Milo and his attorneys. “Felony convictions have some pretty serious job implications for someone in Mr. Erzinger's profession,” Hurlbert said, “and that entered into [the decision].”

There’s nothing new about high flyers getting off the hook for traffic accidents with a wink and a nod from friendly prosecutors, but what makes the story noteworthy is that Hurlbert, who ran as a Republican in an unsuccessful bid for the state senate last year, felt comfortable acknowledging his reasoning to reporters. That he’d freely admit to considering an accused felon’s social status in charging Erzinger suggests a cultural shift in the works.

Economically, the birth-story of America’s new Gilded Age is fairly straightforward. In 1928, on the eve of the Great Depression, those in the top 10 percent of the economic pile grabbed about half of the nation’s income. With the emergence of the New Deal, a powerful labor movement and World War II -- and the GI Bill that followed the troops home -- a large middle class developed, and by 1953, that slice had been cut to less than a third. But by 2006, the middle class’ gains had been entirely reversed, and the top 10 percent were again taking around half of the nation’s income.

As I explain in my book, The Fifteen Biggest Lies About the Economy, that didn’t happen by accident. It was the result of a decades-long class war from above. And there has been a philosophical framework underpinning that war that holds the wealthy to be these perfectly virtuous and hard-working "job creators" on whose backs the rest of society attaches itself like a swarm of parasites.

 
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