The old order fought back. Hoover, fearing disorder, had the protesters in 1932 teargassed and their protest encampments destroyed by the Army. When the government tried to impose the law on this small group of powerful actors, what FDR called the “informal economic government of the United States,” they at first refused. In the middle of the 1930s, the head of the American Bankers Association called on bankers to stop funding the government until it ended the New Deal. The A&P supermarket chain, the first company with a billion dollars in revenue and the Amazon of its day, fought the Robinson-Patman Act, a law passed in 1936 to stop the corporation and other chain stores from engaging in predatory practices against its rivals.
The courts, largely run by conservative old men, struck down 1,600 injunctions and rules in the summer of 1935 alone. Lamont, Mitchell, and Mellon escaped criminal charges, but the government continued pursuing civil remedies. Financiers poured money into advocacy groups. Patman likened them to the KKK, calling them “hooded organizations.” “They only believe in law and order,” he said, “if they write the law and give the order.”
The public validated these left-wing populists with three smashing elections, in 1932, 1934, and 1936. Just before the 1936 election, Roosevelt said that “the forces of selfishness and of lust for power” would soon meet their match, and “their master.”
By the 1950s, New Dealers had been able to impose some semblance of the rule of law in corporate America, and business leaders built great companies organized around creating better products and services. The likes of Google, Facebook, and Uber, however, are partly the result of the breakdown of this legal environment.
As I trace in my book Goliath, the New Deal system lasted until the 1970s, when a series of debates took place in corporate America and Congress over inflation, oil shocks, and breakdowns among corporations such as the train giant Penn Central—and the bankruptcy of New York City itself. Both the left and the right, for different reasons, agreed to relax rules on concentrated capital.
On the verge of the 2020s, we’re reverting to the 1920s: The rule of law, if you are powerful in either business or government, increasingly seems optional.
Starting in the early Reagan era, enforcers changed enforcement around antitrust laws and stopped aggressively enforcing white-collar-crime laws. From Michael Milken’s junk bond scandals to the savings and loan scandals to Microsoft’s predatory schemes around its operating system products, misbehavior in business soon paid well. At first much of the behavior, like that of Milken, was frowned upon. Milken and Enron executives, for instance, went to jail, and Microsoft went to trial for monopolization. But these would be the last great hurrahs for the rule of law. As Inside Job documentarian Charles Ferguson noted, between the late 1990s and early 2000s “all the rules just went away.”
This first became apparent when executives at almost 200 of the largest companies in America got unusually large stock option grants to take advantage of the post-9/11 stock market swoon. In 2004, the FBI warned Congress of a possible mortgage fraud “epidemic,” which of course went unaddressed until the 2008 financial crisis, when, again, no one in a powerful position was punished. No one was jailed for the BP oil spill or the Volkswagen pollution fraud scandal. By the time Wells Fargo was caught for systemic fraud, many Americans simply yawned at the very idea of justice for the powerful.
This trend has continued in the Trump era. Facebook’s stock went up significantly after the FTC’s action against the company for privacy violations become publicly known. The Sackler family, opioid billionaires, are reportedly set to announce a settlement with no admission of wrongdoing. As British writer Gilbert K. Chesterton once put it, “The poor have sometimes objected to being governed badly; the rich have always objected to being governed at all.”
In Washington, DC, it’s easy to see, with petty corruption of favor-seekers staying at the Trump hotel or golf course. But throughout C suites, for decades, self-dealing has been the route to riches. The gap between the rule of law as applied to the powerful and the rest of us widened long before Uber emerged. Uber, in other words, was simply adhering to norms set decades ago.
This article was syndicated from wired.com