LONDON — A couple of decades ago there appeared a new blossom
in the moribund garden of liberalism called neoliberalism.
Naturally with that ever-hopeful prefix, “neo,” slapped onto it,
the liberal faithful were aglow with anticipation of yet another
glad and glorious morn. Happy days would be here again. We now know
that those days never came. Neoliberalism was a bust mainly because
there was not much new to it. Essentially it was the same old nanny
state mentality motivated by envy and indignation.
One of the neoliberal’s tenets was that white-collar criminals
were getting off easy. That is to say white-collar criminals, for
instance a corporate fraudster, were being treated much gentler
than muggers, bank robbers, and other violent criminals. It was a
class thing or a racial thing. The neoliberal promised to end this
injustice. Neoliberals were going to get tough with errant
businessmen.
Well, the neoliberal blossom has wilted along with all the other
varieties of liberalism. Its obsession with white-collar criminals,
however, has remained, much to the detriment of justice as a whole
and of a vigorous entrepreneurship. To begin with, a white-collar
criminal is profoundly different from a violent criminal. The first
is a scoundrel. The second is a scoundrel and a menace to human
life. Further, America has always been inhospitable to white-collar
criminals, and long before the rise of the neoliberal we have been
locking them up. Two reasons that America has been a vibrant place
to do business is America’s rule of law and its relative freedom
from corruption. Yet now America is losing its position as one of
the most favorable countries in the world to do business. The
reason is the government’s obsession with white-collar crime as
manifest by such inhibitors of business as the Sarbanes-Oxley
Act.
The law was passed by Congress as a typical overreaction to the
white-collar criminals of the 1990s, most of whom were prosecuted
and jugged without resort to Sarbanes-Oxley. It has always been
illegal to defraud. What Sarbanes-Oxley has achieved is the
stifling of honest business dealings. It has placed redundant
accounting regulations on business and nearly criminalized serving
on the board of directors, whether the board be that of a giant
corporation or a local publicly-traded plumbing company. The cost
of Sarbanes-Oxley has driven IPOs abroad and persuaded
entrepreneurs to forego IPOs entirely, denying them access to
public capital, to growth, and to job creation.
Consequently the business climate in the United States has
turned sour. The business climate in places like London is less
risky and IPOs that might have been issued here are now issued in
London. The London Stock Exchange markets itself as “A
Sarbanes-Oxley Free Zone.” London is prospering, a businessman told
me the other day, because of North Sea oil and “Sarbanes-Oxley,
which has encouraged Americans to take their IPOs here.”
Unfortunately, Washington’s campaign against white-collar crime
has not ingratiated us to our most loyal ally. Our Justice
Department is now pursuing three British bankers who allegedly
defrauded a British bank. The evidence against them in Britain is
insufficient to prosecute them according to British law, and they
are free here. But our Justice Department argues that they were
part of the Enron scandal and is extraditing them to Texas — an
instance of prosecutorial rapaciousness that has made headlines
here for a week and created growing enmity against us. The reason
for the enmity is that the Justice Department is extraditing the
Brits by a 2003 extradition treaty that was reserved for terrorists
and that Washington has not even signed.
As you read this the anger against Washington grows in London.
The three British bankers face as much as two years in a Texas
prison without bail before they go to trial because they fought
extradition. Thus, even if they are eventually found innocent their
lives are ruined. Tension is also growing as the British newspapers
are calling on the government to take last-minute measures against
flying the men to Texas. Now comes word that another British banker
who was questioned by the FBI about his three indicted colleagues
has committed suicide. The bad feeling against us is bound to
grow.
The bad feeling comes from the left, for instance, the
Guardian. And it comes from the right, from America’s
friends at the Telegraph newspapers and the British
Spectator. Washington’s obsession against white-collar
crime has at least been a unifying force in British politics. They
are all mad at us.
