Round up the usual brokers.

Round Up the Usual Brokers

I SEE THAT my old friend Michael Keinsley has recently been supporting the Racketeering-Influenced and Corrupt Organizations Act as a legitimate tool against all sorts of crime, not merely crime committed by racketeering-influenced and corrupt organizations. Michael's reasoning is, as always, ingenious. I particularly liked his point that RICO's provision allowing prosecutors to impound an organization's assets before trial was justified in order to "prevent the assets slipping away and making the trial pointless." But would Drexel Burnham Lambert really have moved all its assets to the Cayman Islands and managed the junk-bond business from there if RICO had not been threatened against it? It seems unlikely to me. And since threatening RICO is equivalent to threatening bankruptcy, wasn't that threat, employed without due cause, a legal version of the protection racket, forcing Drexel to surrender whether guilty or not?

At this point in the argument liberals accuse conservatives of inconsistency and hypocrisy. How come you're raising these legalistic quibbles about the rights of the accused, goes the refrain, when you invariably attack the exclusionary rule? Isn't white-collar crime every bit as bad as street crime? To which the answers are: a) abolishing the exclusionary rule would not damage a fair trial, which RICO does, and b) no, as a matter of fact, white-collar crime is not nearly as bad as street crime because it doesn't wound, maim, and kill people.

Why do liberals demand stern measures against white-collar crime while defending the rights of most other sorts of accused? After all, a white-collar criminal is best defined as someone who is not a habitual criminal and not a violent criminal either. Yet this mild, unassuming villain seems to arouse a special passion for retribution and harshness among the liberal chattering classes. Time magazine, for instance, last year denounced white-collar crime on Wall Street, in particular insider trading, as an "epidemic of cheating" which "culminates a roaring, greedy decade that created . . . boundless motivation for cheating." It was also "lurid," "ghoulish," "remorseless," and--here, finally comes the point--"partly inspired by the deregulatory, anything-goes mood of the Reagan era."

But be of good cheer. Time told us that "law-enforcement agencies are conducting the clean-up with a newfound toughness." And Congress duly passed a stricter law on insider trading. In other words, the campaign against insider trading has all the hallmarks of a liberal witch-hunt.

Ordinary people, however, have been quietly resistant to this hysteria, perhaps because they couldn't quite understand what it was all about. In a 1986 opinion poll, respondents were asked whether insider trading should be illegal. A worthy majority of 66 per cent to 26 per cent said stoutly that it should. The second question then told them what insider trading was:

"Suppose that someone got a tip that the company he or she works for was going to be purchased for a lot more money than its current stock price. Do you think that most people, if they had the money, would buy stock in that company or not?"

Now they were better informed, only 15 per cent thought that most people would refrain from insider trading. Sixty-eight per cent backed Original Sin. There was a slight increase in virtue (or in hypocrisy) when this question was changed to "would you buy stock in the company?" Fifty-two per cent said yes and 39 per cent resisted temptation.

Finally, this second, virtuous group was asked their reasons for not buying a sure thing. A sober, upstanding 35 per cent said it would be "just plain wrong." Three per cent feared detection. Twenty-two per cent pleaded that it would be illegal. But 34 per cent--almost as many as the honest respondents--pointed out cannily that the tip might be wrong.

There is little evidence here of strong public indignation about "crime on Wall Street." What the public finds ghoulish, lurid, and remorseless is the epidemic of crime in other streets. This represents a sensible order of priorities. In Dr. Madsen Pirie's rhetorical question: "When was the last time you were afraid to go out at night in case you were embezzled?" And don't tell me, Michael, that fear of embezzlement is the cause of America's low savings rate.

* We have become familiar in recent years with perverse legal judgments: for instance, the man who throws himself under a subway train, survives, and then sues the transport authority because the driver put on the brakes too slowly. A fascinating article in Forbes by Peter Brimelow and Leslie Spencer points out that these are not mere miscarriages of justice. They are a combination of greed and, er, political liberalism.

Judges in recent years have taken to making large awards against defendants who have done no wrong, often to plaintiffs who have themselves been negligent, simply on the grounds that the plaintiffs (usually corporations) could afford it. Trial lawyers, seeing the chance of hefty contingency fees, have rushed to judgment. The results are an explosion of multi-million-dollar awards, the occasional bankrupt corporation, higher insurance premiums, and millionaire lawyers who spout social justice--and worse. Thus Mr. Herb Hafif (1988 income, according to Forbes, $40 million) declares: "I think it's a bitter shame about this society. The Russians have a more responsive political system than we do."

This nonsense has, of course, been made much easier by public-interest "consumer advocates," like Ralph Nader and his "raiders," pushing extreme views of a manufacturer's product liability. Mr. Nader has always denied accepting funds from trial lawyers since that would be a plain conflict of interest. Forbes, however, quotes several trial lawyers saying they donate money to him. There's a contingency fee in this for someone. Unless, of course, there's honor among lawyers.