Matt Taibbi rips into America’s growing income gap in ‘The Divide’

Matt Taibbi begins his sixth book, “The Divide: American Injustice in the Age of the Wealth Gap,” with a simple formulation: “Poverty goes up; Crime goes down; Prison population doubles.” It’s a snapshot, a way to represent what Taibbi sees as the through-the-looking-glass reality of contemporary America, where rule of law has been subverted by, on the one hand, corporate greed and, on the other, a kind of institutionalized abuse of the poor.

Such a landscape, he suggests, brings to mind the last days of the Soviet Union, which operated out of a similar sort of mass hypocrisy until, in 1990 and ‘91, “people were permitted to think about all this and question the unwritten rules out loud, [and] it was like the whole country woke up from a dream, and the system fell apart in a matter of months.”

Not that Taibbi is particularly optimistic about such a revolution (of either justice or perception) happening here. Rather, he feels “like I’m living that process in reverse, watching my own country fall into a delusion in the same way the Soviets once woke up from one.”

“The Divide,” then, is — like other recent books, including George Packer’s “The Unwinding” and Thomas Pikkety’s “Capital in the Twenty-First Century” — an attempt to map the slippage, to identify, through reporting and analysis, just what has happened to America and how it operates. Taibbi is well suited for such an endeavor; a longtime contributor for Rolling Stone — he left this year to start an online magazine for First Look Media — he’s been writing about American political and economic life for better than a decade, especially the 2008 financial meltdown and its aftermath.

In that regard, “The Divide” can be read as a sequel of sorts to his last book, 2011’s “Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History” or even to “The Great Derangement: A Terrifying True Story of War, Politics, and Religion,” which came out in 2009. What all three share is a sense (to borrow a phrase from Leonard Cohen) “that the deal is rotten,” that we as a nation have turned our backs on our ideals.

“For a country founded on the idea that rights are inalienable and inherent from birth,” Taibbi writes, “we’ve developed a high tolerance for conditional rights and conditional citizenship. And the one condition, it turns out, is money. If you have a lot of it, the legal road you get to travel is well lit and beautifully maintained. If you don’t, it’s a dark alley and most Americans would be shocked to find out what’s at the end of it.”

To make the case, Taibbi shifts throughout “The Divide” between macro and micro, juxtaposing two distinct, and separated, worlds. He begins with Wall Street, which has yet to pay in any real sense for its part in the financial crisis: “a Ponzi scheme, no different than the Bernie Madoff caper, only executed on an exponentially huger scale.”

As to why this is, Taibbi zeroes in on a memo, written in 1999 by “a little-known official from Bill Clinton’s White House named Eric Holder” that established the principle of collateral consequences. The term refers to avoiding fallout from prosecution on corporate “officers, directors, employees, and shareholders” by pushing for fines and civil sanctions instead.

Here we see the roots of TARP, with its too-big-to-fail ethos — and why not, since these white-collar crimes are essentially victimless? The catch, however, is that they’re not victimless at all since, as Taibbi observes, “in more than a few cases, you can draw a straight line from a cop being laid off or a union worker having his or her pension slashed back to the week of 2008 when a handful of Lehman executives took a payoff to mark down their own inventory.”

Taibbi effectively indicts those executives — a cadre of insiders who engineered the sale of Lehman Brothers to Barclays Bank while guaranteeing themselves exorbitant bonuses and new jobs — as well as the hedge fund traders who tried to destroy the Canadian insurance company Fairfax Financial Holdings for the sport of it and the credit card division at JPMorgan Chase.

But the heart of “The Divide” emerges from what he finds on the other side, on the streets of Brooklyn’s Bed-Stuy and Riverside County and Gainesville, Ga., where an overlapping matrix of police initiatives, immigration laws and an “Obama-era initiative bearing the Bush-Orwellian catch-phrase ‘Secure Communities’” has made going to work or applying for assistance a source of persecution and anxiety.

These are the stories that will keep you up at night, so many I hardly know where to begin. There’s Alvaro Fernandez (not his real name), a Colombian living illegally in Georgia, who was deported to Mexico after being stopped at a roadside checkpoint, despite owning a successful construction business. Or Andrew Brown, a Brooklyn resident who drives a casino shuttle bus and has been arrested repeatedly because, as a black man, he “fits the description.” He exclaims, “Everybody in my neighborhood fits the description.”

Such situations are bad enough, but even worse is how they fit into a growing legal framework by which the underclass is effectively criminalized. Late in the book, Taibbi describes a San Diego County program called P100, which grew out of Clinton-era welfare reform. The idea is that all assistance claims must be investigated, although what this means is applicants end up at the mercy of officers who barge into their homes and pore over their toothbrushes and underwear. A woman named Markisha Powell, a former meth addict and prostitute, was denied benefits because the investigator who came to the room she was renting refused to believe she lived there with her son. “You can always score political points,” Taibbi writes about her case, “banging on black welfare moms on meth.”

If that makes you angry, you’re not alone — Taibbi is angry too. And yet, he argues, the only option is to fight. That’s what Alvaro and Brown have done, battling to maintain their status, and it’s also what some of Chase’s credit card clients did when sued for money they didn’t owe; “when credit card holders actually contest the lawsuits filed against them,” Taibbi notes, “the plaintiff in the vast majority of cases … simply drops the case.”

In that sense, “The Divide” is not just a report from the new America; it is advocacy journalism at its finest, an attempt to stir us up. “Just trying to do the right thing,” Taibbi writes, “legitimizes the entire system. We don’t do it often enough.”

david.ulin@latimes.com

The Divide
American Injustice in the Age of the Wealth Gap

Matt Taibbi
Spiegel & Grau: 416 pp., $27