Speaker 1: Brought to you by the reinvented two thousand twelve Camray.
Speaker 1: It's ready. Are you welcome to you Stuff you Should
Speaker 1: Know from House Stuff Works dot Com. Hey, and welcome
Speaker 1: to the podcast. I'm Josh Clark. There's Charles W. Chuck Bryant,
Speaker 1: uh stiffing on his laqui uh mineral water and um
Speaker 1: this isn't even a sponsored by location. Done this like
Speaker 1: two or three times? Yeah, I agree, call us uh.
Speaker 1: And since you put the two of us a couple
Speaker 1: of microphones in an ice cold can of refreshing Laquais
Speaker 1: mineral water together, you have something called Stuff you Should Know.
Speaker 1: It's a podcast. It's a podcast. I'm looking to see
Speaker 1: who makes this actually. Oh no, I thought I was
Speaker 1: gonna say, like Coca Cola and small let No, it's
Speaker 1: a Sundance beverage company. Oh yeah, they're huge for Minnesota.
Speaker 1: I think that's perfect. That is a perfect sponsor for stuff.
Speaker 1: You know, a little guy that's producing a great product. Agreed.
Speaker 1: Uh So, Chuck, I've got an intro today. Stop criticizing me. Um. So.
Speaker 1: Very recently, a trio of Brits economists, British economists, they're
Speaker 1: like walking saltines. Very exciting. Um. But anyway, these guys
Speaker 1: did something pretty cool. They studied bank robberies, and their
Speaker 1: study was published in a journal called Significance. It's actually
Speaker 1: kind of a cool journal. It takes statistics and applies
Speaker 1: it to real world stuff, so it's an interesting statistics journal.
Speaker 1: If there is such a thing, um, And if there is,
Speaker 1: this is it. And what these guys found was that
Speaker 1: bank robbery is actually a really terrible way to make
Speaker 1: a living. Yes, I would agree with that morally, economically
Speaker 1: it's a terrible way to make a living too, the right. Yes,
Speaker 1: they looked at they looked at a lot of variables,
Speaker 1: like the number of people involved, and they found that
Speaker 1: the bigger the gang, the more um, the bigger the
Speaker 1: hall I guess. But it also meant that's one extra
Speaker 1: mouth to divide up amongst unless you're like one of
Speaker 1: those bankrupers that just kills everybody afterward. Yeah, you don't
Speaker 1: want to get in bed with one of those guys
Speaker 1: like Ben Affleck, or like in Heat, when there are
Speaker 1: a lot of killing afterward. In Heat and in the
Speaker 1: town ben Affleck's a recent heist movie, a lot of
Speaker 1: killing going on. I was gonna let that one walk by,
Speaker 1: but you brought it up twice. I enjoyed it. Um.
Speaker 1: Oh really uh and okay, So anyway, Um, there's a
Speaker 1: lot of variables involved. But what they found is, no
Speaker 1: matter what, in the u K, you can make off
Speaker 1: with about thirty one graham. That's not bad, per yes,
Speaker 1: and on average that's what that's what the take was.
Speaker 1: So in the UK it's not so bad. Um. But
Speaker 1: at the same time, thirty one grand, what are you
Speaker 1: gonna do with that? Yeah? I mean, if you want
Speaker 1: to live the high life, you gotta rob like four
Speaker 1: or five banks a year easy, right or right? Okay
Speaker 1: or um. If you're in the US, you have to
Speaker 1: rob it more than that. So the UK suffers about
Speaker 1: a hundred and six bank robbers a year. In the
Speaker 1: US there's twelve thousand, and of those twelve thousand, the
Speaker 1: average take is like four grand. They only have how
Speaker 1: many a year. That's they have really stiff, stiff gun laws,
Speaker 1: and I think that probably determs bank robbery because you
Speaker 1: kind of have a gun or a note in your
Speaker 1: pocket and that says something. Well, these guys figured out
Speaker 1: that the presence of a firearm increased your take um.
Speaker 1: But anyway, so forty bucks that's not much at all now,
Speaker 1: and about a third of bank robberies I guess in
Speaker 1: both countries yield nothing zero zero. So it's a lot
Speaker 1: of hard work, a lot of risk, for very little gain.
Speaker 1: The real money is in white collar crime. Oh yes,
Speaker 1: you want to make some cash quick, maybe one good heist.
Speaker 1: It's gonna set you up for the rest of your
Speaker 1: life and even if you're caught. Even if you're caught,
Speaker 1: the chances are you will have a mild, if any
Speaker 1: penalty leviaging against you. White collars the way to go. Yeah,
Speaker 1: we're talking guys who um tell people that they are
Speaker 1: financial investors and get friends and family and uh parents
Speaker 1: of the little league that they coach to give them
Speaker 1: nine hundred grand. Um. There's other guys who just have
Speaker 1: little penny stock companies that pump up their um stock
Speaker 1: prospects called stock touting, and um dump all of their shares. UM.
Speaker 1: That's investor fraud. They make hundreds of thousands, if not
Speaker 1: millions of dollars. It's where the real money is, and
Speaker 1: historically speaking, it has really low risk even if you're called.
Speaker 1: All right, so we're endorsing white collar crime. We're not
Speaker 1: endorsing it. I was being facetious. I thought you met
Speaker 1: up with white collar crime in no. No. As a
Speaker 1: matter of fact, it's going down. The times are definitely changing.
Speaker 1: There's a big struggle going on right now is to
Speaker 1: figuring out the just the right amount of punishment with
Speaker 1: white collar crime, because there's a lot of factors involved.
Speaker 1: It's a lot different from blue collar crime e g.
Speaker 1: Stealing a car, robbing a bank. There's a lot of
Speaker 1: differences that differentiated. Let's separate the two, um And one
Speaker 1: of those now is the the sentencing forum is probably stiffer,
Speaker 1: which is a total reversal from how it used to
Speaker 1: be before. And they've also closed a lot of the
Speaker 1: club beds down that got so much press. Yes, well
Speaker 1: they've they've changed them. They're still there, they just are changed. Well,
Speaker 1: a lot of more shut down like period. Yeah, just
Speaker 1: to ship them to real federal penitentiary penitentiaries. Penitentiaries. Uh.
Speaker 1: That reminded me of a word that will definitely be
Speaker 1: hearing at some point in this podcast. It's oh yeah,
Speaker 1: because that's definitely white collar. Part of the problem with
Speaker 1: white collar crime, Josh, as you know from reading this
Speaker 1: is that uh um, it's hard to come up with
Speaker 1: an exact definition of what constitutes it. So that's why
Speaker 1: they have a hard time getting great statistics on punishment
Speaker 1: and finds levied and how many of they're catching. But
Speaker 1: I'm gonna go with non violent crime that typically involves
Speaker 1: and you have to sit things like typically because it's
Speaker 1: kind of all over the map. Typically involves um deceit
Speaker 1: and fraud given by a perpetrator because of their occupation. Yeah,
Speaker 1: And for that reason, a lot of times it's called
Speaker 1: occupational um crime. Yeah. Uh. And if you look at
Speaker 1: it through that view, which is a very broad view
Speaker 1: of white collar crime, it's not just the exacts and
Speaker 1: the three thousand dollar suits who are perpetrating this. It's
Speaker 1: the guy who's stealing pencils from work, Yeah, or violent
Speaker 1: especially somebody asked him if you did it, and he
Speaker 1: says no, And it's because you are You're You're granted
Speaker 1: this opportunity through your occupation. I would call that petty theft.
Speaker 1: It's but I'm saying, like a very very broad definition
Speaker 1: of white collar crime that that definitely counts. But for
Speaker 1: the most part, when you think of white collar you
Speaker 1: think about the CEO as you think about investor fraud, embezzlement,
Speaker 1: that kind of stuff exactly. Uh, feds have been after
Speaker 1: in the United States, uh, in earnest since nineteen seventy four,
Speaker 1: as far as a a dedicated division the FBI. Yeah,
Speaker 1: and that's because the NIX and I read and then uh,
Speaker 1: despite that, about three hundred billion dollars a year. And
Speaker 1: that's a pretty rough estimates, the two estimate. So let's
Speaker 1: talk about a few ways you can commit white color crime. Yeah,
Speaker 1: because the definition you gave us like beautiful, it's pretty good. Um,
Speaker 1: and there are some that just like I said, investment
Speaker 1: fraud or embezzlement or just prototypical white collar crime. Insider
Speaker 1: trading is one that's a big one which falls under
Speaker 1: securities fraud, right Uh yeah, I mean it's a type
Speaker 1: of securities fraud. So basically insider trading. We've I swear
Speaker 1: we've done something on this. I don't think so it
Speaker 1: must have been in our Fenian Freddie presentation then and
Speaker 1: then we studied a lot of this stuff. Yeah, and
Speaker 1: I thought we'd done a podcast and I guess not.
Speaker 1: But insider trading is essentially like, um, let's say that
Speaker 1: you and I find out that Discovery had an awesome quarter,
Speaker 1: and so we go and buy a bunch of Discovery
Speaker 1: stock for nothing, and then it just shoots through the
Speaker 1: roof after the stock price comes out. That's inside of trading. Sure,
Speaker 1: that's using private knowledge about a publicly traded company for
Speaker 1: your own game. That's a no no we to other people.
Speaker 1: That would count as well. And then Stewart, yeah, that
Speaker 1: they took part and then they would be UH insider
Speaker 1: traders as well, exactly. And it works the opposite way
Speaker 1: as well, Like if you find out that there's a
Speaker 1: lot of terrible information, terrible information is going to make
Speaker 1: your stock drop that you sell before that information becomes public,
Speaker 1: you're in trouble, big trouble. Securities fraud, which UM insider
Speaker 1: trading is kind of like that UM, but it is
Speaker 1: also manipulated and cooking the book keeper that term of
Speaker 1: your own company too. Maybe undervalue UM a stock before
Speaker 1: it goes public or I mean, there's all different variations,
Speaker 1: but it basically involves manipulating numbers in a dishonest way, right,
Speaker 1: that pumping up scheme where it's stocked outing. There's that's
Speaker 1: all securities fraud. UM and then there's anti trust violations
Speaker 1: for another good one that this has been kind of
Speaker 1: big lately. So, um, Google is supposedly hogging the YouTube metadata,
Speaker 1: which is preventing Microsoft from making a decent app for it.
Speaker 1: Yeah and um and Google's like, well, it's proprietary or whatever.
Speaker 1: And I was like, no, you gotta kind of have
Speaker 1: to share that. That's they're alleging an antitrust violation. Companies
Speaker 1: kind of police one another with that. And then also
Speaker 1: price fixing is a big one, which is like the
Speaker 1: opposite of companies policing one another. It's collusion between companies
Speaker 1: and like Apple and book publishers, um fixing the prices
Speaker 1: of e books allegedly has been going on. Yeah, yeah, man,
Speaker 1: it's going on all over the place. That it's it's
Speaker 1: a dirty, dirty, dirty world bribery one of the oldest
Speaker 1: tricks in the book. Um. Obviously that's involves some sort
Speaker 1: of a payoff or a kickback in exchange for uh
Speaker 1: whatever information. Um, I get the bid, my company gets
Speaker 1: your bid with this government job, and I get a
Speaker 1: little kickback or I give you a little kickback rather um,
Speaker 1: any kind of maybe favorable decision that can influence your company. Yeah,
Speaker 1: a little little grease in the palm going on. Here's
Speaker 1: three high quality frozen steaks. Please consider it, and you
Speaker 1: say consider granted. And within each of these steaks is
Speaker 1: a one million dollar bill. It's not even an it
Speaker 1: doesn't even exist. What frozen steaks with money in a
Speaker 1: million dollar bill? Okay, we know about frozen deutsch marks.
Speaker 1: Somebody sent us a dollar. By the way, I want
Speaker 1: the dollar. We'll we'll give you fifty cents, right, I
Speaker 1: guess it's thirty three in the third we gotta give
Speaker 1: Jerry or cut. Don't go there, we'll talk about it later.
Speaker 1: Embezzlement Office Space. Everyone's seen the movie Office Space, that
Speaker 1: little program they had to like shave a sin or
Speaker 1: something off of a transaction. That's embezzlement. They were given
Speaker 1: the opportunity through trust, with books, with accounting, they basically
Speaker 1: add access to the money and skim them off the top.
Speaker 1: Which we have done a podcast on schemes um So
Speaker 1: basically all of the those are all the stars. There's
Speaker 1: also other ones like m espionage, industrial espionage, corporate SPI,
Speaker 1: white collar. Remember the lady who tried to sell Pepsi's
Speaker 1: secret to coke? Yeah, that was pretty hackney. No Coke's
Speaker 1: secret to PEPSI because she was like, wait right here
Speaker 1: she was, and they went and called the cops. She
Speaker 1: didn't do a real good job, but she was surprised. UM.
Speaker 1: Environmental law violations like dumping toxic waste. Yeah, covering that
Speaker 1: up like Aaron Brockovich style. UM. One of the things
Speaker 1: they point out in here, which is when it comes
Speaker 1: to things like your little office space scheme that you
Speaker 1: just touted. UM. A lot of times, it's difficult to
Speaker 1: imagine victims. Like in office space, they think no one's
Speaker 1: gonna miss a penny. Is a huge company, So you
Speaker 1: commit these crimes without realizing that someone has hurt somewhere
Speaker 1: down the line. If you dump your stock, your company
Speaker 1: stock that you know is about the tank. And I'm
Speaker 1: not saying it's understandable, but if you've like worked your
Speaker 1: whole career investing in this company with your four own
Speaker 1: k you know it's about to tank, You're like, man,
Speaker 1: I need to sell this or else I'm done for.
Speaker 1: My family's done for. You don't think about the people
Speaker 1: buying the stock, they're the victims. No, It's absolutely true,
Speaker 1: And I mean, like you are being pawned. You're pawning
Speaker 1: your problem off on somebody else. But I think you
Speaker 1: paint a really really excellent scenario, Like you can in
Speaker 1: some cases feel bad for the white collar criminal um,
Speaker 1: especially if it's just some average Joe who's worried about
Speaker 1: is for a one case um or in the case
Speaker 1: of Enron, you don't feel bad for the upper dudes.
Speaker 1: You feel bad for everyone in that company that got defrauded, right,
Speaker 1: But they were strictly victims. They didn't they didn't turn
Speaker 1: around and like try to dump the stocks. But that
Speaker 1: that's a very visible case of like screwing over your
Speaker 1: own employees. But you make a good point, like even
Speaker 1: if the even if the criminal is sympathetic, there still
Speaker 1: is a victim, even if it's just some amorphous trader
Speaker 1: they'll never meet, even if the victim is some like
Speaker 1: hedge fund manager. It's really tough. There's like a really
Speaker 1: weird spectrum here. There's like I don't know if it's
Speaker 1: a Bell curve or like the UV spectrum, who knows.
Speaker 1: But there's sympathies like placed in different spot sympathies and
Speaker 1: anti antipathies placed along this this depending on who did
Speaker 1: what and what they gained from it and what their
Speaker 1: motives were agreed, because you gotta also have credit card
Speaker 1: fraud and computer and mail fraud and counterfeiting and things
Speaker 1: like that, like you know the Nigerian email scams. That's
Speaker 1: white collar. But and they're in the same boat as
Speaker 1: like ken Ley and Jeff Skillings exactly same scummy crooks.
Speaker 1: Or let's say you commit a little credit card fraud
Speaker 1: and you or bankruptcy fraud and you're dislike, does it
Speaker 1: be easy way to get out of my debts? Or
Speaker 1: I just say someone stole my credit card. It's very
Speaker 1: easy there to not envision a a victim because it's
Speaker 1: it's Chase Manhattan Bank, and like they're gonna notice. But
Speaker 1: what happens is they raise the rates on you and me,
Speaker 1: and all of a sudden, everyone across the board is
Speaker 1: paying more money for stuff. Yes, that is that is true.
Speaker 1: That is very true, and that is I think everybody
Speaker 1: should probably. I think a good companion piece that occurred
Speaker 1: to me is to go listen to our wide corporations
Speaker 1: have the same rights as you. One of the fundamental
Speaker 1: flaws of UM corporate policy is that you serve your
Speaker 1: shareholders first. Like you need to adhere to the law,
Speaker 1: but really, ultimately, like anything you can do to serve
Speaker 1: your shareholders is your mandate as a as a corporate governor.
Speaker 1: Um that includes keeping the profit margin as high as possible,
Speaker 1: which you're not gonna go to your your shareholders and
Speaker 1: be like, hey, we're making enough money. We took kind
Speaker 1: of a hit, but we're still making a ton of profit,
Speaker 1: so we'll just take a little hit this year. No,
Speaker 1: it's where we took a hit, so we're gonna fire people.
Speaker 1: However you reconcile that, I mean, that's your own personal beliefs,
Speaker 1: like what what you feel about that? But that is
Speaker 1: reality as far as business goes, Right, there's fraud, there's
Speaker 1: adjustments to the fraud, absorbing the fraud, and it's the
Speaker 1: corporation trying to get as lean as possible. Yeah, they're
Speaker 1: not going to take the hit for that. They're not
Speaker 1: gonna say, oh, well, a bunch of people defaulted on
Speaker 1: their credit cards this year. I guess we'll just have
Speaker 1: a bad year. And I know in reality that's how
Speaker 1: it works, but it's I just find it disingenuous to
Speaker 1: be like, well, everybody suffers, you know, like people lose
Speaker 1: their jobs because of thought. It's like there's a there's
Speaker 1: a point b in there that that has to be
Speaker 1: held accountable to some degree. Well, which is your own
Speaker 1: freaking ethical code of conduct? And like, how about not
Speaker 1: doing that because it's the wrong thing to do. No,
Speaker 1: but I'm saying, like there's an institution that's absorbing the
Speaker 1: hit and then turn around firing this poor guy. Yeah, exactly.
Speaker 1: It's just it's tough because I came across a word
Speaker 1: when they were describing white collar crime giving a definition
Speaker 1: of it, and they said, victims colon diffuse. You don't
Speaker 1: meet the person that the victim passes along the hit
Speaker 1: to other people. It's a big it's nebulous. And even
Speaker 1: if they're raised rates by like a quarter of a
Speaker 1: percentage point, or you're paying an extra two dollars as
Speaker 1: a consumer a year, it's like it's still not right. Yeah,
Speaker 1: you know, it's not right all over the place. So
Speaker 1: where did this come from? Uh, Josh, it came It
Speaker 1: sounds like it came from a cold wool delivery boy.
Speaker 1: I want to know more about this. Was this dude
Speaker 1: just cold or did he really steal a lot of wool?
Speaker 1: So you're talking about the carriers. The Carrier's case of
Speaker 1: fourteen seventy three, it's the first um white collar trial, yes,
Speaker 1: um and and it resulted in the first white collar
Speaker 1: law in fifteenth century England. And this wool transporter was
Speaker 1: given a bunch of wool and said, hey, take this
Speaker 1: wool to this person, and it was his job. So
Speaker 1: he decided to instead just keep the wool for himself
Speaker 1: for his own use. So he looked into this more. Yeah,
Speaker 1: I thought he might have been like cold on his
Speaker 1: journey and said, you know, I'm gonna keep some of
Speaker 1: this wool. Now, he kept some of the wool. He
Speaker 1: I think he kept all of it, but somebody gave
Speaker 1: it to him. He's like, thanks, chump, and he was.
Speaker 1: But the key is, and this is something that has
Speaker 1: has woven into the history of white collar crime. What
Speaker 1: he did was not illegal at the time. The law
Speaker 1: that was enacted as a result of the Carrier's case
Speaker 1: was they were saying, Okay, this isn't this isn't illegal,
Speaker 1: but it's obviously there's a huge problem with this, so
Speaker 1: we're going to create a law right that outlaws this
Speaker 1: act so people can't do it anymore. Good point, and
Speaker 1: basically that's what happened. Well, that's kind of what happens
Speaker 1: with every law. I guess, someone commits it first and
Speaker 1: then someone says, hey, maybe we shouldn't do that. Yeah, yeah,
Speaker 1: I guess. But in this case, especially like uh, the
Speaker 1: Industrial Revolution in the West, obviously you started getting these
Speaker 1: larger corporations and all of a sudden, things like monopolies
Speaker 1: and price fixing and employee uh safety and all these
Speaker 1: things come into effect for the first time. So that's
Speaker 1: sort of when it was really born, and when they
Speaker 1: started saying, hey, we need to look at something called
Speaker 1: to trust. Yeah. Again, like monopolies were not illegal, but
Speaker 1: when a company bought up all of its competitors and said, oh,
Speaker 1: suddenly the price for your groceries like through the roof,
Speaker 1: where else you gonna go, it wasn't illegal. But the
Speaker 1: the people of the world started screaming and governments finally responded,
Speaker 1: And it was really the US that first had the
Speaker 1: real first solid response in the Sherman Anti Trust Act
Speaker 1: in like the eighteen seventies maybe I think nine, named
Speaker 1: for John Senator John Sherman, Ohio Republican dude Chairman of
Speaker 1: the Senate's Finance Senate to Finance Committee, which I didn't
Speaker 1: know they even had way back then. I forgot didn't either,
Speaker 1: but I mean it seems like a basic committee there.
Speaker 1: So this is interesting. And that it was voted on.
Speaker 1: It won by vote of in the Senate one in
Speaker 1: the House by two forty two to zero, so there
Speaker 1: was one dude that didn't vote for it. And then
Speaker 1: I think twenty five years later when they came up
Speaker 1: with the Clayton Anti Trust Actor, really put some punch
Speaker 1: into the Sherman Act. It was two seventy seven to
Speaker 1: seventy four and forty six to sixteen. So in that
Speaker 1: twenty four years it sounds like maybe things got slightly
Speaker 1: corrupt here and there. Well it wasn't that it was that. Well,
Speaker 1: maybe it was, but there was also some real problems
Speaker 1: with the Sherman Act. It was really vague. It basically
Speaker 1: said like now from here fourth all um anti competitive
Speaker 1: corporate measures are illegal, and then it left it to
Speaker 1: the courts to decide what was what, and the courts
Speaker 1: weren't really in the mood to enforce it, so it
Speaker 1: went largely unenforced. Although American Tobacco Company and Standard Oil
Speaker 1: like two of the biggest companies in the country were
Speaker 1: dissolved under the Sherman Act, Standard Oil big time. Imagine that.
Speaker 1: Like imagine going to a company now and saying like, hey, Apple,
Speaker 1: you're just too big, so we're gonna dissolve you into
Speaker 1: thirty one companies. We have all these federal regulators here
Speaker 1: and they're gonna come in and look at everything, and
Speaker 1: that dissolve you into different companies. Sorry, that's what they did. Okay,
Speaker 1: even still it didn't have enough tea, so they came
Speaker 1: up with the Clayton Anty Trust Act, and then that
Speaker 1: one really spelled things out, like, um, you couldn't do
Speaker 1: price discrimination anymore, which if you were black in America
Speaker 1: during the Gym Crow era, price discrimination was mind boggling.
Speaker 1: Oh yeah, you walk into a store if you're allowed
Speaker 1: in there to begin with, and they'll just make up
Speaker 1: whatever price they want. It's it was really I'm reading this,
Speaker 1: um consumers in an America book, and it's at this
Speaker 1: point now is really just this blemish on American history.
Speaker 1: I mean, like slavery wasn't bad enough to like have
Speaker 1: slavery light through the Jim Crow era. It's just disgusting. Um, Okay,
Speaker 1: so there was no price discrimination allegedly, corporate mergers were outlawed. Yeah, um.
Speaker 1: And then interlocking boards where you have like competitive companies
Speaker 1: but the same people on the board of each Right,
Speaker 1: you can't have that. And then also elusive contracts where
Speaker 1: it's like hey, home Depot, you can sell our um
Speaker 1: weed whackers, but you can't tell anybody else's those contracts
Speaker 1: are out right. They do stuff like that now though, right,
Speaker 1: maybe not exclusively, but they carry lives. They do not
Speaker 1: limited number of brands, corporate mergers, interlocking boards, exclusive contracts,
Speaker 1: all that stuff one a way, it all got chipped away.
Speaker 1: It's just I mean this, this, this act is like
Speaker 1: not in forts anymore. Basically, Well, that's one things that
Speaker 1: bugs me about like grocery or actually the big box
Speaker 1: hardware stores. Grocery shopping. You you only have access to
Speaker 1: what they who they have partnered with, right, whether it's
Speaker 1: your potato chip that you want or your weed whacker
Speaker 1: that you want. It's true, and most of the big
Speaker 1: box stores also have exclusive contracts the other way. It's like, yeah,
Speaker 1: we'll sell your weed whacker, but you can't sell it
Speaker 1: no one else can. So it's like a real gamble,
Speaker 1: I understand, like sign on to one of these giant corporations. Well,
Speaker 1: that's one in the Walmart effect. That was one of
Speaker 1: the things I think they used to. It's like a
Speaker 1: tent company or an awning company, and like this mom
Speaker 1: and pop awning company all of a sudden gets a
Speaker 1: Walmart contract and they're like, sweet, they answered all our prayers.
Speaker 1: They ordered like thirty thousand and these they ordered thirty thousand,
Speaker 1: They opened up like three new buildings. Hi are all
Speaker 1: these employees. And then the next year they come back
Speaker 1: and say, we want thirty thousand more, but we're gonna
Speaker 1: pay you about less. And you've already bought the buildings
Speaker 1: and even you know, invested in the in the materials
Speaker 1: and the people, and all of a sudden you're screwed.
Speaker 1: You know one thing that I've long thought and I'm
Speaker 1: gonna totally take flak for this, but I still think
Speaker 1: it's worth saying, like you here, like, well, that's just business.
Speaker 1: I feel that any any institution where like morally reprehensible
Speaker 1: acts can just be you know, off handedly dismissed as
Speaker 1: a matter of course of that institution is inherently fought.
Speaker 1: There's an inherent problem with it. Yeah, that's not okay,
Speaker 1: Like we don't just go, well, that's just murder, you know,
Speaker 1: or well that's just stealing, you know, Welcome to earth. Human. No,
Speaker 1: we have moral and legal guidelines that we follow, and
Speaker 1: business and corporations have so so long stood outside of
Speaker 1: these things that it's just it always bugs me when
Speaker 1: it's just like, what are you gonna do? Yeah, I
Speaker 1: don't like that. So sorry, I'm off my soap I
Speaker 1: agree completely. Well, I'm off of my Tide brand soapbox.
Speaker 1: Well said, um. So, things are kicking along here in
Speaker 1: the industrial West. Corporations are getting larger, and all of
Speaker 1: a sudden, these crimes start happening, and something called a
Speaker 1: muckraker in the nineteenth than early twentieth century comes about.
Speaker 1: And I didn't realize a muckraker was exclusively a journalist. Yeah,
Speaker 1: it's for an investigative journalist. I thought it would was
Speaker 1: anyone raking muck um. But it's specifically a journalist who
Speaker 1: basically early on said you know what, there's bad stuff
Speaker 1: going on see and I'm gonna expose your Oh really,
Speaker 1: and he wrote the Jungle Change. Of course, I mean
Speaker 1: the FDA basically came about because of that investigation that
Speaker 1: he conducted. Well, muckrakers raked a lot of muck and
Speaker 1: caused a lot of problems in these companies. And um,
Speaker 1: one of the things that came about because of the
Speaker 1: muckraking were, you know, things like the Clayton Act that's
Speaker 1: exactly right, exposing all this stuff exactly and things like that,
Speaker 1: the A Federal Regulations consumer protections. The muckrakers basically stirred
Speaker 1: up public sentiment like hey, don't be idiots, like this
Speaker 1: stuff's going on, and a lot of people said, well,
Speaker 1: it's not illegal. And then unfortunately there were guys like
Speaker 1: um E. A. Ross who was a criminologist and a sociologist,
Speaker 1: and he started really kind of looking into this and said,
Speaker 1: hey man, these people might not be criminal, but let's
Speaker 1: all them criminal OIDs. Like that was the coining the
Speaker 1: coin for people who, especially in business, carried out these
Speaker 1: terrible acts that weren't illegal. He argued that even though
Speaker 1: it's not illegal, they're causing ill and these people are
Speaker 1: still responsible for him. So make a law that outlaws
Speaker 1: at dummies. And he inspired a guy named E. H. Sutherland. Okay,
Speaker 1: he came before Sutherland. Yeah, he was at the Ross
Speaker 1: was working at the time of the muckrakers, and then
Speaker 1: Sutherland came about twenty years later. Yeah. Southerland coined the
Speaker 1: term actually white collar crime in nineteen thirty nine, and
Speaker 1: he was a criminologist and sociologist, and he pretty much
Speaker 1: he had a broader definition that basically it was the
Speaker 1: high society and not the lower class at all committing
Speaker 1: these crimes, which nowadays he can't really say that because
Speaker 1: anyone can get a stock tip commit in. You know,
Speaker 1: it happens all the time across all spectrums of the
Speaker 1: class system. But Sutherland's point was, and he wrote a
Speaker 1: book called white Collar Crime, UM. His point was that
Speaker 1: there was a huge bias in the United States, UM
Speaker 1: where the where law enforcement in the courts leaned heavily
Speaker 1: on the working class crimes and just basically ignored the
Speaker 1: crimes of the upper class and said this is not okay, Like, um,
Speaker 1: if a guy is gonna steal a thousand dollars from
Speaker 1: a cash register with no gun or anything like that,
Speaker 1: Like there are other factors, but let's just say a
Speaker 1: guy steals a thousand dollars from a cash register and
Speaker 1: he's poor, and a guy steals a thousand dollars from
Speaker 1: an investor and he's rich. That's they should be treated equally,
Speaker 1: and they're not. And that's what Sutherland's point was. And
Speaker 1: he was sup first dude to really bring this to light,
Speaker 1: wasn't he. Yeah, well, Ross kind of started to, but
Speaker 1: Sutherland was very well received. It was well received in
Speaker 1: certain corners, but there were also certain flaws pointed out
Speaker 1: by people over the years. Um One of the things
Speaker 1: mentioned the articles said that he failed to distinguish illegal
Speaker 1: crime from deviant mere deviant behavior, like apparently his his
Speaker 1: whole premise was like you're into donkeys, you're a white
Speaker 1: collar criminal exactly. And the other thing I mentioned too
Speaker 1: was that he pretty much said it was anyone like
Speaker 1: any upper class nonviolent crime, right, And that's definitely evolved,
Speaker 1: and I think fairly. I think you can be working class,
Speaker 1: you can be business class if you like. That's a big,
Speaker 1: big part of white collar crimes definition is your opportunity
Speaker 1: arises because of the trust that's granted to you through
Speaker 1: your occupation. Yeah, even if you're a lower level employee,
Speaker 1: you still may have access. Like the lady who wanted
Speaker 1: to sell the Coke secret. She wasn't like a CEO. No,
Speaker 1: she was an admin I believe, Yeah, exactly. Um, so
Speaker 1: there's a there's one thing that that like you said,
Speaker 1: they like to shoot a hole in Sutherland's theory that
Speaker 1: or they say his definition is too broad because he
Speaker 1: did include behavior that's not illegal. But it's a very
Speaker 1: legitimate point to say, you kind of have to because
Speaker 1: if not, then we wouldn't have had the Sherman an
Speaker 1: Anti Trust Act, we wouldn't have had the Clayton next,
Speaker 1: we wouldn't have had um, you know, the FDA, all
Speaker 1: of these things that uh that the carrier's case, he
Speaker 1: would have gotten off scott free, and what he did
Speaker 1: was not illegal. So it has to evolve over time. Agreed, Okay,
Speaker 1: and it has agreed. So let's talk about, um, I
Speaker 1: guess the impacts of today's modern white color CRME. I
Speaker 1: was like man that was suspensible all of a sudden. Um. Yeah.
Speaker 1: We've talked about a few of these about it seemingly
Speaker 1: not having a victim. But what happens is, um, you
Speaker 1: rip off a huge corporation, the race of prices. There's
Speaker 1: another ripple effect. You talked about cutting jobs to meet
Speaker 1: you know, the needs of the investors if it's a
Speaker 1: publicly traded company. Um, when there's stock fraud committed insider
Speaker 1: scandals like Enron are going to ripple out throughout the
Speaker 1: stock market cause, like you know, basically cause people to
Speaker 1: be unsure and have no faith in the stock market
Speaker 1: all the sudden. Yeah that's dangerous. Yeah, I think about
Speaker 1: all the people who just lost everything. Oh my god,
Speaker 1: I get Yeah, I get just as angry, if not
Speaker 1: more angry at something like that than you know, something
Speaker 1: like heinous crime. Yeah, that's an equal Yeah, they're both scumbags. Okay. Um,
Speaker 1: so you said, like in seventy four the FBI first
Speaker 1: started they that's when they've created this white color Kime division.
Speaker 1: So apparently like yes, and it was a response like
Speaker 1: this University of Michigan survey that they conducted between nineteen
Speaker 1: fifty eight, I think in nineteen seventy three, they found that, um,
Speaker 1: people who said that they trust the federal government went
Speaker 1: from seventy three to thirty seven percent between nineteen fifty
Speaker 1: eight and nineteen seventy three. Yeah, flo flopped. I could
Speaker 1: see that over that time period. The sixties. Yeah, one
Speaker 1: of the big ones was just like fraud and corruption
Speaker 1: at high levels, and so the FBI created this white
Speaker 1: collar crime thing. One of the other things that differentiates
Speaker 1: white collar crime from regular working class crime is the
Speaker 1: police's ability to police it. Right, you walk into a
Speaker 1: room and there's some guy weighing out cocaine, he's a criminal.
Speaker 1: You walk into a room and there's some guy on
Speaker 1: a computer doing a pump and dump scheme. Who knows
Speaker 1: that average cop isn't equipped to detect this kind of crime.
Speaker 1: And as a matter of fact, even very very well
Speaker 1: trained cops aren't typically equipped to detect this kind of crime.
Speaker 1: One of the hallmarks of white collar crime is that
Speaker 1: it's very difficult to prove. It's very difficult to uncover,
Speaker 1: and it's also difficult to prosecute. Yeah, and there's no uh,
Speaker 1: smoking gun, there's no paper trail, or there may be
Speaker 1: a paper trail, but it's probably electronified. Sure, so it's
Speaker 1: a little harder to follow. You gotta really, you know,
Speaker 1: you gotta have people that know what they're doing. And
Speaker 1: that's why the FBI created that division, And I guess
Speaker 1: they're doing a good job, but it's kind of hard. Well,
Speaker 1: the Justice Department has been going after white collar crime
Speaker 1: lately under Obama pretty hard here there. Um, and then
Speaker 1: the Sarbanes Oxley Act definitely step things up, and some
Speaker 1: say too much. Yeah, I mean I've had to comply
Speaker 1: with this at various uh when I worked in the
Speaker 1: film as Is production, companies had to like to jump
Speaker 1: through way more hoops of paperwork because the Sarbanes Oxley
Speaker 1: do you want to talk to you want to tell them? Well,
Speaker 1: it's it was in two thousand two, and it was
Speaker 1: to improve corporate governance, which is basically accountability between corporation
Speaker 1: and the stakeholders. What it amounted to was a lot
Speaker 1: more paperwork, essentially more proving of numbers and showing numbers
Speaker 1: and jumping through hoops. It was a direct reaction from
Speaker 1: of the fallout of Enron, from the fallout of en
Speaker 1: On and Tycho and like all the other companies around
Speaker 1: that time. Um. But one of the other things that
Speaker 1: did chuckers was, um A quadrupled sentences in a lot
Speaker 1: of cases for white collar crime. So now you have
Speaker 1: guys like Bernie made Off getting a hundred and fifty years.
Speaker 1: There's a guy named Sholem Weiss who was involved in
Speaker 1: like the breakup of some insurance company. He got eight
Speaker 1: hundred and forty five years. He gets out in twenty
Speaker 1: seven fifty four. I don't think he's gonna see that.
Speaker 1: I don't either, But I mean a guy named rich
Speaker 1: Harkness got a hundred years for thirty nine million dollar
Speaker 1: ponzi scheme like these and all of this is like
Speaker 1: post Sarbanes Oxley, except Sholm Wisse, which is really saying something.
Speaker 1: But but I mean, like, so now now sentences are
Speaker 1: like quadruple. It's like, well, wait a minute, maybe maybe
Speaker 1: this is a little too much like just retribution on
Speaker 1: the rich. It is, and that's kind of I think
Speaker 1: why a lot of people are having a hard time
Speaker 1: feeling bad. Are ridiculously wealthy people who were hucksters and frauds,
Speaker 1: or people who built people out of their retirement accounts.
Speaker 1: It's tough to feel sorry for him. But legally speaking,
Speaker 1: it's like, well, wait a minute, um, you were worried
Speaker 1: about the guy who stole a thousand dollars out of
Speaker 1: it till being treated differently from the guy who stole
Speaker 1: a thousand dollars from an investor. Now it's flip floped.
Speaker 1: How is that any better. One of the arguments for
Speaker 1: these kind of things is that these people are traditionally
Speaker 1: and historically have been treated differently because they look like
Speaker 1: the judges that are sentencing them, and so judges historically
Speaker 1: like really have taken it easy on them. Um, let's
Speaker 1: go ahead and just call them white dudes, Okay, but
Speaker 1: they also have been Um, you can make the case
Speaker 1: that they are usually first time offenders, they're usually family people. Um,
Speaker 1: that's that's something that the judges put out there, like, well,
Speaker 1: this is a family man, he's not much of a
Speaker 1: flight risk, he's probably never going to do this again
Speaker 1: of the society. Yes, he didn't use a weapon, which
Speaker 1: is a huge, huge differentiation, and so sentences have typically
Speaker 1: typically been light. But um, you can you can also
Speaker 1: kind of say, well, you know where where it feels
Speaker 1: like we haven't quite felt it out, Like we've traditionally
Speaker 1: ignored white collar crime. Now we're really sticking it to him. Well,
Speaker 1: it's that whole argument with prison. Is it like punishment
Speaker 1: for a crime done or is it rehabilitating a person
Speaker 1: who has a problem with crime? Well, within eight hundred
Speaker 1: and forty five years sentence, it's making an example out
Speaker 1: of that person, because since you can't police it, another
Speaker 1: way to prevent it is to send a message through
Speaker 1: the courts, like you do this man, you're going to
Speaker 1: prison for a long time. Yeah. I don't know if
Speaker 1: that's such a deterrent though for some of these people.
Speaker 1: I don't know. I mean, I think about it. Twenty
Speaker 1: years in a in a federal penn You say Club
Speaker 1: fed is not around any longer, um, And I mean this,
Speaker 1: this is like twenty actual years. Um. Some guy named
Speaker 1: Thomas Peters recently got fifty years and he will spend
Speaker 1: forty years in jail. And he's fifty two, and he
Speaker 1: will probably die in prison. Now that's a big deal
Speaker 1: with somebody who's like, well, maybe I shouldn't do this
Speaker 1: insider track, Maybe I should let this fifty grands just
Speaker 1: walk by because it's not really worth it. Well something
Speaker 1: like that. I'm talking about the ones who are getting
Speaker 1: rich by the tens of millions of dollars. What I
Speaker 1: want to see is that these people don't get out
Speaker 1: of prison and still have all those millions of dollars
Speaker 1: like hidden in different foreign accounts and offshore islands and ah. Like.
Speaker 1: The financial part is what really bugs me. I meant to,
Speaker 1: I didn't get a chance. I meant to look up
Speaker 1: and see if any of the en Ron victims and
Speaker 1: employees where ever repaid or if they were just s
Speaker 1: O L. I'm under the distinct impression they were s
Speaker 1: ol because the company was in such bad shape that
Speaker 1: even dissolving it. And I think I think they some
Speaker 1: people did get money, but I don't think it was
Speaker 1: anything approaching what they lost. Well, whoever commits these crimes
Speaker 1: gets out of jail and they have two pennies to
Speaker 1: rub together, then those two pennies more than they should have.
Speaker 1: I think, Well, that's the thing. Like, so, the government
Speaker 1: started prosecuting under the Rico Act, which is the same
Speaker 1: thing they bust up mafia organizations with UM and they've
Speaker 1: been fighting white collar crime with that. And one of
Speaker 1: the things about the Rico Act as it allows states
Speaker 1: and individuals who are harmed to sue for up to
Speaker 1: three times the damages. Yeah, but even then all they
Speaker 1: have to do is say, yeah, I don't have that money.
Speaker 1: You kid me. Well, it's true, can't pay it. No,
Speaker 1: it's true. But like UM in the made Off case,
Speaker 1: the guy who's who was assigned to basically get money
Speaker 1: back for investors has gotten I don't remember how much
Speaker 1: made off fleece, but let's say it was eight billion.
Speaker 1: The guys managed to like get like six billion back. Yeah,
Speaker 1: he's done a really good job of getting the money back.
Speaker 1: And that's just a that's that's an example. It's not
Speaker 1: a figure, but it's it's something pretty significant. You're still
Speaker 1: gonna get email. I'm looking forward to the ones. But
Speaker 1: it's like, hey man, we don't listen to you for
Speaker 1: free to hear your opinion about class. All right, let's
Speaker 1: move on to other countries. Um, things are different all
Speaker 1: over the world. Um. Obviously, when it comes to big
Speaker 1: business and business dealings. Uh. Western Europe has followed right
Speaker 1: behind the US, UH most wholeheartedly with laws to prevent corruption.
Speaker 1: Eastern Europe's coming on board a little slower. Um. But
Speaker 1: then you go into other countries like in Western Africa,
Speaker 1: and it may be customary to Greece palms to get
Speaker 1: a deal going, or in India where apparently, if you're
Speaker 1: a truck driver, you're gonna have to bribe people to
Speaker 1: keep your rig on the road. And that's just how
Speaker 1: it is there, right, And not only is it customary.
Speaker 1: It's frequently legal, yeah, Russia. Yeah, bribes all over the place.
Speaker 1: If you want to land contract, you might have to
Speaker 1: bribe somebody. So if you're a multinational corporation, it's tough
Speaker 1: to do this headquarter in America. Yeah, you have like
Speaker 1: a real problem facing you. Especially, like I said, the
Speaker 1: UM Justice Department under Obama has been prosecuting white color
Speaker 1: crimes and going big time after UM people under the
Speaker 1: Foreign Corrupt Practices Act, which says if you're an American company,
Speaker 1: you can't engage in bribes, even if it's legal in
Speaker 1: that country. Yeah. But what's the point, like why hamstring
Speaker 1: American business abroad? Exactly? UM? And to help this out, actually,
Speaker 1: there has been a unified committee called the UM company
Speaker 1: I'm sorry committee called Transparency International, and they are out
Speaker 1: to get rid of corruption and to unify business business
Speaker 1: ethics all over the world. Right, And that's the that's
Speaker 1: the reason that you hamstring American business because it's basically saying, hey, uh,
Speaker 1: we can take the hit in the hopes of pressing
Speaker 1: the rest of the world into the same clean up
Speaker 1: their act. Competitive laws we have here in the States
Speaker 1: that work very well. It's so good luck to them. Yeah,
Speaker 1: that's it, man, I got nothing else. No, we should
Speaker 1: we should play this one out with um the talking
Speaker 1: heads big business agreed. Okay, Um, so Chuck, let's see. Uh.
Speaker 1: If people want to learn more about white collar crime,
Speaker 1: I would strongly advise them to go read this article
Speaker 1: by Jay McGrath of John And there's a Simpsons reference
Speaker 1: in it. It's a way to go, Jane. Um. You
Speaker 1: can type in white collar crime in the search part
Speaker 1: how stuff works dot com, which friend oh brings up listener. Ma'am,
Speaker 1: that's right, Josh, I'm gonna call this, uh hot off.
Speaker 1: The press is good cause I'm okay, Chuck and Josh
Speaker 1: and Jerry. I want to say thank you for all
Speaker 1: the hours of listening. My brother Chase and I've been
Speaker 1: listeners nearly as long because you have been making them.
Speaker 1: There was even one New Year's Day where all we
Speaker 1: would do was listen to your hangover podcast on UP.
Speaker 1: I don't think. I don't know if that's good for hangover. Uh.
Speaker 1: It's funny and informative, and I always feel like calling
Speaker 1: my brother after listening to the latest episode. I'm writing
Speaker 1: you because it's recently his birthday. He's the best brother
Speaker 1: in the world and downright awesome human being. It would
Speaker 1: mean a lot to me if you could tell the
Speaker 1: stuff you should know listeners about his latest project. When
Speaker 1: his friend Jim survived cancer, he told Chase that he
Speaker 1: gained strength in the music he loved. Over two years,
Speaker 1: two hundred, twenty six hundred tracks, two hundred tracks, that's
Speaker 1: a weird way to put it. What would that be?
Speaker 1: Two would that be? Wait? How many two hundred? Dred
Speaker 1: would it? Or dred? No? Plus two hundred, twenty hundred
Speaker 1: nearly two hundred artists persons insane, No, she's not. Over
Speaker 1: two years, two hundred tracks. Nearly two hundred artists from
Speaker 1: other countries all over the world have allowed them to
Speaker 1: share that message. They are releasing their second compilation disc
Speaker 1: Electronic Saviors colon Industrial Music to Cure cancer. So it's
Speaker 1: these artists compilations are putting together apparently two tracks. Uh.
Speaker 1: They're a registered US charity and all proceeds go to
Speaker 1: cancer research. And if you want, if you're into electronic
Speaker 1: music and if you want to support cancer research, you
Speaker 1: can go to www. Dot Electronic Saviors dot com. And
Speaker 1: that is something Chase has got going and his sister
Speaker 1: Laura Dudley. UH is a big fan of her bro
Speaker 1: He sounds like a swell guy. I'm all for it. Cancer.
Speaker 1: We had to promote a good cause, chuckers. We try
Speaker 1: to do that. Um. Yeah, we always want to hear
Speaker 1: about good causes. So you can get in touch with us.
Speaker 1: Let us know about yours. We'll try our best to
Speaker 1: let everybody else know about it, especially if people can
Speaker 1: support it. Agreed. Um, let's see also enjoy Little Talking Heads,
Speaker 1: Big Business from the live album Stop Making Sense released
Speaker 1: to nine eight four. We're sure it's up on iTunes,
Speaker 1: Amazon and elsewhere. Um. You can get in touch with
Speaker 1: us at s Y s K podcast on Twitter. Uh,
Speaker 1: you can go to Facebook dot com slash stuff you
Speaker 1: should Know, and you can send us a regular old
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Speaker 1: and sending it off to Stuff podcast at Discovery dot com.
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