99 The Real Game of Missing Money no economic sense except for the property managers and owners who build and manage it for layers of fees. We have a horde of service providers to federal pro- grams who are “expert” at helping communities of people who rarely show signs of improvement…. The truth is that the private sector is eating government programs and adminis- tration alive. This means that fundamental economic productivity is decreasing while government investment earns a constantly decreasing rate of return to taxpayers. This has been going on for a long time. For example, in 1988, I was invited to a budget briefing for business leaders by Secretary of Defense Weinberg- er at the Pentagon. For eight hours he and his corporate guests painted a clear and detailed picture as to how the top corporations in America would protect themselves during globalization. This would be accomplished by substantially increasing the amount of cost-plus fixed price contracts they would be guaranteed from Washington. I had little appreciation then for what this meant Wall Street might be cooking up in the mortgage and mortgage securities market. Catherine Austin Fitts, “The Myth of the Rule of Law” In the 1990s, I helped HUD institute a network of computer centers in HUD housing. My com- pany also started a data servicing company, Edgewood Technology Services, in a residential com- munity in the Washington, DC area. We were able to document that a woman living on welfare and HUD housing subsidies with an average of 1.8 children who was costing the U.S. taxpayers approximately $55,000 a year could become a taxpayer with a relatively modest investment of time and effort. I provided the resulting documentation to the White House Budget office (OMB), showing that a portion of the welfare and unemployed population could learn market- able skills and become taxpayers working from residential communities with sufficient telecom- munications access. Given the federal government’s explosion of data servicing needs, there was a pathway to improve both the economy and save significant costs for the federal budget. This model was rejected for a model that was both harmful to the overall economy and signifi- cantly drove up the expense on the budget. What was adopted was predatory subprime mortgage lending, a significant expansion of the War on Drugs, and mandatory sentencing and private prisons, which I describe at length in Dillon, Read & Co. Inc. & the Aristocracy of Stock Profits. Now, instead of a woman with 1.8 children costing the federal taxpayers $55,000, she, or one of her children, would be rounded up and sent to prison at a cost, according to GAO in 1996, of an average $154,000 per year (reflecting system wide costs for criminal justice and prisons). If one or more children then were turned over to foster care, the costs would be far greater. I served as a managing director and member of the board of Dillon, Read & Co. Inc. After I left to serve in the first Bush Administration and then started Hamilton Securities in Washington, Dillon Read invested in a start-up private prison company, Cornell Corrections, whose suc- cess depended entirely on a rush of federal prison companies issued after legislation to increase mandatory sentencing. The costs to taxpayers were significant. Here is one example of how an uneconomic activity propped up with government money can make Wall Street rich: