Sunday, April 6, 2008

Defining Deviancy Down

"For decades, social scientists, policy wonks and politicians have studied and debated what's come to be known as the culture of poverty. The consensus: a class of Americans is set apart from the mainstream by geography, class and income. ... We don't hear as much about the culture of poverty these days. Perhaps that's because the market turmoil is making us all feel a little poorer. ... Forget welfare queens and the culture of poverty. Think Wall Street kings and the culture of affluence. ... Because they rarely interact with people of middle-class means (save the odd doctor, lawyer or interior designer), they have become woefully out of touch with the solid bourgeois values that made America great. ... 'There's a total disconnect between the compensation and the responsibility for their actions,' says William Cohan, a former Lazard banker turned author. ... 'Modern Wall Street is a system,' says Charles Morris--a former Chase banker ... 'that rewards crazy risk-taking in the short-term without regard for the long-term consequences.' ... In 1993, the late senator Daniel Patrick Moynihan coined the phrase 'defining deviancy down.' The prevalence of bad behavior in the underclass, he argued, caused institutions to lower standards and expectations, which effectively socialized the costs of dysfunction. Today, the [Fed] is 'defining deviancy down.' ... The overclass is better connected, and it can cause more damage. 'Poor, inner-city kids selling drugs to suburban kids can harm people,' [Susan] Mayer says. 'But financial markets can bring thousands and thousands of people to ruin," Daniel Gross at Newsweek, 7 April 2008.

Gross is closer to the truth than even he thinks. I have long likened the Fed to a crack dealer, in that it hooks the public on low interest rates to induce borrowing for the benefit of its owners, the financial institutions.

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