Broken Windows on Wall Street

Great idea from Steve M:

IF RIGHT-WINGERS LIKE THE "BROKEN WINDOWS" THEORY SO MUCH, WHY NOT TAKE IT FROM THE STREETS TO THE SUITES?

James Q. Wilson died this past week. I mentioned Wilson and his "broken windows" theory in my last post, but I wanted to add one more point. Here's David Frum eulogizing Wilson:

James Q. Wilson is perhaps most famous for his work (with George Kelling and Catherine Coles) of the "broken windows" theory of law enforcement.

... In the 1960s and 1970s, law-enforcement had tended to shrug off minor urban disorder: street-corner drinking, graffiti. Those were years of rising crime, and law-enforcement officials thought it most rational to focus resources on the most dangerous offenses....

Wilson, Kelling, and Coles debunked these ideas. The disregard of petty disorder created an environment that invited major offenses. And a crackdown on minor offenses would ease the work of police in suppressing major crime.

If this approach is as powerful and effective as right-wingers say it is, why do we limits its application to the streets? Shouldn't we also apply it to white-collar crime?

Everyone across the political spectrum wants to prevent another financial catastrophe like the housing crash (or the dot-com crash, or the S&L crisis, or the '87 crash). When fiscal calamity happens, we inevitably find that laws were broken -- so shouldn't we drastically ratchet up enforcement of securities laws, arresting all sorts of financial-world employees for even the slightest of infractions? Doesn't it follow from the brilliant work of Wilson and his colleagues that if we let minor SEC offenses go -- if, as Frum puts it, we have "a disregard of petty disorder" on Wall Street -- the financial world will conclude that its employees can cheat and finagle and manipulate with impunity, which will "invite major offenses," and thus cause or threaten a global financial collapse every few years or so?

Shouldn't we get these small-time violators and lock them up en masse in periodic sweeps, just to send a message that society won't tolerate financial crime? Wouldn't a few days in the pokey get that across to any low-level Wall Streeter who wants to bend the rules? Doesn't the very survival of our society demand that we do no less?

But that would mean disregarding the primary principle of the last 35 years: the wealthy are above the law.