Unlike Adams, I was not on the front lines of the financial meltdown. Still, I think that he is way off base . . . .
In my opinion, the superficial similarity that the “broken windows” model shares with the financial meltdown is a cascade effect but that is true of so many crises — something small and manageable, with a negative feedback loop, is not managed which leads to more and more ’till the situation reaches crisis proportion.
For “broken windows,” the model is that unrepaired/unprocecuted petty vandalism will lead to more petty vandalism which will lead to worse crime as more individuals come to believe that they can “get away” with greater and greater misdeeds.
It is true that a major contributor to the financial meltdown was a cascade of low quality mortgages. First sub-prime then Alt-A — as friends told friends about how much they got and how little they have to pay, more and more individuals saw opportunities to buy houses they hadn’t thought they could afford, to flip houses for investment purposes, etc.
But there the similarity ends.
Nobody, but the vandal and his buddies think its good to throw a rock from a window or snatch a purse. But there were plenty of people who celebrated the increase in home ownership and how increased demand was inflating the prices (they didn’t recognize it as a burstable bubble).
For “broken windows” you don’t have anybody suggesting that the anti-vandalism ordinances shouldn’t be enforced, it’s just that the police claim they’re understaffed and that the prosecutors won’t prosecute and that the courts won’t even slap wrists, etc.
But for the financial meltdown you had political leaders defending the financial health of Freddy and Fanny and explaining how important the CRA had been to help the underprivileged.
For Adams’ thesis to have merit, the “broken windows” model would have politicians celebrating the breaking of windows so that their glass manufacturing friends would benefit from expanded markets.
Anyway, that’s what I think.
