Editorial: When the privileged grab for more

An alleged disability scheme reportedly swindles the Long Island Rail Road out of $1 billion. A man who's been at the pinnacle of American business is ensnared in an insider-trading probe. Affluent families pay some smarty-pants to sit for the SAT in place of their own children.

Allegations like these should always make people mad. But what makes them so infuriating at this particular juncture is what all three have in common: the gross abuse of privilege by those who were already doing well while so many others are suffering.

Middle-class Americans are hurting -- and angry. Their government, in fending off a financial crisis, bailed out banks and bondholders, yet has done little to stem the foreclosure crisis or generate jobs at a time of massive unemployment and underemployment. In this context, people who take advantage of everyone else out of sheer greed seem especially loathsome.

A job as an LIRR conductor for example, is a pretty sweet setup in the current climate, providing pay, benefits and job security beyond the reach of most Americans lacking advanced education. Yet according to the criminal complaint, at least, that wasn't good enough, so some conductors, with the complicity of physicians who surely weren't starving, retired early on phony disability claims.

Rajat K. Gupta, the former chief of McKinsey & Co., the consulting giant that serves as a source of guidance for captains of industry the world over, had things far, far better than any conniving LIRR conductor. A former director at Goldman Sachs and Procter & Gamble, Gupta had wealth, prestige and the perks to match. Yet he allegedly passed inside information to hedge-fund billionaire Raj Rajaratnam -- who needed more money like Long Island needs more traffic.

The SAT cheating scandal would hardly seem to be in the same category. Yet here the difference is one of magnitude, not of kind. People who can afford to pay a stand-in to take the SATs can surely afford the advantages -- books, tutoring, a home in a good school district -- that typically result in a good score without cheating. The children of such families, in other words, already had a leg up on the many other kids lacking such benefits, and would have done just fine -- whether it was they or their parents who paid the bogus test-taker.

In all three cases -- the LIRR, Gupta, and the SAT scandal -- people who didn't need to cheat allegedly went way out of their way to take advantage of the many to improve their lot even further, exploiting positions of privilege others can only envy.

That makes people mad. But it's a canard that Americans resent privilege. On the contrary, we're more tolerant of unequal outcomes in life than most nations, as long as we perceive equality of opportunity. No, what Americans loathe is privilege that is unearned -- witness our historic embrace of estate taxes -- and worse yet, abused.

Each of us is shortchanged by such episodes, as if someone has cut in front of a long line. Worse yet is the corrosive effect that each episode has on the glue of fairness holding society together. If people come to believe that disability fraud is widespread in government, they won't want to pay taxes. If they believe insider trading is rampant, they won't want to invest in stocks. And if they believe the SATs are rigged, they might not want to study.

The avaricious will always be with us, but perhaps Americans are more tolerant of them when the economy is strong and others are getting their share. In these hard times, by contrast, exploiters are more likely to face the guillotine, or at least some contemporary equivalent.

Perhaps that accounts for Rajaratnam's recently imposed 11-year prison sentence -- the longest ever for insider trading. Ditto the 150 years meted out to Ponzi schemer Bernard Madoff. Indeed, penalties for financial crimes have grown markedly stiffer in recent years, while income inequality has grown. That's not a coincidence. hN