What Cowen has missed is the famous (but nearly famous enough) warning sounded by George Akerlof and Paul Romer in 1993 in their classic article "Looting: The Economic Underworld of Bankruptcy for Profit."
"[M]any economists still [do] not understand that a combination of circumstances in the 1980s made it very easy to loot a [bank] with little risk of prosecution. Once this is clear, it becomes obvious that high-risk strategies that would pay off only in some states of the world were only for the timid. Why abuse the system to pursue a gamble that might pay off when you can exploit a sure thing with little risk of prosecution?" (Akerlof & Romer 1993: 4-5).The result of these perverse incentives is the epidemics of accounting control fraud that drive our recurrent, intensifying financial crises. In the savings and loan debacle, for example:
"The typical large failure [grew] at an extremely rapid rate, achieving high concentrations of assets in risky ventures.... [E]very accounting trick available was used.... Evidence of fraud was invariably present as was the ability of the operators to 'milk' the organization" (NCFIRRE 1993).The large Enron-era frauds were all accounting control frauds.
Worse, when cheaters prosper market forces become perverse because of the "Gresham's" dynamic in which bad ethics drives good ethics out of the markets and professions. George Akerlof explained this in his most famous article on "Lemons" in 1970.
"[D]ishonest dealings tend to drive honest dealings out of the market. The cost of dishonesty, therefore, lies not only in the amount by which the purchaser is cheated; the cost also must include the loss incurred from driving legitimate business out of existence."Akerlof was not the first expert to understand the dynamic.
"The Lilliputians look upon fraud as a greater crime than theft. For, they allege, care and vigilance, with a very common understanding, can protect a man's goods from thieves, but honesty hath no fence against superior cunning. . . where fraud is permitted or connived at, or hath no law to punish it, the honest dealer is always undone, and the knave gets the advantage" (Swift, J. Gulliver's Travels: 1726).
Comment: The US wants to choose which terrorists to support and which to go after. They are happy to arm and fund al-qaeda terrorists in Syria while going after other patsy terrorists elsewhere whose usefulness for the empire has expired.
The financial terrorists of Wall Street are of course protected as they line the coffers of the elite, while destroying the lives of billions.