It seems to me that this is basically "guilt by association". It's a fact of life, however unfair it may be. If you happen to be the lone good guy in a group, you will still be associated with that group. You may be vindicated eventually, but that's the way of the world.
I use this to remind myself that perhaps I should judge each person individually. It is far too convenient to lump a group of people together and pass judgement on the group.
I am reminded of the controversy surrounding the book "The Secret". This book resurrected the pseudo-science of the "Laws of Attraction" that had its first appearances near the start of the 1900's. The big secret of course is to become completely committed to and immersed in whatever it is you want and the universe/power of the mind will grant it to you.
The specific controversy over the book, "The Secret" was that it plainly stated that if you wanted to be thin, only associate with other thin people and do not associate with overweight people. It seems to me like self-induced peer pressure, at the draconian cost of shunning certain groups of people and can even appear somewhat immoral. The book also went on to say similar things like, if you want to be rich associate with the rich and not the poor, etc..etc.
Now the Laws of Attraction are of course BS, but we can all come up with alternate anecdotal reasons for why something like these laws might work in some situations. Whether it be something like the self-imposed peer pressure, or just being around something so much presents more opportunities, etc.
My question is how does a responsible man divorce himself completely from the "bad company" when it could be argued that he has a duty to help elevate them? In other words, for example, who are the thin people that let the overweight people looking to become thin associate with them.
Sure, bad company corrupts good morals. You can still be in a corrupt world; just don't "lie down" with it, meaning, don't be a part of it, excuse it, adopt it, or let such people be your circle of friends, as opposed to people you're friendly to.
It is not elitist, at all. The phrase was meant to illustrate the simple concept of ones' having been "guilty by association". Further, I should think most adults would know exactly "where" to draw the line. The line for each of us is drawn right between what we consider to be OK, as compared to what we consider to be "not OK". If you are hanging with people who happen to be "not OK", then you are likely to also be considered to be: "not OK".
It seems if you treat the "group" as a myth and go against it, and you are certainly free to do so, there is a cost to your reputation and how the group treats you that must be paid.
What about those gray areas, changing perspectives, and where prejudices exists and judgment was simply not fair. For example motorcyclists, because of incidents in the past with certain Hell's Angels, and 1%'ers made just owning a street bike put you in very infamous company. Now it is much more accepted because some really good people decided to participate (they always have) and over time the perspectives changed.
Another example is tattoos. It used to be having a tattoo meant having a potentially bad reputation and put you into a highly suspect and negative group, now it is almost a norm to have at least one.
Homosexuality seems to be the next big "evil" (as some view it) poised to become accepted and attitudes are changing making it more acceptable to come out and associate with other homosexuals.
When we "lie down" and either join or accept something that "used to be considered not ok" are we slipping and lowering our standards or are we stepping up and recognizing that something is not as bad as we once once thought?
Do you do something that others do not regard well and how do you deal with it or have you ever avoided something that interested you just to protect your reputation? What were the consequences of that decision?
...but Franklin's thought, though well understood by (some) older heads, is well taken for the young. Because it's so easy to give tacit approval to evil when you want to be part of the group that's doing it. And so easy to excuse it rather than face the inconsistency.
To put this in the vernacular, if a straight guy starts hanging out in a gay bar, he KNOWS he is doing so at the risk of being perceived as gay himself. It either doesn't matter that much to him what others think; or it is an act of defiance.
The "lying with dogs/waking up with fleas" analogy is a cautionary statement. Actions always have consequencies.