There are two almost completely different definitions for "wise guy". The older one refers to someone who says or acts provocatively, and gets called for it. The newer one refers to Mafia (made??) members. Anyone have any idea as to how this developed?
Because they can act provocative and get away with it, at least for a period of time until another "wise guy" doesn't take their shit any longer and offs them like in Goodfellas the movie.
answer: "wise guy" is mafia slang for "noob", only a noob would act like a wise guy with the mafia. -lord watsamata
All the dictionaries insist that "wise guy" is a slang term for a man who has been formally inducted into the American Mafia. The older term "made man" is cited as an equivalent. There is no indication that it's derogatory or only applied to new members. I have not found an explanation for their choice of that particular phrase. "Wise guy" as slang for a conceited, insolent person--a particular type of fool also called a "know-it-all" or "smart aleck"--is an Americanism that came into the language at the very end of the 19th century. At that time the Mafia was not a major organization in the USA. It was only a couple of decades later, when the government so generously put them in control of the incredibly lucrative alcohol industry by passing Prohibition, that they began to become rich and powerful.
I don't maintain contacts with professional criminals, and so I don't have any first-hand understanding of when the term "wise guy" might be used, nor by whom, nor about whom. I grew up in the Las Vegas area, and the mob was very much a part of the culture, history, and politics there -- and I still don't know who would use the term "wise guy," nor about whom. The movies depict a wise guy as a member of the mob, but that's all I know. The way the mob works -- by insinuating itself into legitimate channels -- your banker could be a "wise guy," for all I know. A former member of the Aryan Brotherhood prison gang once told me that they referred to imprisoned mob members as "Spaghetti-O's," as in the advertizing jingle: "Uh-Oh! Spagetti-O's"! I can imagine that one's experience in using such a term may vary, and it may be the same for the term "wise guy," for all I know.