Lyric discussion by cfinkel 

I always thought that Bowie is talking about the "oh-so-righteous" people who will judge anybody that tries something different, dress differently, etc. People who would loathe rock n` roll, of any behaviour or attitude that strays from the "righteous/sane path". At least, thats what I get from the chorus, that he would rather stay with the insane than with the sane sad people :

'Cause I'd rather stay here With all the madmen Than perish with the sad men roaming free

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