Economics and the Death Penalty
I commented on an interesting post by Scott Lemieux reviewing Charles Lane’s article on the death penalty here. The post discusses the Norwegian mass murderer Anders Breivik’s case and whether Norway’s lack of a death penalty and a relatively short sentence is a problem.
I am against the death penalty and my reasoning is based on the economic principle of “perfect information”. My comment on the blog was:
“I oppose the death penalty because we can’t always be sure the person did the crime or did it in a manner that led to the court’s sentencing. If we had perfect information of all crimes and motives then no problem; we could setup objective death penalty sentencing rules and carry them out confidently.
Since we don’t have perfect information, we let everyone live because prison is an experience of life. With death, all experience of life ends for the person and, morally, I can’t do that without perfect information and that will never be.”
In our normal economic daily lives we incur costs in our transactions due to imperfect information (among other things). A lack of perfect information is one reason why our markets don’t always produce the most efficient outcomes. Executing the wrong person or for the wrong reason as a cost of imperfect information (no matter how improbable) is unacceptable.
Big Think on Invisible Children
Big Think says:
What’s the Big Idea?
One criticism of the video is that it uses social media to advocate for armed conflict. Foreign Policy‘s Michael Wilkers says it is extremely dangerous to essentially sell a foreign intervention in a reductive and highly-produced video (apparently that sort of thing must be left to more sanctioned media). The biggest criticism of Invisible Children comes from a blog called Visible Children which accuses the non-profit of spending too much money on awareness efforts and not enough on the ground in Uganda. What do you think? Can the video have a multiplier effect on funding given the incredible success it has had?
I commented:
Michael Wilkers is towing the old coward’s line; “best not get involved, it could be dangerous.” Its a global community now and we are a part of it. Invisible Children is trying to get someone to bring Kony to justice to save the children. The ICC wants him and Invisible Children would like anyone to bring him in. It is the best effort I have seen to bring these Central African criminals into the world’s awareness and hopefully into court. We can look the other way or we can do something. A little bit of money every month from everyone will bring in some great bounty hunters. It’s that simple.
I love it, some tough bounty hunters should get together and create a Kickstarter-like project (the Kickstarter Vig is too high for charity work). When they bring in Kony, all contributors to the project should get a finger painting from a Ugandan child.
It doesn’t have to be direct services or direct aid because we really don’t know who the good guys are. We do know though, that Kony is a bad guy. Building awareness is the key and someone will bring Kony down (most likely his own men).
It will raise my spirit tremendously if we save the children of Central Africa this year by bringing down the LRA!
Another Gold Standard Rebuttal
Gary Gibson surprises us all (not!) that in gold, the price of gas is falling.
My comment:
Somehow we forget the problems the world economies experienced trying to grow with the value of money tied to a scarce natural resource. I have read from gold supporters that there must have been a conspiracy to defraud the world as the major global economies of the world went off the gold standard. That is not the case.
Tying money’s value to gold is a notion that does not support free market mechanics. It depends on fixed exchange rates which are untenable in a growing world economy.
If you like gold, buy it! It is a great hedge against inflation it seems. So is land. Buy it too! Buy silver! Just leave the money alone. The world’s move towards free-floating exchange rates were part of the global free-market economic progress. Money is to facilitate commerce first, let the market decide what it is worth, we do not need to legislate its value.
Free-Market Money
I read John Tamny’s letter to the editor of Cato Unbound yesterday. Even though I enjoy reading letters and essays about free-market publications from intelligent people this one hit me wrong. I have an Economics degree (BA) from UCSD but I skipped post-graduate academia in favor of the business world. While working my first job, I went on to earn a Certified Public Accountant designation to learn the “language of business”. While I am not qualified to debate many in academia, I do believe I can shed some light on why a return to a commodity standard for money is ill-advised.
John Tamny, who has excellent credentials, wrote this letter to the editor of Cato Unbound explaining why he felt a return to the gold standard would be optimum. Mr. Tamny makes some excellent points about money, many of which I agree with. He quoted some world-class economists (including Mr. Keynes) about the need for a stable measuring rod to be used in the exchange of goods.
Mr. Tamny’s argument is that money, if not backed by a stable commodity such as gold (the most stable commodity ever according to him), will never be an optimal measuring rod of value. I would argue that there can be only one optimal determinant of the value of money and that is the market.
Money needs no proxy to help the market determine its value. Money’s value is what the market settles on based on its supply and the general confidence in the government issuing it. The US dollar is not backed by a stable commodity for the very reason that unless the supply of that commodity can expand ad infinitum and the government can acquire it ad infinitum, as money can and must, it will eventually drag on the economy.
Gold is a finite commodity and the potential size of the world’s economy is not. If I would like to sell my cows to a butcher, I could accept just about anything of value in exchange although the most efficient would be money. Money is the chit that goes on the left side of the ledger in place of my cows. Do I really care if it is backed by gold? It makes no difference to me because in a market economy with a stable central government I know that when I need feed for my cows I can take the chits I got from the butcher and use them at the feed store.
If we tie the chits to gold, what happens when the need for money increases (because commerce is growing along with population etc) beyond the supply of gold? We then have to devalue the currency relative to our cache of gold. Government intervention to devalue money will, most likely, be problematic. It raises too many questions.
By example, suppose today we have dollars backed by 1/1000th of an ounce of gold. In several years, we will need more money to conduct more commerce (because GDP growth depends on money growth), and so we either buy it or we devalue the dollar dropping its worth to 1/2000th of an ounce of gold for example. Regardless of how much gold we can buy today, we will eventually have to devalue. Taken to the extreme our money, after many devaluations, will effectively not be backed by any commodity because it will be backed by 1/200,000,000th or some other tiny fraction of an ounce of gold which, for all purposes, is not far from zero. In addition, we endured numerous shocks along the way as our government intervened (without the help of the market and global economy) to devalue the dollar thereby allowing us to increase the supply of money to accommodate more commerce.
What is surprising is that many free market proponents such as the Cato Institute, Mises.org, and many of the Austrians (including Ron Paul), do not have faith in these markets they adore to set an optimal currency value; a value on currency backed by the full faith and credit of the participants in the economy. They lack faith in currency supported by the robustness of the free market whose supply is assured by a stable government.
These “free-market” advocates see a number of problems with “unbacked” currency stemming from the evils of government and including imminent inflation. Apparently they believe folks will wake up one day and say “Damn I thought I had gold in my pocket and it’s only really paper” and perhaps they believe the butcher will suddenly say, “since this is only paper and I thought it was gold or I think it should be gold, I want $100 for this pound of beef instead of my usual $10″. This thought process and behavior seems inconsistent with a market understanding and free market ideology.
I say, if you’re free-market, believe in the market. The gold standard is ancient history. It is like training wheels on a bike; we don’t need them. Let’s do business and let the market stabilize the value of a dollar while we grow the economy through that very same market.
Robin Hanson sings the praises misers
Steven Landsburg is exactly right:
Here’s what I like about Ebenezer Scrooge: His meager lodgings were dark because darkness is cheap, and barely heated because coal is not free. His dinner was gruel, which he prepared himself. Scrooge paid no man to wait on him. Scrooge has been called ungenerous. I say that’s a bum rap. …
In this whole world, there is nobody more generous than the miser — the man who could deplete the world’s resources but chooses not to. The only difference between miserliness and philanthropy is that the philanthropist serves a favored few while the miser *spreads his largess far and wide. …
Put a dollar in the bank and you’ll bid down the interest rate by just enough so someone somewhere can afford an extra dollar’s worth of vacation or home improvement. Put a dollar in your mattress and you’ll drive down prices by just enough so someone somewhere can have an extra dollar’s worth of coffee with his dinner. (more; HT Adrian Kent)
Why are misers so widely criticized, if their gift is distributed unusually equitably, with little chance to receive praise or gratitude in return? Some might suggest this is caused by economic ignorance, but it seems far more likely that misers are criticized exactly because their gifts are equitable.
Humans have had literally millions of years experience begging from one other. Many primates do it, as do foragers. A supplicant appeals to common feelings that one should help associates in need when one is doing well, in the expectation of getting help later when you are in need, and also of sending good signals about your loyalty and ability.
Associates who hint that you should be less miserly and make more overt gifts are not at all hoping that you will spread your gift equitably across the world. They are instead hoping that you will unequally focus most of your gift on them. By criticizing misers you are working to take the gift away from those distant recipients. Ask yourself: are you really more deserving than they? Do you care?
Added 1:30p: Karl Smith says:
The miser is not as generous as the dedicated philanthropist. … [He] is withholding his assessment of the most utility maximizing uses of his money. (HT TGGP)
True, but I’d still guess that the miser does more good than the average rich-nation philanthropist.
I posted the following comment (number 11 or so):
“Well I don’t see the miser’s shine. Misers can be neurotic, anti-social and may live in fear that one day they will be poor again. It is most likely a form of mental illness. It is no life for a man or woman. A proper balance with regards to money and taking care of oneself is best methinks.”
In Defense of Al Sharpton
Don Boudreaux writes to Al Sharpton:
Rev. Al Sharpton
National Action Network
Dear Rev. Sharpton:
Your organization, the National Action Network, e-mailed me to boast about your complaint to Walgreen’s CEO regarding his company’s alleged ‘underserving’ of minorities.
I like your tactic! But it prompts me to ask: Why are you ‘underserving’ minorities in need of low-priced pharmaceutical products?
What have you done to attract private capital to finance retail outlets? How have you helped to organize supply chains that get pharmaceuticals from factories to consumers at costs that make the on-going retail distribution of these products profitable at prices that also are affordable to low-income consumers? Where’s the evidence of your entrepreneurial creativity – and the evidence of you risking your own money and of you spending untold hours of your own time – to help bring pharmaceuticals to low-income neighborhoods? Why do you not devote more of your ample energies to struggle with details of the likes of inventory management, optimal liability-insurance coverage, and OSHA work-place-safety regulations so that you can create a retail pharmaceutical chain that earns sufficient profit to enable it to stay afloat while it simultaneously achieves all of what you somehow divine such a retail chain ‘should’ achieve?
Walgreen’s investors and employees actually and already contribute infinitely more energy and resources than you do to the process of making pharmaceutical products readily available to the masses. So surely if it’s appropriate – as you clearly believe it to be – to fling accusations at anyone who arguably exerts insufficient effort to improve the retail distribution of pharmaceutical products, you deserve far more criticism than does Walgreen’s and its CEO.
Sincerely,
Donald J. Boudreaux
Here’s my comment (you have to go down to about the 100th comment):
John Donnelly December 14, 2011 at 7:17 pm
Ok, I’ll be your huckleberry. I know that most of the commenters are your fanboys (and girls) so I will take the Sharpton side.
Professor Boudreaux is like a father in his disciplining of the complainer with the old argument, “if you aren’t part of the solution, you are part of the problem” or “what? are your legs broken”. His argument is likened to telling an art critic to “grab a brush”!
Unfortunately Professor Boudreaux is not helpful in this case simply because the good Reverend is not in the business of distributing pharmaceuticals and he needn’t be. Nor does Rev Sharpton need to be an economist to express his opinion about Walgreens and their distribution and pricing policies from his social utility point of view.
Chucklehead has it right, Sharpton is just doing his job, complaining on behalf of those he deems to need his help and who don’t enjoy his level of influence. Rev. Sharpton’s attempt to sway a large corporation to do (hopefully mutually beneficial) business to help his community is a very rational thing to do given his unique assets and abilities.
I can go on about the good Reverend’s assets and how he leverages them but that is another debate.
This should generate some interesting comments!
