Stationary Bandit

Shoot First to Reduce Crime

The relatively new President of South Africa has a plan to tackle the high violent crime rate in the country: allow police to use "lethal force" against criminals even if they do not shoot first. Raising the costs of crime should lead to less of it. Fair enough. Here is a quote:

"My thinking is that once a criminal takes out the gun, the intention is clear. The police must then act to protect himself or herself and the citizens," President Zuma said, drawing applause from the assembled police officers, reports the AFP news agency.

To put it mildly, this is problematic. First, I doubt it is clearly stated when it is appropriate for police to shoot first. Corruption plagues South Africa and this policy may offer a new avenue for corruption to take place. Second, will a rational criminal shoot first because of the threat of getting shot? Seems reasonable to me. Here is the story.

Property Titling is Not Enough

Formal titling of property rights does improve the security of property rights. But more is needed. It is not a panacea. Property rights protection often requires more than state acknowledgement of one's claims. Courts and other formal governmental agencies are not enough. Other resources are used to protect property rights as well. Richard Hornbeck offers up some novel empirical work that emphasizes the impact of a simple technology: barbed wire. Simply put, barbed wire kept the animals out and value increased. Farmers had more secure property rights and they invested accordingly (here is the paper). The effect appears to be significant. Maybe development agencies should give out barbed wire to farmers to improve productivity. But then again, in some areas that may be a problem.

IQ and Disasters

As is often the case, Thomas Sowell provides enlightening commentary on public policy.

There is usually only a limited amount of damage that can be done by dull or stupid people. For creating a truly monumental disaster, you need people with high IQs.

He continues

Many crucial things in life are learned from experience, rather than from clever thoughts or clever words. Indeed, a gift for the clever phrasing so much admired by the media can be a fatal talent, especially for someone chosen to lead a government.

Massive destruction requires cleverness and a of lack of experience. Add in some an individual's propensity to overestimate their own intelligence and disaster looms.

Happy Birthday Ludwig von Mises!

Ludwig von Mises has had a profound impact on my thinking. As an undergraduate, I spent many hours reading Human Action, Socialism and The Theory of Money and Credit. I went to the Mises University to improve my understanding. In graduate school, I re-read Mises and attempted to identify his place in modern political economy (the paper remains unfinished after many years). Since then, I consult his works frequently as I address whatever I thinking about.

If I had to pinpoint the most important aspect of his influence on me beyond his arguments against socialism, I would have to pick his interpretation of Ricardo's law of comparative advantage. Only Mises, best I can tell, understood it is the basis of social cooperation. No one before stated the implications so eloquently. Here is Mises in his own words:

The law of association makes us comprehend the tendencies which resulted in the progressive intensification of human cooperation. We conceive what incentive induced people not to consider themselves simply as rivals in a struggle for the appropriation of the limited supply of means of subsistence made available by nature. We realize what has impelled them and permanently impels them to consort with one another for the sake of cooperation. Every step forward on the way to a more developed mode of the division of labor serves the interests of all participants. In order to comprehend why man did not remain solitary, searching like the animals for food and shelter for himself only and at most also for his consort and his helpless infants, we do not need to have recourse to a miraculous interference of the Deity or to the empty hypostasis of an innate urge toward association. Neither are we forced to assume that the isolated individuals or primitive hordes one day pledged themselves by a contract to establish social bonds. The factor that brought about primitive society and daily works toward its progressive intensification is human action that is animated by the insight into the higher productivity of labor achieved under the division of labor.

Once you wrap your mind around the law of association, the world makes a lot more sense.

HT: Steve Horwitz.

Paging Gordon Tullock

I can imagine Gordon Tullock making this suggestion in all seriousness (For all I know, he may have).

Poland on Friday approved a law making chemical castration mandatory for pedophiles in some cases, sparking criticism from human rights groups.

Under the law, sponsored by Poland's center-right government, pedophiles convicted of raping children under the age of 15 years or a close relative would have to undergo chemical therapy on their release from prison.

However, the rationale is not Tullockesque.

"The purpose of this action is to improve the mental health of the convict, to lower his libido and thereby to reduce the risk of another crime being committed by the same person," the government said in a statement.

 

Funniest Sentence I read today

It is not Tyler's take, as far as I can gather, because as usual Tyler rejects the standard libertarian view in favor of a complex, pluralistic story that satisfies no one but himself. 

That is from Bryan Caplan.  I have the same reaction to many of Tyler's arguments.

Krugman’s Macro History

This semester I am focusing on the development of macroeconomic thought in my history of economic thought course. Obviously, Krugman's recent essay caught my attention. Here are some of my reactions.

1. Krugman writes

   Over the next 160 years an extensive body of economic theory was developed, whose central message was: Trust the market. Yes, economists admitted that there were cases in which markets might fail, of which the most important was the case of "externalities" — costs that people impose on others without paying the price, like traffic congestion or pollution. But the basic presumption of "neoclassical" economics (named after the late-19th-century theorists who elaborated on the concepts of their "classical" predecessors) was that we should have faith in the market system.

Not really. As Steve Medema's recent book demonstrates, from J.S. Mill to Keynes, the message is do not trust market.

1. Some more Krugman

   Keynes did not, despite what you may have heard, want the government to run the economy.

   Well, Keynes did write

   The State will have to exercise a guiding influence on the propensity to consume partly through its scheme of taxation, partly by fixing the rate of interest, and partly, perhaps, in other ways. Furthermore, it seems unlikely that the influence of banking policy on the rate of interest will be sufficient by itself to determine an optimum rate of investment. I conceive, therefore, that a somewhat comprehensive socialisation of investment.

2. Finally, one wonders if Krugman ever skimmed Gottfried Haberler's book on depressions that appeared before The General Theory. It has lots of stuff about financial markets and their impact on the aggregate economy (Irving Fisher and Thorstein Veblen come to mind).

Cochrane on Krugman

Well worth the read.  Here is my favorite :

If you believe the Keynesian argument for stimulus, you should think Bernie Madoff is a hero. He took money from people who were saving it, and gave it to people who most assuredly were going to spend it.  Each dollar so transferred, in Krugman’s world, generates an additional dollar and a half of national income.  The analogy is even closer. Madoff didn’t just take money from his savers, he essentially borrowed it from them, giving them phony accounts with promises of great profits to come. This looks a lot like government debt.

If you believe the Keynesian argument for stimulus, you don’t care how the money is spent. All this puffery about “infrastructure,” monitoring, wise investment, jobs “created” and so on is pointless. Keynes thought the government should pay people to dig ditches and fill them up.  

If you believe in Keynesian stimulus, you don’t even care if the government spending money is stolen. Actually, that would be better. Thieves have notoriously high propensities to consume.

Well said.  Why does anyone believe naive Keynesianism?