Cafe Hayek

A Great Arrrgggument

One of my and Russ's impressive young colleagues, Pete Leeson, has his research discussed in today's edition of the Boston Globe.  (HT Pete Boettke)

Leeson makes clear that pirates on the high-seas evolved their own social order, one that makes good sense from the perspective of positive economics.  Here's a slice from the article:

The pirates who roamed the seas in the late 17th and early 18th centuries developed a floating civilization that, in terms of political philosophy, was well ahead of its time. The notion of checks and balances, in which each branch of government limits the other's power, emerged in England in the Glorious Revolution of 1688. But by the 1670s, and likely before, pirates were developing democratic charters, establishing balance of power on their ships, and developing a nascent form of worker's compensation: A lost limb entitled one to payment from the booty, more or less depending on whether it was a right arm, a left arm, or a leg.

The idea of enlightened piracy is strange swill to swallow for those steeped in a pop culture version of the pirate - chaos on the high seas, drinking and pillaging, damsels forced onto the plank. Sure, there's something about the independence of piracy that still speaks to people today. (Even the founders of International Talk Like a Pirate Day acknowledge that there is, in people who love to say "Aargh," a yearning for a certain kind of freedom.) But it turns out that pirate life was more than just greedy rebellion. It offers insights into the nature of democracy and the reasons it might emerge - as a natural state of being, or a rational response to a much less pleasant way of life.

To Leeson, pirate democracy was an institution born of necessity. In one successful cruise, a pirate could take home what a merchant sailor earned in 50 years. Yet a business enterprise made up of the violent and lawless was clearly problematic: piracy required common action and mutual trust. And pirates couldn't rely on a government to set the rules. Some think that "without government, where would we be?" Leeson says. "But what pirates really show is, no, it's just common sense. You have an incentive to try to create rules to make society get along. And that's just as important to pirates as it is to anybody else."

So just as Buchanan, Tullock, and Mancur Olson were pioneers in using economics to help us to better understand the behaviors and institutions of stationary bandits, Pete Leeson is using economics to help us to better understand the behaviors and institutions of floating bandits

British guns

The headline in the Washington Post story:

Britain's Gun Laws Seen as Curbing Attacks

The article begins:

At 9:35 a.m. on a March day in 1996, a disgruntled former scout leader walked into a primary school gym in Dunblane, Scotland, with four guns and killed 16 children and their teacher in Britain's worst mass shooting. The crime still causes Britons to recoil when they recall the victims, many of them only 5 years old.

That rampage, with guns purchased legally -- as were those used in last week's killings at Virginia Tech -- led to a near-total ban on handguns, and Britain's current laws are considered among the most restrictive in the world. Days after the shooting, hundreds of thousands of people signed petitions demanding tougher gun control, and weeks later more than 22,000 illegal or unwanted guns, and nearly 700,000 rounds of ammunition, were turned in to authorities under a special amnesty.

Although England already had tough restrictions in place, champions of the gun control laws say the new limits have been vital in keeping fatal shootings relatively rare. Still, guns continue to proliferate and the law has not kept firearms out of the hands of some criminals.

The next two paragraphs are about a British gun control advocate, Rebecca Peters, a gun control advocate who says:

"Without the fix, it's likely we would have had more deadly shooting incidents in the last 10 years."

Could be. The next two paragraphs contain the only facts in the article:

According to government statistics, the number of people killed by guns has essentially stayed the same, with dips and spikes, as before the 1997 gun control laws went into effect: There were 55 shooting deaths in 1995 and 50 last year in England and Wales. By comparison, there were 137 fatal shootings in the District of Columbia last year.

The number of crimes in which a handgun was used in England and Wales has risen from 299 in 1995 to 1,024 last year. Offenses committed with all types of firearms, including air guns, have also increased.

The rest of the article is about the differences in attitudes between Brits and Americans toward guns and the surprise among Brits that Americans don't have more restrictive gun laws.

Of course, it's possible that without the ban on handguns, there would be even more deaths from handguns due to other changes in England other than the ban. But the only facts that are presented in the article suggest that the ban on handguns in England has had little effect at best, or at worst, caused an increase in gun violence in Britain.

Reporters don't write their own headlines. But based on the facts presented in the article, the headline should have read:

British Gun Laws Seen as Curbing Attacks Despite Lack of Evidence

Separation of Procedures

My good friend and former fellow student from my days at NYU, Roger Koppl, has this very nice op-ed published in today's edition of the New York Post.  Using the injustices in the recent sham "case" of rape against three members of the Duke University Lacrosse team, Roger concludes:

The time has come to free forensic science from the pressures of prosecutorial bias. To that end, crime labs should become independent of police and prosecutors, and public defenders should be given greater access to forensic advice and testing. Crime labs should be independent, operating under the supervision of an officer of the court, who would be responsible for assigning forensic evidence to laboratories and ensuring that all crime labs in the system are following proper scientific procedures.

Patrolling Incentives

Are drivers from out-of-state more likely to be ticketed for traffic violations than are drivers from in-state?  It's an empirical question -- and, as this item in The Atlantic Monthly points out -- two George Mason University economists offer an answer based on sound empirical analysis.  The answer is yes.

The article is by GMU Economics PhD candidate Mike Makowsky and my colleague Thomas Stratmann.  You can read an abstract of the paper here.

Who's Irresponsible?

Here is a letter of mine published in today's edition of the Boston Globe:

OBJECTING TO an earlier op-ed that endorsed legalizing marijuana for medical use, Maro Sciacchitano says that "it is irresponsible to promote policies that ignore the illegal drug trade and the complex problems US recreational consumption causes other countries" ("Pro-marijuana argument blows smoke," Letters, March 23).

I say to Mr. Sciacchitano: It is irresponsible to promote policies that create a multibillion-dollar underground economy, that further gang violence, police corruption, and deterioration of our liberties, and that ignore the complex problems US drug-interdiction efforts cause other countries.

DONALD J. BOUDREAUX
Fairfax, Va.

War on Humanity

I cannot hear or read of such developments without feeling outrage.  The "war on drugs" is a war on humanity -- a cruel hoax -- an unalloyed evil.  If humankind continues to progress, one day the "war on drugs" will be regarded in the same way that we today regard the burning of witches.

(HT Fred Dent.)

One of the most thorough scholars of the economic consequences of prohibition, by the way, is Jeffrey Miron (currently visiting at Harvard).

UPDATE: The Agitator, Radley Balko, offers his always-valuable opinion here.

Instapundit on Gun Ownership

Instapundit's own Glenn Reynold's endorses gun ownership (and does so, of all places, on the op-ed page of today's edition of the New York Times).

Reporting on Greenleaf, Idaho, which just passed a statute "calling for its citizens to own guns and keep them ready in their homes in case of emergency," Reynolds writes that

Greenleaf is following in the footsteps of Kennesaw, Ga., which in 1982 passed a mandatory gun ownership law in response to a handgun ban passed in Morton Grove, Ill. Kennesaw’s crime dropped sharply, while Morton Grove’s did not.

To some degree, this is rational. Criminals, unsurprisingly, would rather break into a house where they aren’t at risk of being shot. As David Kopel noted in a 2001 article in The Arizona Law Review, burglars report that they try to avoid homes where armed residents are likely to be present. We see this phenomenon internationally, too, with the United States having a lower proportion of “hot” burglaries — break-ins where the burglars know the home to be occupied — than countries with restrictive gun laws.

While I oppose statutes that mandate gun ownership, these statutes do strike me as being more consistent with the 'public-goods' rationale for state action than is most of what government does -- and certainly more consistent with this rationale than are statutes that prevent peaceful people from owning guns.

Causes of Crime

The Washington Post finds it surprising that crime rates in New York City have dropped while the prison population has declined.

It is one of the least-told stories in American crime-fighting. New York, the safest big city in the nation, achieved its now-legendary 70-percent drop in homicides even as it locked up fewer and fewer of its citizens during the past decade. The number of prisoners in the city has dropped from 21,449 in 1993 to 14,129 this past week. That runs counter to the national trend, in which prison admissions have jumped 72 percent during that time.
...

"If you want to drive down crime, the experience of New York shows that it's ridiculous to spend your first dollar building more prison cells," said Michael Jacobson, who served as New York's correction commissioner for former mayor Rudolph W. Giuliani (R) and now is president of the Vera Institute of Justice, which studies crime-fighting trends worldwide.

"I can't tell you exactly why violent crime in New York declined by twice the national rate," he said. "But I can tell you this: It wasn't because we locked up more people."

It doesn't seem obvious to either Jacobson or the author of the article, Michael Powell, that crime might be down for reasons unrelated to incarceration, say a change in the demographics of New York and that both crime and incarceration are down because of this third factor. Correlation isn't causation.

The article goes on to look at other states:

Perhaps as intriguing is the experience in states where officials spent billions of dollars to build prisons. From 1992 to 2002, Idaho's prison population grew by 174 percent. the largest percentage increase in the nation. Yet violent crime in that state rose by 14 percent. In West Virginia, the prison population increased by 171 percent, and violent crime rose 10 percent. In Texas, the prison population jumped by 168 percent, and crime dropped by 11 percent.

I guess I don't find it so intriguing.

In Idaho, something changed—say an increase in the proportion of young men relative to the population as a whole—and this in turn increased crime and—surprise!—led to an increase in the number of people in jail. And sometime when your criminal population increases, you have to build more prisons. Maybe that's why prison spending is up rather than because of some theory that by building more prisons you'd deter crime. Without more information, these numbers have no meaning.

What am I missing here? Ah, here it is:

"Crime is down and people realize, sure, we can lock up more people, but that's why your kid's pre-K class has 35 kids -- all the money is going to prisons," Jacobson says. "There's a sense of urgency that for the first time in two decades, we can talk about whether it makes sense to lock up even more people."

According to this logic, we should let some criminals go free rather than tie up valuable money taking care of them in prisons or building new ones. Use that money for schools and the crime rate won't change. In fact, it will go down, because better reading pre-K reading programs mean fewer criminals!

I don't know what's sadder. The claim that we're spending less on education (we're not), the idea that if we spent more money on education, we'd get more education (not true given the incentives of the public school system) or the implication that punishment doesn't deter crime (it does). 

(HT: James Taranto's Best of the Web at the WSJ)

The Damage Done

The usually reliable Wall Street Journal gets it wrong (sr) assessing the damage caused by  Lay and Skilling et al  in the Enron debacle:

Meanwhile, the damage done from this fraud was terrible: tens of billions of dollars in market value, $2.1 billion in pension obligations, and 5,600 jobs lost in the December 2001 collapse.

That isn't the damage from their fraud. That's the damage done when any company is poorly run—lost value and employees having to come to grips with lost pensions and having to look for work.  In the case of Enron, the market value was apparently a phantom—the fraud merely covered it up.

The real damage was the cost to capitalism imposed on all of us whether or not we worked for Enron or held its stock. The real damage was the disillusionment Lay and Skilling caused in the hearts and minds of Americans and the political response to that disillusionment, a new set of regulations that were unnecessary to catch and punish the Lays and Ebbers and others and that instead has made it dramatically more costly for a company to go public rather than remain private.

Lay and Ebbers and the rest of them betrayed their workers and their stockholders.  But most of all they betrayed the ethos of their professions that led to harm to all of us.

In that sense, these dishonest CEOs are most analogous in their impact not to a CEO who runs a company poorly that leads to bankruptcy, but rather to the shoe bomber. The shoe bomber's evil desire to kill a few hundred innocent people never came to fruition. But the result is that air travel is less convenient for hundreds of millions of people forced to remove their shoes and be inconvenienced with little gain in security.

The crimes of the Enron execs and their ilk are not as heinous as the intended crime of the shoe bomber. But their immorality in violating their fiduciary commitments did far more than harm the people connected to Enron. The regulatory environment that was the result of their misbehavior is the real damage done. And that regulatory envirnment has numerous costs with few if any benefits. Millions of people bear those costs in unseen ways. To paraphrase Neil Young:

I've seen the scandal and the damage done
A little part of it hurt everyone
Gone, gone, the damage done.

Outrage at Arnold

I have not been following the Tookie Williams story, but evidently the Europeans have  been paying attention.  The AP reports (ht: Drudge):

Europeans Outraged at Schwarzenegger

The execution of convicted killer Stanley Tookie Williams sparked outrage Tuesday throughout Europe, which has a deep aversion to capital punishment sustained by the painful memory of state-organized murder during the Nazi era. The disappointment was particularly strong in Austria, native country of Gov. Arnold Schwarzenegger, where many had hoped the former bodybuilder and film star would spare the 51-year-old Williams.

I love the phrase "Europe has a deep aversion" as if Europe were a person.  Are all the Europeans outraged?  Are there some Europeans holed up somewhere who think capital punishment is a good idea?  If there are, they have not been contacted by the AP or made their presence known.

But the really strange thing about this article is the invoking of the Holocaust as the reason for European outrage.  Capital punishment is too close to state-organized murder?  Executing a murderer is too close to trying to exterminate the Jews?  Sorry, but I don't quite see the parallel.  If Europeans were really affected by state-organized murder, they'd let their citizens carry lots of guns and they'd make their governments less powerful.

Evidently the Italians aversion to capital punishment goes back a little further:

Rome's Colosseum, once the arena for deadly gladiator combat and executions, has become a symbol of Italy's anti-death penalty stance. Since 1999, the monument has been bathed in golden light every time a death sentence is commuted somewhere in the world or a country abolishes capital punishment.

"I hope there will be such an occasion soon," Rome Mayor Walter Veltroni said. "When it happens, we will do it with a special thought for Tookie."

I am not touched by Mayor Veltroni's sentiment, but I suspect many Italians find it touching or he would not have said it.  I have a different theory for the aversion many Europeans feel for capital punishment.  I suspect most Europeans feel that every human being is basically good and therefore, any evil in the world is the result of bad circumstances beyond the individual's control.  If you feel that way, then capital punishment is certainly barbaric.  Thomas Sowell has it figured out.