As Somali pirates continue to hijack more and more vessels, fingers are being pointed, but who's really to blame?
Piracy off of the horn of Africa has been rife over the past few months, but with the capture of an American vessel and the first of many British warships entering the area, the issue is once again heating up. While the temporary solution to the problem seems to be clear, the causes and thus the long-term solutions seem to be muddled and unknown.
When I was driving home today, I heard a guest on "The World" give what must surely be the most western version of the story. Namely, Somalia is chugging out pirates because it has a failed state. Because there is no overarching coercive force to force the law on desperate Somalis, they are behaving so reprehensibly. Notwithstanding that coercion doesn't work, the feeling is that if the Somalian state is unable to beat it's own citizens into doing what's right, other states will send their navies in to beat up Somalian citizens into doing what's right (we insist).
But, of course, the whole point of a state is not to force it's population into a certain set of behavior patterns through force. It is unsurprising that those states who have held such to be their mandate have all invariably failed. Put otherwise, it is the attempt to mete out law at all costs that causes states to fail, rather than the failure of a state that causes lawlessness. After all, there are many communities in the world that don't have direct, external, state-sponsored law that do just fine (like the Amish, for example), and to think that men are naturally savage and require strong governance over them to prevent rampant anarchy and death may be surprised to know that their philosophical roots were already cut out nearly 400 years ago...
The particular guest then went on to say that another reason for Somali piracy is the desperate condition of Somalis. Specifically, because they have a failed state, they don't have education, roads, or welfare. Simply put, without government giving you what you need, you are left in a world of squalor. Of course, this idea is actually absurd. People have gotten on well enough without states providing infrastructure or medical bill reimbursement or factory-produced government schools for millennia. If this hyper-statist point of view were accurate, then the entire world, pre-westphalia, would have been nothing more than barbarity and mass butchery: something we know to be patently false.
We know as fact that people can take care of themselves without a government handing them everything without immediately resorting to things like piracy. The overbearingly western idea that the failure of the state has transitively caused the problems is clearly confused. Thea idea that Somalis are risking their lives for $10 million in one go when they otherwise might make $10 over their entire lifetime seems much more at heart in this issue. We could just lump this all into a category of mass greed if it weren't for the fact that Somalis do suffer SO much and are in SUCH a state of destitution. Such want undoubtedly would drive people to float rafts hundreds of miles away from shore just for a chance at relief.
This brings us to another thing that this particular guest noted. Somalis are in a very desperate state, and we know this because almost everyone there is reliant on food aid. Once again, there is reason to believe that this line of thinking has been turned on its head. It is assuming that the Somalis are desperate (perhaps due to lack of an overbearing government), that they are required to take food aid in order just to get out of the worst of their deprivation. In fact, it may be that the opposite is true: food aid is CAUSING the worst of the deprivation.
Foreign aid is often channeled into the hands of governments who simply divert the funds for themselves. Somalia was no exception to this in the early 1990's. Those resources that DO manage to make it down to regular people undermine the fledgling ability for the people to provide for themselves. After all, what Somali farmer or pastor can possibly compete against free food from the rest of the world? What you wind up with is with a bunch of out of work farmers swelling the need for more aid, while no longer being able to help free their country from their need of it. Add to that interest payments on loans, and we can begin to see a fundamental factor for the worsening of the situation in Africa since we've started giving out aid.
So, in the end, if it's not a matter of a failure of state or a failure of aid that's causing the conditions which breeds piracy, then the question is, "this is a failure of what?" Firstly, and most clearly, this is a failure of Somalians to provide well enough for themselves. If they grew enough food, and desired political unity and economic stability (rather than the tribalism and looter-take-all attitude which has been rife in Somalia for the past few thousand years) enough, they would be able to MAKE an environment in which piracy was no longer such a good-seeming option. While a state may very well be helpful, all states rest on the consent of the governed (they are made for the people BY the people), and the governed seem to have no will to make a state. It requires little imagination to consider what would happen were a state forced on them from outside...
While the Somalis should take a lion's share of the blame (but if they don't feel guilty, then what good will it ultimately do?), the outside world certainly hasn't helped. Rather than encouraging entreprenurialism, or civil society, it encourages dependency (which, in the end is really another word for slavery), and attacks civic institutions as harbingers of terrorism. We want Somalia to step in line, and do things our way. After all, there's a profit to be had.
If we want to have any hope to change this situation, there seems to be only two real options. The first is to swarm the Gulf of Aden with warships and murder anyone caught in a boat, while at the same time colonizing Somalia and giving (forcing on) them a state which they were unable to make themselves. Extreme order through extreme coercion. Welcome to the 1800's. The second, of course, is to stop half-assedly engaging with Somalia in a system which is ultimately propagating the problem. By this, I mean that we need to wean Somalia off of its dependency that is ultimately its ruin, and we need to stop behaving like we can control a Somali state (or even that we know what it should look like), and let Somalia grow up into a strong, independent nation. Stiflement begets destitution begets retribution, now as in the past, and to simply state that Somalia has "failed" to make a state in our image that follows our laws and norms is simply continuing the problem to the indefinite future.
Showing posts with label problems. Show all posts
Showing posts with label problems. Show all posts
Wednesday, April 8, 2009
Saturday, March 21, 2009
Money and Wealth
To continue from my last blog, this time, let's talk about wealth.
Wealth is another one of those tricky ones, as it's also mostly relative. Wealth can, broadly speaking, refer to two things. The first is that someone is considered wealthy when they have a lot of what they value ("he hasn't a dime, but his family is happy" implies he's wealthy, even if it's just wealth in heart rather than a sum of money). The second is when people have a lot of what is generally considered to have a lot of value. For example, ALL people value shelter, ergo someone who had shelter in a community where nobody had any would be considered wealthier. The same goes for other broad, social things, like having fancy or nutritious food, a lot of shelter, at least one form of transportation (like a car), a refrigerator, washing machine, and a host of things that fit the Norman Rockwell vision of the American Dream.
It is important to remember that wealth is NOT money. Money, is an arbitrary human construct that allows us to quantify wealth when talking with other people about it. It is understandable to see why people think that money IS wealth, but it's important to remember that when we do crazy stuff with money, we're not affecting wealth at parity.
The first major difference is how wealth and money are made. Wealth, generally speaking, is generated through the creation of objects, or a continuous service. For example, you have running water and sanitation in your house. This standard of living increase is an actual part of wealth (especially if no one else around you did). Likewise, wealthier people are those who have better houses, cars or estates (goods), or better nutrition, health, or comfort or convenience (services). In any case, wealth generation is ultimately a creative process (even if it's just maintenance).
It is also divorced from money. If inflation suddenly caused the price of goods to increase by 100%, would the usefulness of the house (the value you place in it) as a shelter increase or decrease? Likewise, if your savings account were wiped out, what would that do to your car's ability to get you to work? The answer to these questions, of course, is "nothing". The only effect that price has on the wealth of a product or service is when people think that something is worth more or less because the price is different. Certainly, however, this confusion barely changes the wealth of only the smallest section of things (if any).
What is important here is that wealth is ultimately a by-product of production, whether of the durable, like refrigeration or sanitation systems, or the non-durable, like a haircut.
Money, on the other hand, is a very different beast. Money is created when people say that there is more money. The Federal Reserve, for example, recently increased the money supply by 1 trillion dollars. They may not have even printed a single new bill (due to most money being handled electronically), but yet the money supply drastically rose. Another way that money is created is through interest. If I borrow $10, and I need to pay $11 back, there is ultimately $1 more in the system that was magically created. Of course, this interest can be leveraged to extreme levels where debt upon debt upon debt creates a tower of money.
This creates an interesting set of issues. The first, of course, is "who should create more money?" If everyone could simply make more money, the value of the money would decrease instantly and drastically. Given the same amount of wealth and a higher amount of money (and a market system that allows for the transparency to see what those two numbers are), the prices will go up if the money amount goes up while the wealth amount stays the same. This, of course, is inflation.
The second, and more important question is "who should get the new money?". Obviously, when the Fed increased the money supply by a trillion dollars, they didn't do it by simply adding $3 to every American's checking account. Instead, the money is going to be mostly going into banks, and into the government itself. Likewise, when you create money through loans, the person who loaned you the money gets all of the increase in the money supply.
This is important because of inflation. When the money supply goes up, the prices of everything goes up (albeit, unevenly). So while everything becomes more expensive, only some people get more money. While some people are magicians with money, most people who get some of that new money only get enough to cover for the inflation that they caused by making more money. For example, if most bank savings account rates were 1%, and their loan rates were 10%, then they would be increasing inflation by 10% (because that's the amount of new money over the same amount of wealth), while the bank itself only actually makes 9%, because it has to pay me some. This is oversimplified, of course, but even stocks, which are considered one of the most risky ways to store your money, only goes up about 6% a year, while inflation goes up and reduces the wealth-aquiring power of that money by 3%: half of the gain. Currently, the Federal Government returns just about 0% to its investors, and banks do only slightly better (compared to the -30% of stocks last year).
As such, it's less of a case of the people who make and keep money richer, while the rest of us stay the same, it's that the people who make the money stay the same, and the rest of us get poorer. In the struggle to get ahead, people are actually just staying where they are while they push everyone else behind.
Ethical questions aside for a moment, this is clearly a bad system. What we want is a system whereby people can become wealthier, rather than just richer (have more money). Instead, we have a system where people's wealth levels stay the same, or go down as their money doesn't go as far.
This can be seen by a disturbing trend in America. My grandfather worked hard, and was able to support a wife and several children, all while being able to accrue new wealth as technology provided it. My father worked hard, and was able to support a wife and a couple of children, but not with a whole lot of bells or whistles, and he had a good, white-collar technology job (compared to my small-farm grandpa). I have to work a part time job AND my wife has to work. Not only can we not dare to think about how much children would cost us, but we're not able to accrue as much wealth as our parents (we can't afford cable TV, 2 cars, etc.) The rate at which people even younger than me return home and live with their parents when they are done with their run through the education system (including college) is absolutely massive compared to my parent's generation, and nigh infinitely more than the near zero of my grandparents. The fact that most households have to have both parents employed just to get by also shows this trend.
In short, people are working harder and harder for more and more money that gets them less and less wealth. Billions of families live paycheck to paycheck, even in the developed world. Americans may make thousands of times more money than an equivalent worker in Africa, but they're both just a few paychecks away from their families literally starving and being homeless. As the CPI continues to soar, it's clear that the system is broken, and the more we put into it, the more broken it gets.
Then, of course, there is the hitherto avoided ethical question. "Who sould have more wealth?" and "Who should see their wealth decline?". Currently, the answer seems to be "Those who are movie stars or who can commit fraud on Wall Street" and "everybody who isn't in the first camp", respectively. Is this what we want? If fraud and celebrity status and professional sports are the only thing that gets you ahead, and everything else causes you to lose, doesn't that just teach us (and our next generation) that if you can't play football, you should learn white-collar crime?
Instead, we should have different values, and have a system that gives wealth (NOT just money) to those who participate in those values. If we value teachers, we should give them more wealth, rather than just hoping that a little more money will fix the problem. Likewise, we should be encouraging behavior that increases the wealth of others, rather than penalizing laborers by sending their jobs overseas, just so someone else can have more money. Yes, money can be used to acquire wealth in individual instances, but due to the fake nature of money, it's not stable or certain (other than it's certain to get you less wealth over time).
It seems to me to be a simple confusion in priorities along with a confusion that the capitalist notion of "make more money" automatically results in "have a higher standard of living". While that may be true for those with a LOT of money, the vast majority of everyone else only sees the decline. While the re-enactment of usury laws may be a tad harsh, it seems to me that people need to be un-brainwashed from the idea of making money for money's sake, so that those who only have a little aren't pushed too far behind.
Wealth is another one of those tricky ones, as it's also mostly relative. Wealth can, broadly speaking, refer to two things. The first is that someone is considered wealthy when they have a lot of what they value ("he hasn't a dime, but his family is happy" implies he's wealthy, even if it's just wealth in heart rather than a sum of money). The second is when people have a lot of what is generally considered to have a lot of value. For example, ALL people value shelter, ergo someone who had shelter in a community where nobody had any would be considered wealthier. The same goes for other broad, social things, like having fancy or nutritious food, a lot of shelter, at least one form of transportation (like a car), a refrigerator, washing machine, and a host of things that fit the Norman Rockwell vision of the American Dream.
It is important to remember that wealth is NOT money. Money, is an arbitrary human construct that allows us to quantify wealth when talking with other people about it. It is understandable to see why people think that money IS wealth, but it's important to remember that when we do crazy stuff with money, we're not affecting wealth at parity.
The first major difference is how wealth and money are made. Wealth, generally speaking, is generated through the creation of objects, or a continuous service. For example, you have running water and sanitation in your house. This standard of living increase is an actual part of wealth (especially if no one else around you did). Likewise, wealthier people are those who have better houses, cars or estates (goods), or better nutrition, health, or comfort or convenience (services). In any case, wealth generation is ultimately a creative process (even if it's just maintenance).
It is also divorced from money. If inflation suddenly caused the price of goods to increase by 100%, would the usefulness of the house (the value you place in it) as a shelter increase or decrease? Likewise, if your savings account were wiped out, what would that do to your car's ability to get you to work? The answer to these questions, of course, is "nothing". The only effect that price has on the wealth of a product or service is when people think that something is worth more or less because the price is different. Certainly, however, this confusion barely changes the wealth of only the smallest section of things (if any).
What is important here is that wealth is ultimately a by-product of production, whether of the durable, like refrigeration or sanitation systems, or the non-durable, like a haircut.
Money, on the other hand, is a very different beast. Money is created when people say that there is more money. The Federal Reserve, for example, recently increased the money supply by 1 trillion dollars. They may not have even printed a single new bill (due to most money being handled electronically), but yet the money supply drastically rose. Another way that money is created is through interest. If I borrow $10, and I need to pay $11 back, there is ultimately $1 more in the system that was magically created. Of course, this interest can be leveraged to extreme levels where debt upon debt upon debt creates a tower of money.
This creates an interesting set of issues. The first, of course, is "who should create more money?" If everyone could simply make more money, the value of the money would decrease instantly and drastically. Given the same amount of wealth and a higher amount of money (and a market system that allows for the transparency to see what those two numbers are), the prices will go up if the money amount goes up while the wealth amount stays the same. This, of course, is inflation.
The second, and more important question is "who should get the new money?". Obviously, when the Fed increased the money supply by a trillion dollars, they didn't do it by simply adding $3 to every American's checking account. Instead, the money is going to be mostly going into banks, and into the government itself. Likewise, when you create money through loans, the person who loaned you the money gets all of the increase in the money supply.
This is important because of inflation. When the money supply goes up, the prices of everything goes up (albeit, unevenly). So while everything becomes more expensive, only some people get more money. While some people are magicians with money, most people who get some of that new money only get enough to cover for the inflation that they caused by making more money. For example, if most bank savings account rates were 1%, and their loan rates were 10%, then they would be increasing inflation by 10% (because that's the amount of new money over the same amount of wealth), while the bank itself only actually makes 9%, because it has to pay me some. This is oversimplified, of course, but even stocks, which are considered one of the most risky ways to store your money, only goes up about 6% a year, while inflation goes up and reduces the wealth-aquiring power of that money by 3%: half of the gain. Currently, the Federal Government returns just about 0% to its investors, and banks do only slightly better (compared to the -30% of stocks last year).
As such, it's less of a case of the people who make and keep money richer, while the rest of us stay the same, it's that the people who make the money stay the same, and the rest of us get poorer. In the struggle to get ahead, people are actually just staying where they are while they push everyone else behind.
Ethical questions aside for a moment, this is clearly a bad system. What we want is a system whereby people can become wealthier, rather than just richer (have more money). Instead, we have a system where people's wealth levels stay the same, or go down as their money doesn't go as far.
This can be seen by a disturbing trend in America. My grandfather worked hard, and was able to support a wife and several children, all while being able to accrue new wealth as technology provided it. My father worked hard, and was able to support a wife and a couple of children, but not with a whole lot of bells or whistles, and he had a good, white-collar technology job (compared to my small-farm grandpa). I have to work a part time job AND my wife has to work. Not only can we not dare to think about how much children would cost us, but we're not able to accrue as much wealth as our parents (we can't afford cable TV, 2 cars, etc.) The rate at which people even younger than me return home and live with their parents when they are done with their run through the education system (including college) is absolutely massive compared to my parent's generation, and nigh infinitely more than the near zero of my grandparents. The fact that most households have to have both parents employed just to get by also shows this trend.
In short, people are working harder and harder for more and more money that gets them less and less wealth. Billions of families live paycheck to paycheck, even in the developed world. Americans may make thousands of times more money than an equivalent worker in Africa, but they're both just a few paychecks away from their families literally starving and being homeless. As the CPI continues to soar, it's clear that the system is broken, and the more we put into it, the more broken it gets.
Then, of course, there is the hitherto avoided ethical question. "Who sould have more wealth?" and "Who should see their wealth decline?". Currently, the answer seems to be "Those who are movie stars or who can commit fraud on Wall Street" and "everybody who isn't in the first camp", respectively. Is this what we want? If fraud and celebrity status and professional sports are the only thing that gets you ahead, and everything else causes you to lose, doesn't that just teach us (and our next generation) that if you can't play football, you should learn white-collar crime?
Instead, we should have different values, and have a system that gives wealth (NOT just money) to those who participate in those values. If we value teachers, we should give them more wealth, rather than just hoping that a little more money will fix the problem. Likewise, we should be encouraging behavior that increases the wealth of others, rather than penalizing laborers by sending their jobs overseas, just so someone else can have more money. Yes, money can be used to acquire wealth in individual instances, but due to the fake nature of money, it's not stable or certain (other than it's certain to get you less wealth over time).
It seems to me to be a simple confusion in priorities along with a confusion that the capitalist notion of "make more money" automatically results in "have a higher standard of living". While that may be true for those with a LOT of money, the vast majority of everyone else only sees the decline. While the re-enactment of usury laws may be a tad harsh, it seems to me that people need to be un-brainwashed from the idea of making money for money's sake, so that those who only have a little aren't pushed too far behind.
Tuesday, March 17, 2009
Judicial Reform (Part 2)
Judicial Reform (Part 1)
covering a brief philosophical history of justice
Judicial Reform (Part 3)
The conclusion to how the justice system should be reformed.
Now that some of the background of why we do justice the way we do has been laid down, it's time to move on to how we actually practice justice in the real world.
It is clear to see that justice, as it is practiced today, is first and last focused on punishment. While some small programs exist (such as anti-drug campaigns) to preempt violent or otherwise subversive or harmful behavior, a near total majority of time, focus, and funding is put towards figuring out to do once a person has already committed a crime. While civil courts tend to place their focus on adequate restitution, that is, forcing the guilty party to compensate the afflicted party for the damage that they have done, the criminal courts, at least in the United States, have a complete fixation on punishment and retribution. The point is not to restore the world to a pre-crime state, but to inflict damage on the offender to an equal amount that they damaged others by committing their crime.
This relies, 100% on coercion. Armed police officers arrest you, and powerful people put you into prisons where you are forcibly detained by more armed officers. It relies on power, and it relies on force, and, in rare circumstances, it relies on violence. More over, it is difficult to do (in part because people tend to resist punishment, compared to restitution or forgiveness), and it has become atrociously expensive. Nowadays, it costs $50,000 per person per year to keep people in prison. If I embezzle $10,000 from a government agency and am locked up for 10 years as a result, the state is burdened by $500,000, a fifty fold harm to the state than if I had just walked away with the money. Clearly there is something wrong with this system if the entire point is to restore balance.
But apart from the horrendous inefficiencies of our current justice system, we have to ask the more crucial question: "does coercion even work?" The only real strategy that a system that can only attempt justice after crimes have been committed is to see if the way in which they meted out justice prevented future crime. While the system may be able to bring the scales back into balance through coercive punishment, I think it would be difficult to find a person who disagrees with the idea that the justice system should also help keep things in balance. If coercion can not do this, it means that the only use of coercive justice is to balance the scales in the least popular, most expensive way possible. Such a system, naturally, should be done away with and replaced.
Allow me to reference John Burton from his essay "International Relations or World Society?" (International Studies Association, "The Study of World Society, the London Perspective", 1974):
There are those at the ground floor level who claim to be "political realists". They have a Calvinistic conception of behavior related very closely to traditional normative notions reflected in legal thinking. Their assumption appears to be that, generally speaking, persons and states conform to agreed norms of behavior because of coercion and threat, together with some sense of moral obligation. The questions they ask are why does the minority not conform and how can it be made to conform? ... The role of the state is to control [peoples'] behavior and is given a legitimate monopoly on violence.
However, there is a false assumption inherent in the ground floor notion of coercive authority... The assumption that policies of coercion deter. The average prison sentence in Britain was 28 percent longer in 1971 than it was in 1961, but there was no apparent positive effect. In education, in industrial relations and in communal relations, threat and coercion are found not to be effective deterrents. This is the empirical position. At all levels, the tendency is to respond to failure by applying more of the same medicine and not to acknowledge that the initial analysis was probably faulty. When "law and order" fails, the level of coercion is increased.
It is this form of punishment... that the court, authorities and society inflict. Behavior is not altered by it in the direction intended: on the contrary, the behavioral response is to damage the person or property of that authority as soon as opportunity offers.
Of course, John Burton was not the first person to notice this effect. As Confucius once said "a man will be good only while he is punished, and, once the punishment is over go back to his ways. A man of propriety, on the other hand, will shun evil ways always."
In fact, I believe it would be difficult to find someone confident that punishment is a serious deterrent, and the fact that 1 in 30 Americans is currently behind bars should testify to this (and the Department of Justice presumes that 1 in 15 people will have spent some time in prison as of this year). In fact, rather than thinking about this abstractly and empirically, we can also bring it down to the concrete level. Ask yourself, have you ever known that doing something had a punishment attached to it, but you did it anyways? This is so pervasive that it because the prime statue for burning people at the stake during the inquisition: auto de fe (or, as Mel Brooks summarizes: "Its what you oughtnt to do but you do anyway.")
So, if coercion is not, in fact, much of a deterrent, then why do we continue to use it, despite its enormous costs, both monetarily and socially? This brings us once again to the history of justice. Hundreds of years ago, the application of justice basically boiled down to two forms: exile, or capital punishment. Firstly, these two options were very inexpensive. Exile, of course, was free, while capital punishment required someone to spare a few moments to slap someone in the local pillory, or some other form of public shaming. While this type of coercion may lack utility, at least it doesn't absorb massive amount of resources and destroy lives while getting the same amount of nowhere.
The second main thrust is that it is actually possible to deter someone from doing something if you remove the person altogether. A brigand exiled to the other side of the ocean is physically unable to terrorize your populace. Likewise, if someone is put to death, it will be challenging, to say the least, to lapse into recidivism. Once again, exile is free, and a single rope can be used at more than one hanging. The important thing to consider, though, is that neither of these methods are designed to level the scales per se. While it definitely may have a balancing effect, the point is clearly focused on deterring further crime, rather than punishing someone and hoping that they won't do it again (which we know doesn't work).
While prisons are thought to have this same effect, they are not the reason we use them. Instead, the rise of the prison system as we know it today, comes on the back of the "penitentiary" movement. The point of the court sending you to prison wasn't so much so that the scales would be re-balanced, or that you would be taken away from society so you couldn't cause problems (although these were both intended side effects) but rather to place criminals in a place where they could do penance for their sins and come out as a reformed person who would not commit crime again. These old penitentiaries were built in the spitting image of old monasteries with rows of cells which contained an ascetic nothing but a bible, and a church in the middle. Criminals would pray until God healed their souls. Free from sin, they would be let out to crime no more.
As noble of an experiment as this was, it clearly failed. In the end, prisoners did not reform simply by being placed in a whitewashed room and told to pray it out. Unfortunately, the prison system lurched on as a zombie. The rows of cells would stay, as would the idea of keeping dangerous people away from society. However, rather than being a place that temporarily housed people while they waited capital punishment or while they prayed, being incarcerated became a PART of the punishment itself. Soon, it would become THE sole punishment for criminal offenses. Gone was a way of punishment that deterred crime (like executions), or reduced recidivism (monastic prayer), and what was left is a non-deterring coercive force of punishment that is as expensive as it is ineffective. It's interesting to note that prisons today are still called "correctional facilities" as if they actually correct anything.
Finally, there is a more insidious side of punishment. That is, that punishment invokes a deep-seated human desire for revenge against our punishers. Not only does punishment fail to deter in the first place, but it actually increases the afflicted's desire to be a violent person. This is easy to understand when the process of imprisonment rips families apart and causes people to be much less likely to get employed or be able to do other things to start a new life once they've been in prison.
The idea that cruelty, even in the name of balancing the scales of justice, creates more problems than it causes is pervasive in the course of human events. Heavy "strategic" bombing in World War 2 sought to break the morale of civilians by bombing them. In fact, strategic bombing increased the resolve of the afflicted population. Likewise, putting down rebellious behavior by force quickly gets re-branded as "massacres" from Waxhaw to Baghdad. While it is easy for our minds to drift to the few times when coercion worked, like the ending of the Boer War with concentration camps, or the end of World War 2 with nuclear weapons, it betrays the fact that coercion almost never works, and when it does, the coerced party must be utterly destroyed. Is that what we want to do to people who park the wrong way on the street or sell insurance with an outdated license?
The way that our modern societies apply "justice" in the real world is an abhorrent mess. Based on a failed experiment over a hundred years ago, we now choose to use the most expensive, most demeaning, least utile form of meting out justice and deterring crime. The only way such a system can be ultimately successful is if all people are born and die in a cell, or if the state is willing to use the equivalent of nuclear weapons on its own population. Clearly, the system must be thrown out immediately.
For further reading, click here.
covering a brief philosophical history of justice
Judicial Reform (Part 3)
The conclusion to how the justice system should be reformed.
Now that some of the background of why we do justice the way we do has been laid down, it's time to move on to how we actually practice justice in the real world.
It is clear to see that justice, as it is practiced today, is first and last focused on punishment. While some small programs exist (such as anti-drug campaigns) to preempt violent or otherwise subversive or harmful behavior, a near total majority of time, focus, and funding is put towards figuring out to do once a person has already committed a crime. While civil courts tend to place their focus on adequate restitution, that is, forcing the guilty party to compensate the afflicted party for the damage that they have done, the criminal courts, at least in the United States, have a complete fixation on punishment and retribution. The point is not to restore the world to a pre-crime state, but to inflict damage on the offender to an equal amount that they damaged others by committing their crime.
This relies, 100% on coercion. Armed police officers arrest you, and powerful people put you into prisons where you are forcibly detained by more armed officers. It relies on power, and it relies on force, and, in rare circumstances, it relies on violence. More over, it is difficult to do (in part because people tend to resist punishment, compared to restitution or forgiveness), and it has become atrociously expensive. Nowadays, it costs $50,000 per person per year to keep people in prison. If I embezzle $10,000 from a government agency and am locked up for 10 years as a result, the state is burdened by $500,000, a fifty fold harm to the state than if I had just walked away with the money. Clearly there is something wrong with this system if the entire point is to restore balance.
But apart from the horrendous inefficiencies of our current justice system, we have to ask the more crucial question: "does coercion even work?" The only real strategy that a system that can only attempt justice after crimes have been committed is to see if the way in which they meted out justice prevented future crime. While the system may be able to bring the scales back into balance through coercive punishment, I think it would be difficult to find a person who disagrees with the idea that the justice system should also help keep things in balance. If coercion can not do this, it means that the only use of coercive justice is to balance the scales in the least popular, most expensive way possible. Such a system, naturally, should be done away with and replaced.
Allow me to reference John Burton from his essay "International Relations or World Society?" (International Studies Association, "The Study of World Society, the London Perspective", 1974):
There are those at the ground floor level who claim to be "political realists". They have a Calvinistic conception of behavior related very closely to traditional normative notions reflected in legal thinking. Their assumption appears to be that, generally speaking, persons and states conform to agreed norms of behavior because of coercion and threat, together with some sense of moral obligation. The questions they ask are why does the minority not conform and how can it be made to conform? ... The role of the state is to control [peoples'] behavior and is given a legitimate monopoly on violence.
However, there is a false assumption inherent in the ground floor notion of coercive authority... The assumption that policies of coercion deter. The average prison sentence in Britain was 28 percent longer in 1971 than it was in 1961, but there was no apparent positive effect. In education, in industrial relations and in communal relations, threat and coercion are found not to be effective deterrents. This is the empirical position. At all levels, the tendency is to respond to failure by applying more of the same medicine and not to acknowledge that the initial analysis was probably faulty. When "law and order" fails, the level of coercion is increased.
It is this form of punishment... that the court, authorities and society inflict. Behavior is not altered by it in the direction intended: on the contrary, the behavioral response is to damage the person or property of that authority as soon as opportunity offers.
Of course, John Burton was not the first person to notice this effect. As Confucius once said "a man will be good only while he is punished, and, once the punishment is over go back to his ways. A man of propriety, on the other hand, will shun evil ways always."
In fact, I believe it would be difficult to find someone confident that punishment is a serious deterrent, and the fact that 1 in 30 Americans is currently behind bars should testify to this (and the Department of Justice presumes that 1 in 15 people will have spent some time in prison as of this year). In fact, rather than thinking about this abstractly and empirically, we can also bring it down to the concrete level. Ask yourself, have you ever known that doing something had a punishment attached to it, but you did it anyways? This is so pervasive that it because the prime statue for burning people at the stake during the inquisition: auto de fe (or, as Mel Brooks summarizes: "Its what you oughtnt to do but you do anyway.")
So, if coercion is not, in fact, much of a deterrent, then why do we continue to use it, despite its enormous costs, both monetarily and socially? This brings us once again to the history of justice. Hundreds of years ago, the application of justice basically boiled down to two forms: exile, or capital punishment. Firstly, these two options were very inexpensive. Exile, of course, was free, while capital punishment required someone to spare a few moments to slap someone in the local pillory, or some other form of public shaming. While this type of coercion may lack utility, at least it doesn't absorb massive amount of resources and destroy lives while getting the same amount of nowhere.
The second main thrust is that it is actually possible to deter someone from doing something if you remove the person altogether. A brigand exiled to the other side of the ocean is physically unable to terrorize your populace. Likewise, if someone is put to death, it will be challenging, to say the least, to lapse into recidivism. Once again, exile is free, and a single rope can be used at more than one hanging. The important thing to consider, though, is that neither of these methods are designed to level the scales per se. While it definitely may have a balancing effect, the point is clearly focused on deterring further crime, rather than punishing someone and hoping that they won't do it again (which we know doesn't work).
While prisons are thought to have this same effect, they are not the reason we use them. Instead, the rise of the prison system as we know it today, comes on the back of the "penitentiary" movement. The point of the court sending you to prison wasn't so much so that the scales would be re-balanced, or that you would be taken away from society so you couldn't cause problems (although these were both intended side effects) but rather to place criminals in a place where they could do penance for their sins and come out as a reformed person who would not commit crime again. These old penitentiaries were built in the spitting image of old monasteries with rows of cells which contained an ascetic nothing but a bible, and a church in the middle. Criminals would pray until God healed their souls. Free from sin, they would be let out to crime no more.
As noble of an experiment as this was, it clearly failed. In the end, prisoners did not reform simply by being placed in a whitewashed room and told to pray it out. Unfortunately, the prison system lurched on as a zombie. The rows of cells would stay, as would the idea of keeping dangerous people away from society. However, rather than being a place that temporarily housed people while they waited capital punishment or while they prayed, being incarcerated became a PART of the punishment itself. Soon, it would become THE sole punishment for criminal offenses. Gone was a way of punishment that deterred crime (like executions), or reduced recidivism (monastic prayer), and what was left is a non-deterring coercive force of punishment that is as expensive as it is ineffective. It's interesting to note that prisons today are still called "correctional facilities" as if they actually correct anything.
Finally, there is a more insidious side of punishment. That is, that punishment invokes a deep-seated human desire for revenge against our punishers. Not only does punishment fail to deter in the first place, but it actually increases the afflicted's desire to be a violent person. This is easy to understand when the process of imprisonment rips families apart and causes people to be much less likely to get employed or be able to do other things to start a new life once they've been in prison.
The idea that cruelty, even in the name of balancing the scales of justice, creates more problems than it causes is pervasive in the course of human events. Heavy "strategic" bombing in World War 2 sought to break the morale of civilians by bombing them. In fact, strategic bombing increased the resolve of the afflicted population. Likewise, putting down rebellious behavior by force quickly gets re-branded as "massacres" from Waxhaw to Baghdad. While it is easy for our minds to drift to the few times when coercion worked, like the ending of the Boer War with concentration camps, or the end of World War 2 with nuclear weapons, it betrays the fact that coercion almost never works, and when it does, the coerced party must be utterly destroyed. Is that what we want to do to people who park the wrong way on the street or sell insurance with an outdated license?
The way that our modern societies apply "justice" in the real world is an abhorrent mess. Based on a failed experiment over a hundred years ago, we now choose to use the most expensive, most demeaning, least utile form of meting out justice and deterring crime. The only way such a system can be ultimately successful is if all people are born and die in a cell, or if the state is willing to use the equivalent of nuclear weapons on its own population. Clearly, the system must be thrown out immediately.
For further reading, click here.
Sunday, March 15, 2009
Demand-side? You're on the wrong side
With current economic woes finally starting to influence regular people over the past few months, it has created this feeling over time that "main street", that is, you and me, are losing out. That is, of course, because we are. While it may be little comfort to know that things aren't getting worse on purpose, we've got to understand that things are getting worse, in part, due to the economic systems that we have in place.
In order to understand this, we've got to look at the "demand side" economic model, as it's definitely the most popular way that politicians look at things at the moment. The basic premise is this:
Demand creates Jobs (to produce the supply) which creates disposable Income (from wages) which creates demand (because people have money, and want to buy things with it).
Assuming you're paying attention, you're getting bombarded by demand-side messages all the time. For example, people are concerned about consumer confidence, because if consumers aren't confident, they won't generate demand, even if they have the income. Likewise there is a concern about unemployment, not just because people suffer when they're out of work, but because job cuts decrease income. As well, there is this constant talk about the "credit crisis" which is a problem because people can no longer raise the income they need (through loans) to have enough demand (for things like cars and homes, which few have 100% down-payments for).
The thing is, though, that while this particular philosophy is very cohesive and internally consistent, it also has serious problems once it starts interfacing with the real world. Problems, which make average people like you and me lose out in the end.
The first of these problems comes from technology. Efficiency creates redundency. Likewise, we have seen thousands, if not millions of jobs simply disappear over the past decade or two because jobs that human beings were doing got replaced by machines. In any case, improvement in technology always leads to job loss, which can sometimes be substantial. Consider, for example, the fact that a single human with only hand tools can farm a few acres of land by themselves, whereas a person who has a few pieces of large farm technology, like a tractor and a combine, can farm hundreds of acres just by themselves. As such, if you introduced technology to a non-modern farm society, you'd instantly get a 99% unemployment rate as the one farmer with the machines can do the work of the 99 others. See THIS for example.
In any case, improvements in technology and labor methods (like improving efficiency) cause unemployment, and unemployment drives down incomes which drives down demand, and the whole system enters a death spiral. While it is possible to use technology to create new jobs, these efforts are usually forced, and not only do they not replace all the jobs lost, but those new jobs will also continue to be lost as the technology used to create the jobs in the first place improves.
A second major problem that demand-side economic thought creates relates to incomes. In the ideal world, the most income would be distributed to the people who would generate the most demand (that is, they would go out and spend it). In the end, the best, most organized, most dedicated organizations to the purpose of spending money are governments. Thus, it's not surprising that when times are tough, demand-side thinkers will take money away from average people (who aren't spending "enough") and give it to the government, which has the will to blow around cash and always too many ideas with regards to how to blow it. FDR created the New Deal, for example, and Obama is currently touting rhetoric of government-backed infrastructure projects, and whatever. The point is that if the government has the income for us it can have the demand on our behalf, which will create the jobs that we'll all fill, which will give us money to buy things on our own.
This idea, though very internally consistent, carries a bathtub full of problems. The first is that just because the government has the willpower to spend money doesn't mean that it has the ability to spend the money well. Large organizations with lots of money invariably have lots of corruption. Corruption means that there will be money sitting in bank accounts rather than money being paid to new employees. Secondly, the whole point is to spend money for the sake of spending money. Thus, it doesn't matter what kind of jobs are created so long as jobs are being created. This can mean that jobs are quickly lost once the government subsidies fade if what the jobs were creating wasn't something that anyone would ever buy. For example, if the government paid a million people to make buggy whips, they would be providing a false demand that couldn't possibly be filled in by the private sector once the government backing left. As such, this type of spending ultimately only prolongs problems, rather than fixing them.
Most importantly, however, the government is taking money away from people who aren't spending it in order for the government to spend it on their behalf. This is one way in which you definitely lose, as normal people are now losing money. As well, with less money in the hands of people, they are now less likely to spend what remains, which works to offset the increase in demand caused by the government.
As well, this decreases saving rates. While saving is an anathema to demand side thought, wiping it out is actually very hazardous. When savings goes down, it makes it so that small economic units, like you or your family, are more likely to go bust. Not only does this further decrease demand, but it also causes problems with people you're indebted to (I'll get to that in a minute), and it causes organizations like the government to come in and bail you out. When this happens, a lot of money is spent (and lost in overhead) without necessarily all that many more jobs created at the local unemployment office.
Also, the people who save the most also tend to be the wealthier, who are also the people who get taxed more (in part precisely because they're saving, rather than contributing to demand). When wealthy people save, they tend to do it in the form of investments (like stocks) or in large sums in banks. Without this, companies, like families, have less capital to fall back on when things go bad. In the case of corporations, it results in the government bailing them out, as we've seen recently. This, yet again, is an expensive way to add little demand or income to the system. More critically, however, if there isn't savings in banks it creates very brittle banks. Let's all remember what happens when there is a systematic collapse of the banking system...
This brings us to a final problem, that of debt. Remember that all three parts of the tripod of income, jobs and demand need to be going up in order for the economy to grow. When technology guts jobs, and inflation guts income (and globalization guts both), there is invariably going to be a crash in demand. As we've seen over the past decade, the only way to prop up the whole system is to create fake income in the form of consumer debt. If you don't have any money, but you have the ability to buy things with your credit card, you will continue to buy things (create demand) because you have the ability to buy things.
This, of course, has the potential to be absolutely disastrous, as we're seeing right now. Remember, credit is FAKE income. While you have more money now, you have to actually give it back at some point because it was never yours. In fact, once you put your interest rate into the mix, credit actually decreases income, even if it very temporarily props it up. In the end, however, debt must be repaid. If you and I have been good economic citizens and have been spending rather than saving, it means we will be unable to pay the debts back, especially if there is a shock.
The only result is a proverbial day of reckoning where homeowners default on their mortgages, families file for chapter 11, and all the fake income comes crashing down, revealing a lack of demand, freezing the ability to create more fake wealth to keep the system going (cf. the credit crisis), while jobs, created by fake wealth disappear (cf. current unemployment numbers), which creates a loss of income which causes you and me, on the wrong side of this whole equation to shudder in fear and darkness as we scrounge to find food in a world with no jobs, inflating food prices, while trying to find shelter when our homes foreclose and we desperately try to use jobs we don't have to pay back debts we can't afford.
And here's the real kicker: we're going to the government for help. The government, meanwhile, is horribly strapped for cash (see THIS, for example) because the tax revenues they're bringing in have plummeted as Americans have lost, on average, 40% of their wealth last year. So, if the government has LESS money, and they're called on to spend MORE money, the end result is a massive increase to the government's debt (projected to increase by 1 to 2 TRILLION in 2009). Remember how I was just talking about what happens when you and I go into debt to artificially keep the economy going? Yeah, now imagine that the debts you're defaulting on were to the tune of $14 trillion dollars. The world, as we know it, will end.
So, what does demand-side economic thought mean to us all? It means we have a system in place that is corroded by technology, quick to implement protectionist policies, makes you, me, and the whole system more vulnerable by stripping away savings while forcing you, me, and the government into debt that will ultimately destroy you, me, and all of civilization as we know it.
Remember, the demand-side philosophy is a neat little internally consistent package, but when it comes into the real world, the natural results of its ideas (policy) hurt you and me. While I'm not about to ring out the virtues of supply-side thought (they'll get a bloggal tongue-lashing later), we've all go to realize that we are most definitely on the wrong side.
In order to understand this, we've got to look at the "demand side" economic model, as it's definitely the most popular way that politicians look at things at the moment. The basic premise is this:
Demand creates Jobs (to produce the supply) which creates disposable Income (from wages) which creates demand (because people have money, and want to buy things with it).
Assuming you're paying attention, you're getting bombarded by demand-side messages all the time. For example, people are concerned about consumer confidence, because if consumers aren't confident, they won't generate demand, even if they have the income. Likewise there is a concern about unemployment, not just because people suffer when they're out of work, but because job cuts decrease income. As well, there is this constant talk about the "credit crisis" which is a problem because people can no longer raise the income they need (through loans) to have enough demand (for things like cars and homes, which few have 100% down-payments for).
The thing is, though, that while this particular philosophy is very cohesive and internally consistent, it also has serious problems once it starts interfacing with the real world. Problems, which make average people like you and me lose out in the end.
The first of these problems comes from technology. Efficiency creates redundency. Likewise, we have seen thousands, if not millions of jobs simply disappear over the past decade or two because jobs that human beings were doing got replaced by machines. In any case, improvement in technology always leads to job loss, which can sometimes be substantial. Consider, for example, the fact that a single human with only hand tools can farm a few acres of land by themselves, whereas a person who has a few pieces of large farm technology, like a tractor and a combine, can farm hundreds of acres just by themselves. As such, if you introduced technology to a non-modern farm society, you'd instantly get a 99% unemployment rate as the one farmer with the machines can do the work of the 99 others. See THIS for example.
In any case, improvements in technology and labor methods (like improving efficiency) cause unemployment, and unemployment drives down incomes which drives down demand, and the whole system enters a death spiral. While it is possible to use technology to create new jobs, these efforts are usually forced, and not only do they not replace all the jobs lost, but those new jobs will also continue to be lost as the technology used to create the jobs in the first place improves.
A second major problem that demand-side economic thought creates relates to incomes. In the ideal world, the most income would be distributed to the people who would generate the most demand (that is, they would go out and spend it). In the end, the best, most organized, most dedicated organizations to the purpose of spending money are governments. Thus, it's not surprising that when times are tough, demand-side thinkers will take money away from average people (who aren't spending "enough") and give it to the government, which has the will to blow around cash and always too many ideas with regards to how to blow it. FDR created the New Deal, for example, and Obama is currently touting rhetoric of government-backed infrastructure projects, and whatever. The point is that if the government has the income for us it can have the demand on our behalf, which will create the jobs that we'll all fill, which will give us money to buy things on our own.
This idea, though very internally consistent, carries a bathtub full of problems. The first is that just because the government has the willpower to spend money doesn't mean that it has the ability to spend the money well. Large organizations with lots of money invariably have lots of corruption. Corruption means that there will be money sitting in bank accounts rather than money being paid to new employees. Secondly, the whole point is to spend money for the sake of spending money. Thus, it doesn't matter what kind of jobs are created so long as jobs are being created. This can mean that jobs are quickly lost once the government subsidies fade if what the jobs were creating wasn't something that anyone would ever buy. For example, if the government paid a million people to make buggy whips, they would be providing a false demand that couldn't possibly be filled in by the private sector once the government backing left. As such, this type of spending ultimately only prolongs problems, rather than fixing them.
Most importantly, however, the government is taking money away from people who aren't spending it in order for the government to spend it on their behalf. This is one way in which you definitely lose, as normal people are now losing money. As well, with less money in the hands of people, they are now less likely to spend what remains, which works to offset the increase in demand caused by the government.
As well, this decreases saving rates. While saving is an anathema to demand side thought, wiping it out is actually very hazardous. When savings goes down, it makes it so that small economic units, like you or your family, are more likely to go bust. Not only does this further decrease demand, but it also causes problems with people you're indebted to (I'll get to that in a minute), and it causes organizations like the government to come in and bail you out. When this happens, a lot of money is spent (and lost in overhead) without necessarily all that many more jobs created at the local unemployment office.
Also, the people who save the most also tend to be the wealthier, who are also the people who get taxed more (in part precisely because they're saving, rather than contributing to demand). When wealthy people save, they tend to do it in the form of investments (like stocks) or in large sums in banks. Without this, companies, like families, have less capital to fall back on when things go bad. In the case of corporations, it results in the government bailing them out, as we've seen recently. This, yet again, is an expensive way to add little demand or income to the system. More critically, however, if there isn't savings in banks it creates very brittle banks. Let's all remember what happens when there is a systematic collapse of the banking system...
This brings us to a final problem, that of debt. Remember that all three parts of the tripod of income, jobs and demand need to be going up in order for the economy to grow. When technology guts jobs, and inflation guts income (and globalization guts both), there is invariably going to be a crash in demand. As we've seen over the past decade, the only way to prop up the whole system is to create fake income in the form of consumer debt. If you don't have any money, but you have the ability to buy things with your credit card, you will continue to buy things (create demand) because you have the ability to buy things.
This, of course, has the potential to be absolutely disastrous, as we're seeing right now. Remember, credit is FAKE income. While you have more money now, you have to actually give it back at some point because it was never yours. In fact, once you put your interest rate into the mix, credit actually decreases income, even if it very temporarily props it up. In the end, however, debt must be repaid. If you and I have been good economic citizens and have been spending rather than saving, it means we will be unable to pay the debts back, especially if there is a shock.
The only result is a proverbial day of reckoning where homeowners default on their mortgages, families file for chapter 11, and all the fake income comes crashing down, revealing a lack of demand, freezing the ability to create more fake wealth to keep the system going (cf. the credit crisis), while jobs, created by fake wealth disappear (cf. current unemployment numbers), which creates a loss of income which causes you and me, on the wrong side of this whole equation to shudder in fear and darkness as we scrounge to find food in a world with no jobs, inflating food prices, while trying to find shelter when our homes foreclose and we desperately try to use jobs we don't have to pay back debts we can't afford.
And here's the real kicker: we're going to the government for help. The government, meanwhile, is horribly strapped for cash (see THIS, for example) because the tax revenues they're bringing in have plummeted as Americans have lost, on average, 40% of their wealth last year. So, if the government has LESS money, and they're called on to spend MORE money, the end result is a massive increase to the government's debt (projected to increase by 1 to 2 TRILLION in 2009). Remember how I was just talking about what happens when you and I go into debt to artificially keep the economy going? Yeah, now imagine that the debts you're defaulting on were to the tune of $14 trillion dollars. The world, as we know it, will end.
So, what does demand-side economic thought mean to us all? It means we have a system in place that is corroded by technology, quick to implement protectionist policies, makes you, me, and the whole system more vulnerable by stripping away savings while forcing you, me, and the government into debt that will ultimately destroy you, me, and all of civilization as we know it.
Remember, the demand-side philosophy is a neat little internally consistent package, but when it comes into the real world, the natural results of its ideas (policy) hurt you and me. While I'm not about to ring out the virtues of supply-side thought (they'll get a bloggal tongue-lashing later), we've all go to realize that we are most definitely on the wrong side.
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