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Archive for February 7th, 2011

Ex Post punishments

I found Friedman’s argument of ex post and ex ante decisions with automobiles very interesting.  I never really thought about the difference in outcomes that result from the various forms of determent.  Friedman explained that in order to properly deter unsafe behavior an extreme punishment could be placed on accidence.  However, he advocated that the system of speeding tickets and other ex ante fines were actually more beneficial in the situation.

The practice of creating legislation in order to deter certain behavior sometimes encourages it.  I keep on thinking about the school that fined parents for picking up their children late, which resulted in an increase in tardiness.  I believe that the same thing occurs with ax ante laws aimed at reducing risky behavior.  A lot of times people are allowed to justify speeding or a minor violation because they know that if they get caught they will merely be slapped with a fine.

Despite what Friedman wrote, I think that an excessive ex post punishment or excessive fine would have the capacity of deterring prejudicial behavior more than speeding tickets.  It would also allow those who are capable and confident to safely drive faster, and more efficiently use their time.  I think that there would be a huge reduction in accidents if the drivers knew that if they caused an accident through negligence their license would be revoked for several years.

On the other hand studies have shown that drivers tend to overestimate their capacities and therefore might judge their skills incorrectly.

Ex Ante=Safety Net

When I boil down all of Friedman’s examples and definitions for ex post and ex ante I found myself trying to simplify the chapter my definition is as follows. Please keep me on the straight and narrow if I’m off base here.

Ex Post: is a punishment defined imposed only after the crime is committed. (Crime being defined as the breaking of a law.) Simple as Friedman states. It deters by imposing a stiff enough penalty either through severe monetary losses or payment in “life or liberty.” A person is therefore left to choose for themselves whether they are in a position to break the law and how close they can ride the line before a traffic accident occurs or a life is taken. The issue that Friedman brings up at one point then ignores later is that ex post has the greatest deterrence value, only if it the party in question is all knowledgeable about his actions. Some people from the south have never had to deal with black ice in Utah. If they came here the would only be deterred after they have caused an accident and possibly taken a life. By the time they have learned this lesson they are paying such a large fine for damages and society is paying as well to enforce those damages and to make up what is not paid.

Ex Ante: A law designed to be a “safety net” in keeping you from having to pay from having to pay the maximum penalties after you have committed the ultimate end result. For example, we have speeding tickets to reduce speeding. Some argue that if I will only go as slow as I am deterred. If I value going faster for thrills or to save time, I will go faster. What Friedman did not acknowledge was the tiered approach to this system of law. The fines increase as my speed increases, as well as the abilities of law enforcement to stop me. Very many will go 10 over, very few will go 30 over, even fewer will go 60 over.

Government and Governance

I really enjoyed the very beginning of chapter three in Leeson’s book.  The difference between government and governance is a very engaging question for political scientist, yet I had never looked at it from an economic perspective.  What would it be like if all types of control were governance?  Perhaps the most interesting statement by Leeson is: “Hobbes’s “state of nature,” what we commonly call anarchy, doesn’t mean the absence of rules, order, and cooperation.  It merely means the absence of governance based on monopoly coercive power-the absence of government.”  Pirates were able to do this in a almost completely Hobbesian sort of way.  Individuals were in a state of nature and then decided to enter into a social contract, to borrow the phrase for John Locke.

If we were to live in a world of no government but only governance what would happen?  I tend to think that we would separate into small nation states or even smaller communities.  If I were placed in the situation where there was no central government to enforce any laws I would tend to make small agreements with my roommates, next door neighbors or maybe even those in may same town but I would not spread out any father than that.  Why would I?  The majority of my life is spent in a small area.  What incentive do I have to form a social contract with someone in New York City?

Pirates should be commended for their ability to establish order out of potential chaos, but it would be a poor excuse for our society.  After all we are not wanted prisoners.  Hopefully.

The Role of the Court

Epstein in chapter 2 of his book makes the point that the judiciary can easily overstep it’s bounds of interpreting the law.  The law, especially the constitution, is very concise for being so heavily relied upon.  He points out the problem with interpreting the law by saying, that “short texts necessarily and properly require extensive explication.”  An example he gives is freedom of speech.  Does it cover only media, or can it cover demonstration, defamation, and other expression (43)?  He explains in the introduction that often the decisions made about the definition of terms like “public use” and “just compensation” are taken from popular use, precedent, and commentary (5).

The fact that courts are relying on former and popular use to make crucial decisions is frightening.  Judges who interpret the law contrary to precedent are endangering themselves.  They are employed by the government.  In a public use case, they stare many other case decisions and higher-ups in the face, and are likely to rule in favor of private ownership.  These are positive externalities for the government employees, and negative for the integrity of the constitution and for US citizens.  That which is good for the individual citizen is good for the whole, but this does not benefit the government workers, nor does it benefit the private owner.  Rights to property are more tightly under lock and key with every court case setting a sterner precedent in favor of public use.

Epstein proposes (and I agree) that the proper way to battle the 150 year march of property gobbling government is the state legislatures.  After the Kelo decision, 34 states made bipartisan movements to limit state sponsored condemnations and economic advancement projects (3).  With clear language set forth in the laws, the court can simply do its interpretive duty.  The constitution and supporting legislation is where property protection starts, and the court is where it should be defended.

How much is too much?

I was talking to one of my friends, both of us from out of state, about the differences we see in Utah compared to elsewhere. And, yes, religion was part of the conversation. This got me thinking about the interpretation of the constitution. Living in Utah, but not being from here, I often wonder how far is too far, particularly with the first amendment. How much separation of church and state is necessary to be considered a separation? Growing up outside of Utah, I sometimes feel suffocated by the oppressive, often overwhelming presence of this region’s dominant religious culture. I feel the Mormon Church runs the state. There are more than Mormons in the state of Utah, and, granted I may not be looking at things from an objective perspective, but I don’t see any protections for the minority out there. I understand the concept of majority rules, but aren’t there supposed to be protections against the majority becoming the great oppressor? So, I guess since each state submits to the federal government in federal issues that are defined in the Constitution, in other areas the states are able to run things the way they want. It is a situation unique to these united states of the United States of America. When the Mormons do run afoul of election laws, like when the church of latter day saints used its staff to work a political referendum in California – “churches” aren’t supposed to do that or they lose their nonprofit status – then they get to pay fines just like any other institution that breaks campaign finance laws.

No Voluntary Choice

Chapter 3 of Leeson’s book offered a wonderful explanation of the difference between government and governance. As I was reading his definition of government I couldn’t help but to think of a situation that I feel describes his idea of government exactly. And no it isn’t any actual form of government. According to Leeson “government is an authority with a monopoly on coercion in the territory it presides over” and an institution that illustrates this monopoly on coercion is high school.

Think about it, as a minor you are forced by law to attend school. You have no choice in whether you can be there. Sure you might not have to go every day but eventually the attendance officer will hunt you down. There are rules that you must follow and there are serious consequences if you do not follow those rules. An example of this is dress code. At my high school there was a strict dress code and the enforcer of this code was a force to be reckoned with. Lucky for me I got to experience just what happens when one violates the dress code. One gets sent home to change, one’s parents get called, and then one has to return to school and visit the dress code authoritarian to get new dress approval.

After four years of high school I can say with some enthusiasm that the state of “an-arrgh-chy” and governance of the pirates sounds pretty dang great!

Death to the Crazy Driver.

I had to laugh when when Friedman suggests that the “obvious answer” for the “ex post fine necessary to give you an adequate incentive to avoid accidents … is to switch from fines to other sorts of punishments, such as execution or imprisonment;” (78).  It just seems so absurd.  We don’t execute people for getting into traffic accidents.  But not because we reason that it’s inefficient–it just doesn’t seem right. I wonder what sorts of laws we would be living with today if ‘economics’ instead of ‘justice,’ or whatever, had always been/was now the standard for lawmaking.

Ex post punishments like execution and imprisonment seem effective because they deter (the advantage of Ex post punishments, as Friedman says), but they do so at an extremely high cost.  In the case of imprisonment, it’s a cost that both the one being punished and society as a whole must pay.  So, if laws had historically been based on economics, we wouldn’t execute people and we wouldn’t have prisons, right?

We do have execution as well as imprisonment as punishment for other ‘misdeeds.’  Economics, though, would say that these punishments are inefficient.  Or at least Friedman tells us this.  A cost that is a net loss becuase society has to pay for criminals to be in jail, and one man losing a life doesn’t grant one to another.  But it’s a necessary evil, right?  If they don’t go to prison, they’ll do more bad stuff and we’ll have to pay for it anyway.  Is Friedman going to figure out a way to overhaul our criminal justice system and get rid of jails?  That would be really great.

Throwback: Public Use and the necessity of Private Property

According to Roman law, “Property is the guardian of every right.”  What does that even mean?  This something that our founding fathers understood which is entire reason for the 5th amendment.  The national government was never created or meant to have complete control of the people.  In fact, the fight for property is what pushes this entire economy.  If we didn’t all crave the newest and greatest things would we ever excel?  Competition to create a product other people can own is the driving force behind our economy.  Imagine a place where we couldn’t own things.  Everything we owned could be taken from us at any moment.  What is the motivation to work? What is the motivation to create? What would happen to our creative thought process? to divergent thinking?

“The logic that drives the [aforementioned Roman] expression is that only a system of private property lets people organize a system that lets people form and raise families, organize religious and other charitable organizations, and earn a living through honest labor.” (Epstein, pages 1-2)

This is the “American Dream.”  You can leave your country and come here and you can own the rights to all you have earned!  You can start a company! You can own your own home free of the governments control!… Wait?! What’s that public Use clause? You have something to say about that? Oh well let’s talk about it.  I’ll bring my good friend the Constitution and you bring the supreme court and we’ll talk about it.

You can talk to me about “just compensation” all you want, but the price of buying someones home, where they have always lived, even at a fair price, will never amount to what the costs of dislocation will really be incurred on the family.  So, in a way, our beautiful government let’s us have what ever we want.  We can have our iPods, we can have our plasma screens, our roller blades (very important), our cars, bikes, scooters, and infinite amounts of close.  We can have our homes.  Unless, of course, the government wants our homes.

A Rising Tide Raises all Ships

“Constitutional structure should improve the odds of making social innovations win-win instead of win-lose propositions.”  It seems that Richard Epstein struggles with the way government is defining the takings clause from the Constitution.  I agree with him on the need to break a judgment down when it supposedly benefits the community or an individual.  If everyone benefits from the judgment on the takings clause then it is hard to dispute its error, but there are times when individuals gain and others lose.  This leads me to question how to keep legislation in check.

In chapter two of Supreme Neglect, is about keeping the various governmental branches in check.  The separation of powers amongst the different branches of government allows each branch to interpret the Constitution and apply it to various statutes.  The best example I could come up with concerning the definitions of the Constitution apply to Obamacare.  I read an article in the Economist about how the new health care reform was once a success but is now considered dead.  In this article it used the various branches of government on determining the status of the health care reform.  Right now the Justices are reading and pondering the health-care law.  It talked about the House of Representatives and how they once supported the bill but are now trying to repeal the reforms. It talked about the Senate and how many of the those who are at risk of losing their seat in the Senate are striking deals to meet more in the middle on these reforms.  Basically, after reading the article I decided that it is great to have a government which supports a separation of powers because it allows careful consideration on the definitions of the Constitution.  Keeping the government at check will allow it to run “its essential functions without becoming so large to destroy the [rights] of those it must protect.”  In the end the government and it’s ships will rise.

Ex ante

While reading in Friedmans Chapter 7, I found the notion of ex ante punishment quite interesting. I had never really thought about this before. Ex ante punishment, while it may be useful to prevent certain things, is somewhat difficult to define. For example, conspiracy to commit murder or acts of terrorism may be effective in preventing these acts, but is there any real way to tell if they were going to do it or not? It almost seems unconstitutional. I feel that these laws are inefficient and a good example of the flaws that law makers can commit. But still, while the law makers may not be perfect, I do feel that common law is generally the most efficient form of punishment.

Ex post on the other hand is good at bringing about a perceived justice, but can also fail in it’s efficiency. While some legislatures may set a penalty that they deem proper, they can often make mistakes. Getting caught speeding can cost you anywhere from 60 to 400 dollars, but while the cost can mean a lot to a starving college student, it doesn’t often prevent people from speeding after. I recently received a speeding ticket in wyoming for a rather large sum, but the punishment was still not enough to keep me at the speed limit while trying to make my way through that terrible state! The ticket was not enough to prevent me from speeding and putting others in danger.

This whole concept was really interesting to me and has me thinking more and more about the efficiency of laws and why they are in place.