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Archive for March 21st, 2011

Plank Walk to make Pirates seem more Humane?!

I loved chapter 5 of Leeson’s book, Walk the Plank. The economic analysis of pirate torture was both thorough and interesting. I find it amazing that the popular image of pirates forcing insubordinate to ‘walk the plank’ is actually a toned down form of pirate torture which never actually existed. So essentially, Disney, Hollywood, and a long history of pirates in the United States have created the image of the plank walk to disguise, replace, or otherwise make pirate torture acceptable in PG and PG-13 movies.

The actual description of pirate torture was as brutal as anything I have ever heard of. The economic incentives to do such were almost as captivating. Leeson writes, “Pirates tortured captives for three main reasons. First, they did so to elicit information usually regarding the whereabouts of hidden valuables aboard captured ships. Second, pirates tortured captives to punish government officials for attempting to capture them or for capturing and hanging fellow pirates. Third pirates used torture to punish unscrupulous or abusive merchant captains.” As our class has been learning throughout the semester, these pirates (or any individual, group) were strategically acting to maximize their utility. The horrors of merchant vessels capture, blackbeard grotesque look, and inhumane torture quickly spread, giving pirates a signaling mechanism which greatly worked to their advantage.

I am glad that pirates, although usually acting according to their own strict rationality, did punish captains for no other reason than sadistic justice. It seems to reconcile my ever-present feeling that there are times when individuals will act against what may be their “best” interests for unknown reasons. That is, sometimes we act with no deliberate motive.

Pirate Reps

I found Chapter 5 of Leeson quite amusing, particularly the part about pirates using word of mouth and past deeds to protect their reputation. I couldn’t help but think of modern day rappers, who spit verses about their past deeds of drugs and violence, riding out their “gansta” reputation to stardom. Yet much like Pirates, these deeds they may or may not have done don’t matter much, as long as people believe them and buy into them. The rapper needs to protect his image as a “gangsta” or “thug” and therefore must rap, speak, and dress the part, even though the days of menacing may be far behind him. He needs to protect his image to get the booty( or modern day bling) he is looking to get. Like Blackbeard, rappers too need portray an image, if not, they won’t sell the necessary records. A Rapper is much like a captain, and the crew or posse needs to help build his image. Imagine a rapper with someone dressed like a hippie in his crew! I don’t know what you think, but the similarities are kind of spooky!

That being said, I did find the logic and code behind the torturing interesting. Their strategic use of pain and suffering displays a mind for business and profit that I never really thought pirates had. They even destroyed their booty at times to protect their reputation! (thus furthering their business plan. You gotta spend money to make money right?)

Risks to Morals

Friedman reminded me of the guy that decided to take a tank from an army base and go for a drive down the streets. Here is a link:

On page 197, Friedman starts his discussion on how what the underlying purpose of tort law is. “Our objective is not to eliminate the risks entirely… What we want is not a world of no accidents-but a world with only efficient accidents, only those accidents that cost more to prevent than preventing them is worth. We want the world we would have if everyone took all and only cost-justified precautions.” I like Friedman’s logic here. Life has risks. We can’t live as if we can prevent ourselves from ever suffering personal injury to our persons, emotional or physical, or our property. There are just to many factors to take into account around us at all times. Right now in the computer lab, just thinking about how many other people have used this computer that may have colds or have pneumonia or some other funky disease that have found it inefficient to wash their hands after using the restroom; my chances of coming down with something are pretty high. I have a cold right now, the next person may catch it. The can decide to take their chances and take care of their farms on facebook or chill with their amigos on World of Warcraft, or surf the internet looking for a date on the world wide web and possibly get a virus that may take them as close to the next life as they have ever been and probably back to their parent’s house searching for some TLC from mom. The point is that our world is riddled with risk. We cannot go through life expecting everything to be peachy.

What we do need to see is that, yes some injuries need compensation. If I go out to the parking lot and find a car planted squarely six inches into the back bumper of my car, I will seek some tort. It’s the closest thing I can get to torture as the pirates like. What about your former scout leader that swipes your rear fender because he wasn’t fully awake at 3 in the morning and didn’t see you with your hazards following the some other neighbor’s 17 horses down the highway that is posted 55 mph. Should I sue him, or just laugh it off because it was the risk I was willing to take to follow those horses to try to keep my fellow drivers safe. And he took a considerable risk in becoming my scout leader, do I owe him?  I think I’ve found were morals finally find their way into law and economics. In government, efficiency is the, well, most efficient way of coming up with law that cover the broad scope of tort cases. Moral, as Kelsey used in a previous blog post, is left to the individual. If I want to be moral, I can be. I should not expect it from others around me and I should rarely expect it from government.

Frivolous Law Suits – Fine The Lawyers

I have always wondered what it would be like to be a lawyer with dealings inside the court room. To me I think I would love that job and that I would be good at it. But when I think about having to deal with some of the situation that I hear about inside the court room dealing with tort damages I reevaluate my desire to be a lawyer. I understand that there has to be a system that deals with “making people whole again”, but what I don’t like is that there is no system in places for people that commit frivolous law suits and try to abuse the system. I have said it in previous post that in my opinion there needs to be a system in places to deter people from suing for every stupid thing they can get away with. I understand that this is a very fine line to draw, but so is the line that awards damages in these court cases. If there was a deterrent to people put in place, that is a penalty for cases that fall into the frivolous category and lost, I think a lot of those cases would not be sought What about making the plaintiff party pay for the cost to run the court for that case. Surely that isn’t cheap and falls onto the tax payer in the end. Or another idea I have thought about a little is penalize the lawyer that got involved in the lawsuit to begin with, they should know better anyways. All that the legal counsel is doing in a situation like this is looking towards that 30% income from winning the case. This in the end would have lawyers not wanting to take these cases for fear of being fined, which would leave it for the public to fight against each other, instead of who can pay the most in lawyer fees.

There is a case that I have talked about before in blogs involving a burglar and a skylight. I did a little more research on the case and found out that it was a group of high school kids sneaking on top of the schools gymnasium to steal a flood light from the roof. They succeeded stealing one of the lights and when one of the 19 year old boys walked back across the roof, he fell through a skylight and suffered major injuries. The 19 year old boy sued and was rewarded with $260,000 and $1200 a month for the rest of his life; money that comes from the government which is coming from the taxpayer. It is cases like these that I find to be frivolous law suits. It exactly like the example Friedman uses with the train car and the tree falling on it. If the driver would have been speeding a little the tree would have missed them. Should the kids have been on the roof to begin with? Let alone up there to break the law by stealing? Maybe if it wasn’t for a good lawyer and finding their own interpretation of punitive damages lawsuits like this could be avoided.

I scorn to do any one a mischief, when it is not for my advantage.

This line stayed with me the longest as I read Leeson’s book.  Economists and politicians are stereotypically known to have no morals so I thought this quote was particularly appropriate for this class.  It seems very efficient at first glance doesn’t it.  Well efficient to the one committing the mischief.  Depending on how big a stick they are carrying, then the costs associated with it are very low.  But pirate mischief was certainly very costly.  Especially to those that were robbed.  But I was thinking, the money/property the merchant ships were robbed of went to a good use, didn’t they?

Perhaps in a Keynesian world it would’ve made sense.  Because of pirates perhaps the demand for mariners and coast-guard people increased greatly proving those men with jobs and opportunities they would otherwise be without.  And all the assets that were stolen by the pirates were obviously used to support the economy.  They weren’t just going to sit on it, they used it to buy food and other kinds of stuff they wanted/needed.  Some might even say that if the merchants didn’t prepare properly to protect the cargo, then it was of greater value to the pirates and the efficient use of it would belong to the pirates.

It seems to me that politicians do this (commit mischief for one’s own gain) quite a bit.  President Obama received the Nobel Peace prize (though nobody is sure why) and has now ordered attacks on Libya.  Is this to gain a particular vote or to prove he’s no pushover.  Or is it for oil?  (I’m assuming there’s oil in Libya).  I personally hope it is.  Would a war for oil really be so bad?  Oil is needed only for an individual’s car, but for transporting all goods, the manufacturing of many goods, and is vital to many industries success and expansion.  As the cost of oil increases, so do the prices of products and that can discriminate against those with small incomes and reduces that industry’s market share.  So why the hell not.

Should the rich pay higher fines?

We all know the more money one has the less time they will spend in jail or money on fines. It’s just the way it works. But why shouldn’t it change? Personally I would be more likely to park in a handicap parking spot in Utah than in California. In Utah it costs only $ 75 and in California it is $375. Then again, guilt always has played a big part in my life.

Why would one state charge more than in another? It is the same story with littering; in California it is $ 1000 and in Wyoming it is $ 750. Does this have to do with the average amount of money earned per capita in each state? Or is it the chance of being caught, but that does not explain Wyoming very well. There are vast amounts of land with only a few people inhabiting seemingly random areas. In California there are so many people and so few cops that the chance of being caught is slim. The major exception, Utah, has cops that almost outnumber the residents, or at least it feels this way. I saw more cops in only a few days in Utah than in California driving for 3 years. Since Utah’s enforcement is so enthusiastic, maybe they are able to levy lower fines, knowing you are more likely to get caught several times, thereby bringing in the same income for the state/county/municipality as getting caught once in California.

The fines for breaking laws should be on a sliding scale, so the “cost” would have a similar effect on the miscreant. In order to get the attention of someone with a lot of disposable income, the fine would have to be great. An unemployed person, however, would be deterred by what many might consider to be pocket change. If the fine is ridiculously low or high it loses its meaning. It would be inconsequential or insurmountable and ruinous, neither of which is fair.

Pirate dating

When, if ever is it considered “rational” to behave in a way different from your own actual instincts?  According to Leeson, it is considered such when you are a pirate.  I found it very interesting to think that pirates were actually trying to create and maintain an image in which they actually did not fit.  They are remembered as blood-thirsty, bandits who enjoyed torture and killing.  When in fact they are nothing more than clever economists who are increasing their profit margin.  In the case of pirates it seems to work.  Black-beard is a legend but apparently he never killed anybody.  He never had to because his image was so fearsome.

Since last week we talked a little bit about marriage and dating in regards to contract law, I started to think about how those two topics relate to what pirates did.  Hopefully building up a reputation of violence andy  torture is not the type of reputation you are going for when soliciting yourself to feuture partners (but then again you haven’t met my roommate).  Nevertheless you are trying to build a reputation.  Most guys want to be thought of as funny, and outgoing….etc.  If a guy has that reputation he is trying to build before the date, then he may have a better chance of getting a positive response during and after the date.  It doesn’t matter if heactually is all those things, what matters is that she thinks he is and then tells others that he is.

I think i have finally figured out what Leeson is trying to say in his books.  It is not that pirates where brilliant economists.  They didn’t know that what they were doing was an economic principle and neither does the guy who is building a reputation to help his dating life, they are simply doing what they both feel is the right thing to do that will increase their happiness (or utility).  Economic principles are all around us and we carry them out with out even thinking about them.  Pirates were no exception and neither are we.

Out of all the chapters in “Invisible Hook” I have found this one to be the most interesting one so far.  It’s made me have a different outlook on pirates and why they did the things they did.   I mean the reason why they torture their victims so brutal was to help prevent more victims and fights.  The pirates did this to install fear into their enemies or the merchant ship crews so they were more acceptable to just giving up then to fight.  Pirates wanted to stray away from fighting has much as possible cause there were no good injured.   So what better than scare or bluff by brutal torturing their victims and for the ones that need call the bluff repeat the example of the past victims.  Now this would also go for the pirates that broke the rules aboard the ship, if you made harsh penalties there would be a lot less people breaking the rules.  I think this is a problem with our society now today the penalties are so lite; people are more will to break the laws because the outcome of that out weights the penalties.  People are just more acceptable to just pay the fine.  I think in most cases people now have more of an incentive to break the law for example speeding because the fines are so small, their just willing to take the chance.  It’s worth more to them to speed then the fine.

Tharris comments about how negative advertising can have a reverse effect on a company.  I don’t see this happening and if so not very often.  I think people are very prone to what they hear is what they go off of.  I think it very seldom people will go and challenge or find their own facts especially the example in Tharris blog about visa and American Express.  This also goes back to the pirates, you know everyone was talking about their victims and people also like to exaggerate.   I don’t think many people were willing to see if they were as mean as what they heard they were.

I think this one of the biggest reason why pirates were so successful and why they lasted as long as they did.

Tort law and costs

When private cost are imposed from one party to another, the way that our legal system is set up to deal with it is through tort law. When reading Friedman, I found it very difficult to understand what tort law actually was. When looking up an alternative definition it became clear to me what it was. If I knowingly impose a cost onto someone else then they are legally entitled for damages, as long as it does not fall into one of the three categories that Friedman points out that makes an action not tortious. When I look at this I see another way for society to remain in equilibrium. Since people are self interested they aren’t going to willingly part with their money. Hence the need for the tort system. This system can correct the in equal cost distribution caused by the actions of others.

This has the same feel as trying to figure out how to deal with externalities. A cost is imposed on something else and the person responsible for causing that cost has to pay the affected people or person or organization. One thing I enjoyed thinking about was the falling safe example that Freidman uses. This goes back to the ex post and ex ante laws that I am not entirely clear on, but what I did understand from that was if you are not knowingly causing a cost on someone because of the timing of some freak accident you are not liable for that cost. This boils down to intent, if I knowingly impose a cost on you then I am liable, but if by some random chance something happens then I am not. Tort law, from what I can see it’s just another way for society to control costs.

“…nausea, sleep disturbance, constipation, flatulence, and death.”

I found Freidman’s chapter on tort law to be very confusing. Not because he is a poor writer, but because I have essentially no background in law. Therefore, I don’t feel very confident in expressing opinions about the reading because my opinions aren’t based on anything more than my misunderstanding.

On page 198: “What we want is not a world of no accidents – that costs more than it is worth.” There is risk involved in everything. Truly. I’m sure we’ve all read the hilarious labels on packaging or heard of crazy lawsuits in the news. (Ironically, one is not immediately coming to mind… Hah hah…) I agree with Friedman. Accidents happen, and we shouldn’t try to legislate or litigate that fact of life away. I would like to talk a little about this in the context of drug companies, as Friedman does on pages 195-197.

This is an interesting article I read a while ago that initially got me thinking about this issue: I encourage you to read it if you have time – it’s short. The article discusses the unseen victims of the FDA: those who cannot access a drug because it has not been thoroughly tested yet, etc. Friedman mentions the “unnecessary death and misery to those denied new drugs.” (197) These are the unseen victims we don’t hear about. If somebody takes a drug and it kills him or her, everyone finds out. But drugs are inherently risky – even approved ones. The list of potential side effects is almost ridiculously long for any drug – long enough that most of us don’t read it all in detail. It’s just the drug company’s way of covering its butt. I think that the FDA does some good and probably has its place in this world, but I also agree that people should be able to take an unproven drug if they understand the potential (in many cases, unknown) risks involved. For someone who is dying anyway, what is there to lose? As Williams mentions in the article, “If this drug will start saving lives tomorrow, how many people died yesterday waiting for the FDA to act?” I take a prescription that carries a fairly high side effect of seizures, but I’m aware of that, and I still choose to take the drug. If people know the risks, they can take the risks. So how specific do the “known” risks have to be? I swear most medications have some mention of death in the side effect list. Doesn’t that cover it all? This is really an area where I know very little.

When I think about tort law, I tend to think that people just need to buck up a little and stop trying to blame everything on everyone else. Of course, there are those who are injured by no fault of their own, and I’m not trying to deny the usefulness of tort law, especially negligence tort, but we all know somebody who has tried to sue somebody over something ridiculous.