Guest Blog on the Austrian Economists

Cross posted at The Austrian Economists.

At Professor Horwitz’s request, I wrote this post as an update to my Lavoie contest essay. My original paper entitled “The Use of Knowledge in the Criminal Justice System,” was an attempt to outline points of decision making within the criminal justice system where central-planning inhibits the transmission of knowledge between suppliers and demanders. When police, courts, and prisons are provided by central-planning they uphold the emergence of prices. Without market prices there is no insight into the local knowledge about the problems of crime and the harm that it causes. Furthermore, the absence of knowledge in earlier production nodes causes discord in later stages as well. For example, prisons rely upon good court decisions, and courts rely upon effective police forces; for criminal justice to function well as a wide variety of institutional goods and services, knowledge must be revealed, detected and responded to, in each stage of production. I still believe that this approach was a useful one and needs more attention, so I plan to return to that draft and improve its structure and clarity.
Now the paper has radically changed form from the previous draft. It is more specifically focused on the topic of proportionate punishment. Proportionality is a philosophical standard of evaluating punishment norms – “a punishment should fit the crime.” I argue that the popularly accepted insights of proportionate punishment assume the state as the sole provider of punishment services, and in doing so they assume a state-central-planner to possess a degree of knowledge that it is impossible to possess. I assume that the moral and normative arguments in favor of proportionate punishment are sound, and then I explain that even if the philosophical arguments for proportionality were universally accepted, the central-authority would still lack the real knowledge of individuals’ tastes, preferences, evaluations, and abilities to provide proportionate punishment. Providing punishment like any other provision of goods and services on the market is a task of social coordination and therefore confronts knowledge problems. Furthermore the decision making process requires a mechanism to update and improve itself in order to maintain proportionality in changing social environments and crime rates.
The updated draft can be found here. Any comments or suggestions would be most appreciated. Once again I’d like to congratulate Claudia Williamson for also winning the Lavoie contest and say thank you to the SDAE and the Lavoie Prize committee.
Addendum:
Sorry I didn’t put the link in earlier. It should work now.

Quote of the day, Adam Smith.

Now in all cases the measure of the punishment to be inflicted on the delinquent is the concurrence of the impartial spectator with the resentment of the injured. If the injury is so great as that the spectator can go along with the injured person in revenging himself by the death of the offender, this is the proper punishment, and what is to be exacted by the offended person or the magistrate in his place who acts in the character of an impartial spectator. If the spectator could not concur with the injured if his revenge led him to the death of the offender, but could go along with him if he revenged the injury by a small corporal punishment or a pecuniary fine, this is the punishment that ought here to be inflicted. In all cases a punishment appears equitable in the eyes of the rest of man kind when it is such that the spectator would concur with the offended person in exacting it. The revenge of the injured which prompts him to retaliate the injury on the offender is the real source of the punishment of crimes. That which Grotius and other writers commonly allege as the original measure of punishments, viz the consideration of the public good, will not sufficiently account for the constitution of punishments. So far, say they, as public utility requires, so far we consent to the punishment of the criminal, and that this is the natural intention of all punishments. But we still find the case to be otherwise. For though in many cases the public good may require the same degree of punishment as the just revenge of the injured, and such as the spectator would go along with, yet in those crimes which are punished chiefly from a view to the public good the punishment enacted by law and that which we can readily enter into is very different. Thus some years ago the British nation took a fancy (a very whimsical one indeed) that the wealth and strength of the nation depended entirely on the flourishing of their woolen trade, and that this could not prosper if the exportation of wool was permitted. To prevent this it was enacted that the exportation of wool should be punished with death. This exportation was no crime at all, in natural equity, and was very far from deserving so high a punishment in the eyes of the people; they therefore found that while this was the punishment they could get neither jury nor informers. No one would consent to the punishment of a thing in itself so innocent by so high a penalty. They were therefore obliged to lessen the punishment to a confiscation of goods and vessel. In the same manner the military laws punish a sentinel who falls asleep upon guard with death. This is entirely founded on the consideration of the public good; and though we may perhaps approve of the sacrificing one person for the safety of a few, yet such a punishment when it is inflicted affects us in a very different manner from that of a cruel murderer or other atrocious criminal.

Adam Smith, Lectures On Jurisprudence, ed. R.. L. Meek, D. D. Raphael and P. G. Stein, vol. V of the Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1982).

How popular music reshaped high school status networks

Tyler Cowen posts to Randall Collins’s, Violence: A Micro-sociological Theory. To sum up; the rise of popular music created new social spaces and opportunities for kids to challenge the traditional social hierarchy awarded by the control of traditional social venues (high school athletics).
It reminded me of this excerpt from McCloskey’s Bourgeois Virtues.

Commercials as art

I’ve been on a kick about the communicative role of prices lately. Prices in the market serve as signals between buyers and sellers about the quality, quantity, and type of goods that should produced and distributed throughout the economy. In this sense the product outputs of a market economy are representative of social preferences, values, and beliefs.
When on a road trip recently, my roommate popped in an old VHS of a movie that he had recorded off TV in the mid 1980s. While listening to the now retro commercial jingles and slogans, I thought about how advertising is also an explicit signal in the market process. I think the old commercials for toys, movies, and other stuff, when interpreted in the correct light could give a richer description of society in that time than could a typical piece of art (novel, painting, music, movie). Even though we often attribute value and quality to art that represents its time and context, on average it seems that commercials are more representative of what society was actually like.
Commercials are specifically trying to appeal to the tastes and preferences of defined customer groups who are most likely to be watching a certain type of program. Something about this made me want to tell Naomi Klein to shove it.

Impatient for technological change

One of the running tabs on Marginal Revolution is “Markets in Everything,” where Tyler points out a real opportunity to buy or sell something you ordinarily wouldn’t think was available on the market. This is kind of the opposite of that. I’m a nerd and a creative one at that, sometimes I think about a product or a service that seems like it would be ideal and is not available and I say why the heck not? In many cases I admit the obstacles might be obvious, but wouldn’t it be great if they weren’t there? I’ll try my best to keep this a running theme, but here are a few starters.
1. Going on a road trip today so I’ll say, high speed trains / moving roads that increase your net speed in a car / cars that drive themselves. I wish there was something that makes it so when you traveled long distances at high speeds you didn’t have to pay attention; you could read or sleep or whatever.
2. Loosie Cigarettes. If you’ve lived in a less affluent area or the Carribean you know what a loosie is and how convenient they can be. Why aren’t they everywhere?
3. Also related to the road trip. Global internet access.
More to come…

A sensible quote then an oddity

Mathew O’keeffe (1989) wrote in Legal Notes No. 5 for the Libertarian Alliance some sensible conclusions as to the empirical results of the incentives promoted by retribution based criminal sentences:

The increase in criminality was matched by a decrease in apprehension; people were far less willing to “shop” their friends if they thought this would mean certain death. And the criminal himself was naturally far less likely to turn himself in, and, if caught, plead guilty. The juries themselves often chose to acquit a criminal rather than condemn him to an unfair punishment for a petty offense. The very great severity of punishments – in particular the irreversibility of the death sentence – led juries to be very cautious about their verdicts… The message is simple; the greater the punishment (“deterrent?”), the greater the crimes actually committed, the smaller the number of apprehensions, and the smaller the number of convictions.

Later sections of the article make me wonder if Walter Block ever used O’keeffe as a pen name:

[C]onvicted criminals could finance restitution by fighting to the death in televised gladiatorial combat or accepting roles in “snuff movies.” Robert Burrage (A Free Market in Human Organs, Economic Notes No. 10 Libertarian Alliance) has even made the suggestion that after death, the criminal’s body be reduced to spare parts and sold on the market! Perhaps the space age will offer less barbaric options; it could well offer a whole range of high pay, high risk, menial occupations. Criminals could be sent to work in perilous, frontier condition places to repay the more sizable restoration debts. A particularly attractive feature of this option would be that after a certain period away from earth, the effects of gravity on the body would be such that no criminal could ever live on earth again.