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Post 20

Wednesday, January 31, 2007 - 6:07pmSanction this postReply
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Thanks Bridget:

Natural risks are covered by insurance.  If the risk is so high as to make the premiums unaffordable, so be it.  That means that the people who are the experts at assessing risks - the insurance companies - are letting you know that the operation has a probability of being unprofitable up front.  So, do something else, or figure out how to reduce the risk overhead.

If you check out the blog that I've referenced previously in this thread, you'll fing reference to something really scary that illustrates a deeper problem with corporations than just going bankrupt and not paying their debts.  It turns out that the cap on liability forces the corporation, as a matter of accounting policy, to discount risks that exceed the cap - the total assets of the corporation.  Which is why - and this was in the news a few days ago, although I wrote that blog a couple years back - the nuclear power plants have done essentially NOTHING! to protect their facilities against serious terrorist threat, even after 9/11.

Insurance companies are a key element in making a real free society work.  Sure you can build a nuke in your basement - if you can afford to pay the premiums...  Unfortunately, our existing nukes - the power plants - have not had to pay the premiums, as congress set yet another, even more limited cap on their liability back in the '50's.  So far, we've been very lucky.  But eventually the odds come due.  Let's hope we can change the system to one of full accountability and responsibility before we manage to really blow it. 


Post 21

Wednesday, January 31, 2007 - 6:28pmSanction this postReply
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I clearly must not have communicated my position very well.

My position is that I shouldn't be concerned with trying to enforce some kind of Biblical "justice."  Why should I even care what some random stranger's motives and character are?  In a small village, where you know everyone and will be dealing with them regularly, sure it's important to have some idea of how reliable and sane various individuals are.  In a modern urban area, you've got 47 varieties of crazies out there, by the tens of thousands, and, odds are, you're occasionally going to run afoul of one or more them.

So, you don't try to play Charles Bronson, if you're sanely interested primarily in your own life and happiness, unless it's a local situation in which that is actually called for.  Instead, you try to make sure that you are covered for your risks.

In a free society, in which insurance companies played a larger role than nowdays, it would be expensive to be a criminal, in several ways.  If the level of crime justified it, then you would have to carry a card, or an ID chip under your skin perhaps, or simply a biometric record on file, such that when you entered a store or mall or a gated community, the people concerned with maintaining risk control would know that you were there.  If things started disappearing off the shelves statistically more often than usual whenever you shopped, then they would likely start watching you more carefully.

If you had a record of causing trouble - meaning expense - then extra attention would have to be paid to you and that would mean that you would be paying a higher premium for whatever level of access to stores, communities, hotels, airlines, etc. that you wanted.  Having a clean record would be worth money.

A few people who were highly skilled criminals would still succeed in gaming the system.  Fine.  They keep the social immune system on its toes.  They don't count for much in the total.  The point is not trying to achieve perfection, which would be infinitely costly.  Justice has a marginal returns point like any other good traded on the market. 

In any case, what I care about is keeping what I've earned.  If someone needs to temporarily violate my rights then there's a price to pay, and it should be one such that I am indifferent to the outcome.  I.e., I don't end up losing anything, including my transaction costs.

People who are mentally weak, such as some of the elderly, should probably take that into account in their dealings.  If they don't, then hopefully they will have children or attorneys who are watching out for them.  TANSTAAFL.  If you're stupid, then you will pay for it, however you got there.  Even so, if you have assets, then you can hire intelligence.  Just try to do it BEFORE you get senile.


Post 22

Wednesday, January 31, 2007 - 6:39pmSanction this postReply
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Thanks Jordan, for moving in that direction with the thread: 

You wrote:

<With mere compensatory damages, I can imagine a society where uber rich folks go around breaking others' fingers for fun. Compensating the injured would be a mere drop in the uber rich's money bucket. To allow this is to allow a society where people get what they don't deserve or haven't earned, which is to allow injustice. That is, Rich Guy hasn't earned the right to break fingers, and Victim doesn't deserve his fingers broken. Shouldn't justice include preventing rights violations rather than merely compensatng for them? But we digress.

As for corporations, sure they aren't a "market entity," but what if their existence has greater net benefit for the individual?>

People sometimes do stupid things.  Rich brats who didn't have to earn their inherited money are often case studies in this, which is unfortunate.  However, there is a logic here which is rarely discussed, although I cover it in some detail in my blog at http://philosborn.joeuser.com/articlecomments.asp?AID=83231&s=1 .

There is a rational cost to having a broken finger.  If someone offered you a million dollars to break your finger, then my guess is that you would ask if he or she wouldn't like to break all ten.  You would even offer them a discount, I suspect.   See my blog for more details.

As to your 2nd question, it seems that this is what we've been talking about, right?

Is it rational to assume that when the state lets certain people escape from responsibility for their actions, that this will somehow work out to everyone's benefit?



Post 23

Wednesday, January 31, 2007 - 7:09pmSanction this postReply
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On Jan 19, Sam Erica said ...

If executive compensation were determined by the shareholders I think this would be a vast improvement.

On Jan 31, President Bush said ...

“Government should not decide the compensation for America’s corporate executives,” he said. “But the salaries and bonuses of CEOs should be based on their success at improving their companies and bringing value to their shareholders.”

Coincidence? I think NOT!

Sam Erica, what is it that you're not telling us, hmm???

;-)

Ed

(Edited by Ed Thompson on 1/31, 7:10pm)


Post 24

Thursday, February 1, 2007 - 6:00pmSanction this postReply
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Phil,

Compensating to indifference works fine for the injured party. We agree. But it might do nothing to deter the tortfeasor from future rights violations. Doesn't this bug you? I want the law to compel a tortfeasor -- one who would be otherwise indifferent about respecting versus violating the law and my rights -- to prefer respecting the law and my rights over not.

Phil wrote:
"Is it rational to assume that when the state lets certain people escape from responsibility for their actions, that this will somehow work out to everyone's benefit?"

Well, I might well be better off. It's a trade off. Corporations make me wealther but with risk that I'll get hurt by them without sufficient recourse.


*

Ed,

Bush was probably responding to Congressman Barney Frank, who wants to pass a bill that would allow shareholders to mess with executive pay. My suspicion is that Sam Erica is Barney Frank.

Phil,



Post 25

Friday, February 2, 2007 - 3:04amSanction this postReply
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Jordan, the problem is that draconian laws do not prevent crime. Many Asian countries execute drug dealers, with little effect. Usually what distinguishes criminals from non, is a lack of impulse control. Thus for most, no matter how tough the sentence, the consequence was never even considered.
With mere compensatory damages, I can imagine a society where uber rich folks go around breaking others' fingers for fun. Compensating the injured would be a mere drop in the uber rich's money bucket. To allow this is to allow a society where people get what they don't deserve or haven't earned, which is to allow injustice. That is, Rich Guy hasn't earned the right to break fingers, and Victim doesn't deserve his fingers broken. Shouldn't justice include preventing rights violations rather than merely compensating for them?
You don't really think that without compensatory, rich guys would run around torturing everyone, do you? You prevent rights violations with floodlights, alarms, fences, locks, surveillance cameras, and patrols.


Post 26

Friday, February 2, 2007 - 9:53amSanction this postReply
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Jonathan,

I was thinking of tort law, not crime. Torts don't tend to arise from impulse control problems. Yes, I do think rich people (read: corporations) would go around committing torts without the law to deter them. And excessive self-security is (a) inefficient and (b) unneeded if the law exists not only to denote what rights are protected but also to protect those rights. Naming a law without enforcing it is as good as not having that law at all.

EDIT: And I don't want draconian laws. I want smart laws, effective laws.

Jordan
(Edited by Jordan
on 2/02, 5:28pm)


Post 27

Saturday, February 3, 2007 - 8:44amSanction this postReply
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(Red check sanctions to Phil Osborn for posts 11, 14, and 16.)

I have put off thinking hard and long about the issues involved in a thread perhaps to be called "Conservative or Objectivist: Which are You?"  People who want laws have an authoritarian worldview.  In terms of the Keirsey/Myer-Briggs, they are "inspector generals" -- they want to know the rules so they can follow them and enforce them. Robert Malcom used the word (from Jacobs) "guardian."  Perhaps, my theme should be "Capitalist or Objectivist?" because the Objectivist really wants to discover and follow (and enforce!) the rules whereas the true capitalist is situational and conjecturual.  In the words of Ernst Samhaber "the successful merchant does not argue religion with his client." (from Merchants Make History).

For a numismatic project on the coinage of Troyes, I have been researching the medieval fairs.  My clue, of course, came from D. T. Armentato's Uncle Sam: the Monopoly Man which tells the story of "fair courts" in which common (ad hoc) decisions restored balance without punishment.  No one would come back to a fair to get their nose slit over how many "sheep" are in a "flock."  (The case in point is that on the opening day of the fair you offer 12 pence for a flock of 12 sheep to be paid for and delivered on the last day.  Meantime, an ewe drops a lamb.  Whose is it?  Argue it as you will, if the count or king gets involved, everyone loses and someone gets their nose slit.)

The Uniform Commercial Code is an excellent example of what a government can do right.  To the extent that it works at all, the basis for it comes from common business law.  The case goes like this:  You buy a truckload of widgets with a phone call, send along your purchase order and a bank draft.  They ship the widgets and send you a sales invoice.  The widgets arrive on a bill of lading.  You sign for them.  What you have is three separate unilateral statements, all of which are contracts and any or all of which can be mutually contradictory on several points.  The UCC resolves those problems... or is supposed to.

I am currently majoring in criminal justice in college. I complete an associate's in April.  I am also enrolled at a university in a BA program in criminology with a concentration in police administration. I chose that because my interest is in private security.  This term, for that degree, I am taking one class in White Collar Crime and another in Sociology of Work.  (In private security, the workplace is my 'hood.)  Both of those classes only echo what I heard in the lower division classes:  when businesses discover crime, they do not report it because (a) they do not want the negative publicity and (b) if the perpetrators are high in the organization, they benefit from status.  However true that may be, I have cited here of RoR before a significant study:
    "In responding to and resolving the criminal behavior of employees, organizations routinely choose options other than criminal prosecution, for example, suspension without pay, transfer, job reassignment, job redesign (eliminating some job duties), civil restitution, and dismissal...
     While on the surface, it appears that organizations opt for less severe sanctions than would be imposed by the criminal justice system, in reality, the organizational sanctions may have greater impact...  In addition, the private systems of criminal justice are not always subject to principles of exclusionary evidence, fairness, and defendant rights which characterize the public criminal justice systems. The level of position, the amount of power, and socio-economic standing of the employee in the company may greatly influence the formality and type of company sanctions.  In general, private justice systems are characterized by informal negotiations and outcomes, and nonuniform standards and procedures among organizations and crime types."
(Hallcrest Report cited in Introduction to Private Security, Hess and Wrobleski, West Publishing, St.Paul, 1982, 1988.)
In other words, criminals are punished, but not by the courts. 

Imprisonment is a failure mode.  While better than drawing and quartering, severing of limbs, branding, flogging, etc., etc., prisons are still a consequence of collectivist philosophy.  The root of the problem is metaphysical, so arguing "ethics" gets nowhere.

Moreover, I have another university class in community corrections. I also serve on the citizens advisory board for community corrections as an appointee of the county board of commissioners, a post I accepted about two years ago.  The theme of the community corrections class is, "they all come back."  Unless you intend to kill all perpetrators -- or at least imprison them for life, permanently, and without other recourse -- every convicted criminal returns to the community, in almost every case, within a few hundred meters of where they last left it.  So, now what are you going to do?

Rational justice demands more than better laws, better enforced.


Post 28

Saturday, February 3, 2007 - 2:28pmSanction this postReply
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Michael:

What's a "red check?"

I submitted a couple of posts on Thursday, I believe, that disappeared, BTW.  Anybody know anything about this?

Trying to reconstruct what I said in some degree...

The issue of rich people breaking fingers - or raping, pillaging, murdering, etc. - is still potentially within the framework of what Common Law can handle.  How much is a broken finger worth?  I.e., if someone offered you a million bucks to break your finger, how many would turn it down?  How many would offer a 10%discount for breaking the other 9?

As I discuss at length on my blog, the issue is the same for crimes such as rape.  There is an objective cost.  Unless, of course, someone wants to argue that values are subjective... ??? ;)

I.e., assuming that you didn't get AIDS, etc., or otherwise suffer terminal damage, which would you rather?  Be simply raped or have your house burn to the ground without insurance?  If the former, then we know that you put a price tag on it of less than whatever your house and contents are worth.  So, raped or lose your car without insurance coverage?  Rape vs. being in an auto accident that cost you a leg?

It is not that difficult to place a subjective valuation on things like assaults or other losses, and if the subjective valuation is outrageously high, based on any objective criteria, then that's why we have courts with judges, arbitrars, and/or juries.

However, we haven't gotten to the hard issues yet.  What about murder?  Or, do you have the right to kill someone in self-defense who simply intends to punch you out over a perceived insult at a party?  Or who intends to simply rape you?  If you can justifiably use deadly force to stop a simple physical assault from which you will almost certainly survive without major damage, then how about if they're stealing your car?  Or your garden hose? Or a flower from your front yard?


Post 29

Saturday, February 3, 2007 - 3:00pmSanction this postReply
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Hey Phil,

Yes, injuries can be valuated. I'm not contesting that. What I'm contesting is the view that it's okay to violate people's rights so long as we can sufficiently compensate them. There're plenty of Law & Economics texts that explain why mere compensation is a bad idea. I think you'd like those texts. Your blog is somewhat similar to them in its approach.

Jordan


Post 30

Saturday, February 3, 2007 - 3:02pmSanction this postReply
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So, and this is getting somewhat far afield from my initial post about corporate statism, I realize - so let's summarize the flow so far:

My argument is that the corporation is inherently evil, a bastard child of the state designed specifically to give certain privileged people immunity from the consequences of their actions, while foisting the excessive risks that result off onto the rest of us without our permission.  That led to the question of WHY the corporation became so popular, which I contend is because of the corruption of the already bastardized courts, from being courts of equity, solely concered with restoring justice, to being agents of social policy, thus imposing excessive risks upon business people, thus forcing them into the corporate fold.

That led to a major discussion of the role of the courts, and what limits there are to their rational judgments, which is where we are now.

So, to pick up on Michael's last post concerning recidivism and the criminal mind...

Part of the problem  is perception.  Similar to Bastiat's "The Seen and the Unseen," if we assume that on average a caught criminal has committed say 50 other crimes, besides the one for which he was caught, then it should be no surprise that most such criminals go right back to the life of crime.  I discuss how to deal with this extensively on my JoeUser.com blog, BTW.

So, what keeps people honest?  Obviously a separate thread is indicated, but I'll summarize my thinking on this.

First there are the practical, down-to-earth costs of being a criminal.  As David Freidman pointed out many years back in "Liberty" magazine, there are additional transaction costs involved in living a life of duplicity.  Freidman, however, repeated an error that crops up elsewhere in his work in failing to consider individual variations.  Some people are VERY good liers.  The stupid, irrational, inept criminals get caught much more often than the smart, capable ones who do a lot more damage.

Then there was the famous piece in the libertarian magazine, "Invictus," by a couple - Xerene and Strackon - which argued in the late '60's that there was no overarching moral reason - from a purely rational selfish standpoint - in NOT committing crimes when one was reasonably certain of not getting caught.  One of the costs which I believe they took into account was the mental overhead transaction costs that Friedman focussed on.

Nobody has answered them so far except me.  I sent my answer to "Liberty" in response to Friedman's flawed argument, and, because I came from an objectivist perspective, they refused to even consider it, being avid Rand haters.

The bottom line is that one of the most crucially important of human values is the perceptual reaffirmation of one's consciousness through interaction with other human beings.  People will risk their lives for a loved one because this is SO important to them.  That visibility is all too rare and hard won at best, and it requires a very high degree of commitment to NOT censoring ones feelings.  Yet, a professional criminal MUST conceal his nature or be ostracized, imprisoned or otherwise penalized, not to mention unable to continue his career.

So, crime and love don't mix.  The criminal gives up one of the most important and enjoyable parts of human existence. 

Of course, people are always trying to have their cake, etc., but it doesn't work out.   The street gangs, for instance, provide a psuedo-family for the kids they take in.  They give them a role that seems - to an ignorant kid who's never had anything - romantic, exciting, purposeful, and likely much more emotionally satisfying and engaging than his prior life.

At the expense of addicting them to the gang, shutting them off from ever being able to have that or better intimacy with non-gang members.

The sad cases are like the Jews in NAZI Germany, those who passed unrecognized, always having to live a lie in order to simply survive.  There are plenty of parallels in present culture.

Anyway, that's the real reason for not being a criminal - not jails, hangings, whatever. 


Post 31

Saturday, February 3, 2007 - 4:55pmSanction this postReply
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Phil, there is a red check on the upper right hand border of every post. If you like a post, click that check to sanction it. That is how you get Atlas Points.

Post 32

Sunday, February 4, 2007 - 9:41amSanction this postReply
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Hi Phil,

Good summary of the flow. Let me just reiterate that you'd like the School of Law and Economics (L&E). David Friedman appeals to it frequently, even teaches a course on it. The notion of "rational crime" was well developed by Gary Becker. And the economics of rape (and other crimes) was developed by Richard Posner. Your thinking in L&E terms but drawing your knowledge from non-L&E sources. So I think you'd find L&E quite refreshing. That said, I'm bowing out of the thread. Thanks for the exchange,

Jordan

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Post 33

Wednesday, February 7, 2007 - 2:09pmSanction this postReply
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From the Acton Institute
http://www.acton.org/blog/index.html?/plugin/tag/subsidies

Money for Nothing, or So it Seems

Tuesday, July 18, 2006
These kinds of stories make me sick, and they are all too common. In today’s Washington Post, a lengthy article examines the Livestock Compensation Program, which ran from 2002-2003, and cost over $1.2 billion.

In “No Drought Required For Federal Drought Aid,” Gilbert M. Gaul, Dan Morgan and Sarah Cohen report that over half of that money, “$635 million went to ranchers and dairy farmers in areas where there was moderate drought or none at all, according to an analysis of government records by The Washington Post. None of the ranchers were required to prove they suffered an actual loss. The government simply sent each of them a check based on the number of cattle they owned.”

Texas rancher Nico de Boer says, “The livestock program was a joke. We had no losses,” de Boer said. “I don’t know what Congress is thinking sometimes.” On the $40,000 he received, de Boer continues, “If there is money available, you might as well take it. You would be a fool not to.”


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Post 34

Wednesday, February 7, 2007 - 8:19pmSanction this postReply
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And then, the cattle, corn, wheat, you-name-it that are over-produced, due to the effective subsidies,  are sold for triple the natural market price here in the U.S., while simultaneously being dumped into 3rd world markets at a huge discount, just to get rid of it, thereby destroying the livlihoods of millions of small farmers. 

And to add insult to injury, corporations like Monsanto go into these 3rd world farming communities, find interesting genetic variants of the corn, etc., that have resulted from generations of careful culling and breeding for local conditions, patent the gene and then sue the original farmers who created the variant for patent violation.  And woe betide the farmer - here, in Canada, or anywhere on the globe - who wants to simply grow his cherished and nurtured breed, because invariably, cross pollination occurs with strains such as Monsanto's "RoundUp Ready" carried by the winds or bees, etc., and then Monsanto comes in and sues the farmer, once again, for using their patented gene, even though they would much rather have not had it at all.

Allegedly, BTW, virtually every significant personage in the Bush White House at one time worked for Monsanto.  Just a coincidence, of course...


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Post 35

Thursday, February 8, 2007 - 7:18amSanction this postReply
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Our agricultural subsidies would make a Soviet 5 year plan blush - and they also hurt poor countries by destroying their ability to make any income on one of the few areas they have the capability to compete in.  This helps a very, very few at the expense of everyone else - consumers, producers of consumer goods who buy the ingredients, and international relations as well.  Just bad, bad, bad.

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