“The Schumpeterian corporation was about colonizing individual minds. Ideas powered by essentially limitless fossil-fuel energy allowed it to actually pull it off.”
That’s from this essay by the utterly fascinating Venkatesh Rao. HT Tyler Cowen.
I excerpt the section titled “Costs” of Eric Sterling’s June 2nd memorandum on the War on Drugs, but you should read the whole thing:
Nixon asked for an additional $159 million dollars for his initiatives, plus an unspecified amount to pay 325 additional positions in the Bureau of Narcotics and Dangerous Drugs (forerunner to the DEA).
Over the past 40 years, with leadership from successive presidents and “drug czars,” and enthusiastic support from Congress, the Federal government has spent, cumulatively, about a half trillion dollars on the “war on drugs.” By FY 1975, federal anti-drug spending had climbed to $680 million. For the past 20 years, Federal spending on drugs has exceeded $15 billion per year including the costs of imprisonment.
The costs are now so high, the “drug czar” seems to conceal almost one-third of the anti-drug spending by excluding it from the formal anti-drug budget. ONDCP says that $14.8 billion was spent in FY 2009 to fight drugs. But another $6.9 billion was actually spent in FY 2009 on fundamental anti-drug activity such as the incarceration of federal drug prisoners.
My name is Eapen Thampy. I am the executive director of Americans for Forfeiture Reform, a nonprofit that works on issues of asset forfeiture, an issue implicated deeply with the emergence of paramilitary policing in America. We have been endorsed by groups on every part of the political spectrum. Some of these groups include the Missouri Libertarian party, Ed Rosenthal’s Green Aid Marijuana Legal Defense Fund, and the conservative Right on Crime initiative, a project of Newt Gingrich, Grover Norquist, Ed Meese, and Pat Nolan.
Last May I was one of the many people at city council speaking in protest of the Kinloch raid; today I return to this chamber to ask again that we pursue a more sensible approach to policing in Columbia. Over the last year, as light has been shone on paramilitary policing practices in Columbia and around the nation, many thousands of people have contacted us, asking us to speak on their behalf, and bear witness to the harms that uncontrollable police agencies can do to their communities.
At the outset, it is important to note what we want. We want a strong and effective police presence, we want a fair and impartial justice system, and we want every man, woman, and child in America to be able to enjoy their freedoms in this brave land. We do not oppose the rule of law; rather, we wish to see it flourish. We honor and respect the sacrifices of all who serve to protect us, but we will not compromise on the high ideal we must hold our public servants to.
Nor do we intrinsically oppose the existence of SWAT teams. They exist for specific reasons: hostage crises, gun rampages in schools and public areas, to combat the threat of organized violent crime. Situations where a SWAT team might be required are by definition extraordinary.
But the emergence of SWAT policing in America and in Columbia indicate that these real needs have been corrupted by the perverse incentives provided by the War on Drugs and Columbia’s own dysfunctional police force.
SWAT policing, as I noted, is a far cry from routine policework. Most small jurisdictions do not need their own SWAT team. However, over the last twenty years, almost every medium to small police department or sheriff has managed to obtain their own SWAT teams, often without citizen approval or request. Moreover, the weapons and armor available to a SWAT team are fairly heavy duty and very expensive to operate and maintain.
A SWAT team is an expensive proposition. To simply get the APV out of the garage and back is a minimum of $2,000. Some of the raids Columbia SWAT have been involved in were on holidays; that means triple hazard, overtime, and holiday pay.
The most perverse part of SWAT policing may be the funding mechanisms that allow it to happen. Federal law allows Columbia police to seize property without proving a crime or obtaining a conviction; moreover, federal law allows Columbia police to keep this money directly, in violation of Missouri constitutional law and Missouri Supreme Court precedents that delegate seizure money to Missouri’s schools. The name of the program is Equitable Sharing, and over the last several years Columbia Police have received hundreds of thousands of dollars with essentially no oversight.
During the last year I have investigated the 106 SWAT warrants Columbia narcotics police served between January 2007-May 2011. You may view the map of these raids at
Here is Brennan David from the Columbia Tribune (http://www.columbiatribune.com/news/2010/jun/27/swat/):
Columbia’s SWAT team served 106 narcotics search warrants between Jan. 1, 2007, and May 11, 2010. The Tribune, through an open records request, received 99 of those search warrants; the others were considered closed records for various reasons.
Of the 99 SWAT narcotics search warrants granted by the Boone County Circuit Court to Columbia police, officers executed 43 percent of them within hours of being issued. Of those, 65 percent resulted in one felony arrest, and 18 percent resulted in misdemeanor arrests.
But the percentage of warrants producing a felony arrest dropped drastically to 37.5 percent when investigators waited one day before serving the search warrant. In those cases, 50 percent produced misdemeanor arrests.
I would also direct the CPRB to the video of another Columbia SWAT raid in 2008 (http://www.youtube.com/watch?v=05gLm6mSZ5M). In this raid, a family is at home when the SWAT team visits; you can see Columbia’s finest holding women and children at gunpoint. There is even a moment of pure incredulity at 7:30, where an officer handcuffs the elderly woman sitting in the bathroom, telling her that she is not under arrest and not in any trouble.
In this raid, 3-4 crack rocks were found, along with some minor paraphernalia. No weapons or evidence of trafficking were found, and despite the prior record of the men who were the target of the warrant, no indications of violence are provided that might justify a SWAT raid on this house in this manner. The woman who was not “arrested” ended up being charged with a paraphernalia possession charge; initially, she pleads not guilty until the court appoints a public defender for her, who negotiates a plea deal with the prosecutor instead of defending her in a court of law. Justice is no longer weighed by a judge in a court of law; it is held at gunpoint before being negotiated in the prosecutor’s office.
No government official here had any incentive to check the wrongdoing, misconduct, or negligence of other government officials.
Other Columbia SWAT raids bear similarly striking details. I have interviewed victims of at least 10 of these raids, who have asked me to bring you parts of their stories. Many of them are fearful that they will find themselves being retaliated against, and none are willing to give me permission to use their names. I have heard and verified tales of SWAT raids being used as retaliation for petty offenses or to put competitors out of business both legal and illegal.
This kind of enforcement is incompatible with the principles of Justice, or of her sister, Mercy.
It is important to note a contrast that I hope illustrates more clearly the problem we face. Boone County Sheriff’s Department does not generate the kind of lawsuits and publicity that Columbia Police Department does. There are a couple structural factors at work here: Columbia Police Department has had an incoherent series of transitions from one police chief to another over the past decade, leaving CPD with dysfunctional leadership and command structures that never had time to build or find the values that law enforcement must have to perform effectively. BSCD, by contrast, has a smaller, more stable force, with much more organizational integrity and continuity of leadership.
We have a few recommendations for the CPRB:
Finally, please consider the words of Missouri Supreme Court Justice William Ray Price in his address to the Missouri Legislature today (emphasis mine, available here: http://forfeiturereform.com/2011%20state%20of%20the%20judiciary%20-%2002-09-11%20-%20FINAL.pdf):
From the 1980s, in Missouri and across the nation, we attempted to incarcerate our way out of crime and illegal drug use. We thought just putting people in prison would make them better or scare them straight. We spent billions of dollars and it did not work. We were tough on crime, but we were not smart on crime. Consider these numbers.
In 1982, 612,000 people were behind bars in state prisons across the country. By 2008, that number had risen almost fourfold to 2.3 million people. In 2010, the United States incarcerated a higher share of its population than any other country in the world. The cost has been staggering. State correctional spending across our country increased from $11.7 billion, in 1988, to $47.3 billion in 2008. (One in 31 The Long Reach of American Corrections, The Pew Center on the States, http://www.pewcenteronthestates.org; The High Budgetary Cost of Incarceration, Center for Economic and Policy Research, June 2010, http://www.cepr.net)
There is a broader debate here over how we approach crime of any nature. I ask you to dare to be smart on crime and engage the broader issues of Drug War reform and incentive-compatible policing in your evaluation of these issues of police conduct and misconduct.
I furthermore recommend the following experts on 4th Amendment law and paramilitary policing:
Radley Balko, former Cato Institute scholar and senior editor of Reason Magazine; expert on SWAT raids and paramilitary policing (radley.responses@gmail.com)
Orin Kerr, Professor of Law at George Washington University; expert on criminal law, asset forfeiture, and Fourth Amendment law (okerr@law.gwu.edu)
John Payne and Audrey Spalding, policy analysts at the Show-Me Institute; asset forfeiture and SWAT raids (john.payne@showmeinstitute.org, audrey.spalding@showmeinstitute.org)
David Roland, lead litigator at the Freedom Center of Missouri; expert on Missouri and US constitutional law (dave@mofreedom.org)
John Chasnoff, Eastern Missouri ACLU; expert on SWAT policing and Fourth Amendment law (john@aclu-em.org)
Peter Kraska, Eastern Kentucky University, expert on SWAT policing (peter.kraska@eku.edu)
Please contact me for any clarification or if you have questions.
I am respectfully yours,
Eapen Thampy
Executive Director, Americans for Forfeiture Reform
3630 Holmes St., Kansas City, MO, 64109
Phone: 573-673-5351
Email: Eapen@ForfeitureReform.com or Eapen.Thampy@gmail.com
Web: http://www.forfeiturereform.com and http://www.facebook.com/ForfeitureReform
Carl Bearden has an interesting discussion about Missouri’s Fair Tax proposal today that I thought was worth commenting on.
Income taxation means that each eligible individual has to figure out that they are eligible to pay tax, what that tax is, and finally, how and when to pay it. Not all individuals, depending on income status and other variables, have to pay income tax, but at a bare minimum, there is a cost to figuring out that I need to pay taxes on my income. I identify this as inefficient; simply because of the existence of transaction costs, some people simply don’t file tax returns. Worse, some people deliberately don’t file, and a lot of people cheat. Some people simply make mistakes.
The system, however, cannot easily correct for free-riders and enforcement costs. You have limited resources to go after tax cheats and people who made mistakes filing, and at the end of the day, most people who keep money from Caesar never face any real penalty.
The sales tax is far more efficient. Instead of collecting from individuals, the tax is collected at the point of sale by businesses, a finite number of entities that are registered and (pervasively) regulated anyway. It is a far simpler thing to collect sales tax from the smaller number of businesses and firms than it is to collect income tax from millions of individuals. Moreover, the costs of enforcing compliance are minimized; you already have the regulatory apparatus in place, pretty much, and the tax is simple to calculate (you don’t need H&R Block to fill out a 50 page form for you).
From an efficiency criterion, this is a much superior setup. Free-riders find it much harder to escape taxation, and society does not have to be overly intrusive to ensure compliance.
Quick thought: A culture’s origin mythology is usually the basis for much of its legal architecture. As LLSV (1997) note, there are some legal architectures that are vastly superior to others (and they discuss a lot of comparative data on civil vs. common law regimes). Common law regimes are generally superior to civil law regimes in terms of economic and human welfare outcomes. Part of the argument is that common law regimes tend to be principle-based, with legislatures making laws and courts deciding dynamically how the legal principles, the law, and the specific case interact; this allows common law regimes to efficiently catalyze economic development through the efficient evolution of things like tort law. Common law regimes also tend to conceptualize property rights in far more generous terms than civil law regimes. Civil law regimes delegate a lot more importance and foundation to legislative law; you can think of the legislative law as creating lines on a court and judges as referees who are limited to far more technical calls. Civil law regimes tend to be inflexible and less efficient, though there are many unanswered questions. You can think of America or Britain as modern bastions of common law, and French law as a good example of a regime based on civil laws.
So here’s the challenge. Origin myths are foundational “oral constitutions” that provide direction for the legal architecture of a culture. We can analyze some basic ways in which they differ through their conceptualization of property rights, and then look at outcomes. There should be some very interesting comparative work to be done in all directions there, I’m sure, and there is a lot of data in human history, so there should be a lot of interesting natural experiments that can be surveyed.
So here is an interesting post by Patrick Tuohey, editor of the Missouri Record (a publication that has previously featured at least one essay by yours truly). In this post, Tuohey very uncharitably slams Show-Me Institute economist Joe Haslag’s latest paper on taxation (disclosure: Haslag taught my Introduction to Macroeconomics class circa 2005). Here is an excerpt from Tuohey’s post:
I’ll take the authors’ word for it because I cannot make heads of tails of the essay itself. It begins with,
Which tax structure — sales or income — is most preferred by the typical Missourian? For the purposes of this essay, the notion of “most preferred” is formalized as lifetime welfare. Both sales and income taxes are distortionary.
That is when I skipped the following twelve pages to get to that summary. The writing is so opaque that I defy anyone without an advanced degree in economics to read and understand the whole essay. This is a shame, because Show-Me has such lofty goals. Their website states that they,
…study public policy problems and develop proposals to increase economic opportunity for ordinary Missourians. It then promotes those solutions by publishing studies, briefing papers, and other educational materials, which help policymakers, the media, and the general public gain a better understanding of the issues.
But this essay helps exactly no one. In fact, I’d argue that such argot-laden documents actually hurts the Institute’s mission because well-meaning journalists and policy-makers are less likely to seek their input if they fear they are going to be hit with such… garbage.
At the top, let me say I meet Tuohey’s sole challenge: I have read (and purport to understand) the entire essay, although I do not have an advanced degree in economics. I will say that the essay itself has a clear and understandable summary, and you do need to understand some mathematics to grasp the more technical sections. A lay reader might be comfortable reading the less technical sections, though there might be a couple definitions to look up (but that’s why Al Gore invented Wikipedia, right?). We might also have a discussion about how well I understand the essay, but that that is a separate issue.
Now, I feel bad that Patrick “cannot make head or tails of the essay itself”. But I do not think that Patrick’s observation of his inability to read or comprehend the essay is sufficient evidence for the claim that Haslag’s writing is universally “opaque”. For one, I think that the sole part of the essay that Tuohey excerpts is crystal clear; there is a question asked (What kind of tax do Missourians prefer?), a clarifying statement (we are measuring what Missourians prefer using this notion of total lifetime “benefit”), and a statement that both income and sales taxes are distortionary (which is simply the observation that taxing products distorts the market price for the good or service taxed).
Here’s the thing. If Tuohey can’t understand this essay, that’s fine. It’s one thing to post asking for clarification. It’s entirely another to slam someone else’s work as “garbage” and to say that this “essay helps no one” without a coherent argument for your claim. Certainly reading the essay helped me; I now know and understand more about Ribelo’s AK model (1991) and the dynamics of income taxation, though emulating Haslag’s work remains far beyond my poor capabilities.
Far from being “well-meaning”, I have another word for Tuohey and journalists like him: lazy. Or perhaps: arrogant, rude, or crass. It would behoove Tuohey to post an apology and to (humbly) ask for clarification. If Tuohey does not, then we know he is not intellectually honest.
I was thinking about the notion of Prohibition lately, and realized there was a valuable insight to be garnered from the telling of the Original Prohibition story, or at least the way I see it.
What I refer to as the Original Prohibition, of course, was Adam & Eve’s experiment* with the mind-altering “fruit of the tree of the knowledge of good & evil”. And here is the crux of the story. It is a story about free will, and about how divine and human will interact, and the consequences of your choices.
I have the suspicion that many people (on both the right and the left) receive this narrative and think that the lesson from the story was that God’s Prohibition was not strong enough. It was not strong enough because it did not work to prevent our prototypical human ancestors from making a choice that brought misery and the profane to human existence. If Adam & Eve could have been prevented from eating that fruit, perhaps, the human race would not be in this ambiguous, pitiable state of earthly existence. The divine would be the sole content of human experience, and who wouldn’t want that?
But having the freedom to choose involves the awkward notion of living with the consequences of your actions. Not the false, legal, human-created consequences (at least in consensual actions where there is no victim), but the consequences of living with the knowledge, and the impact of your free will.
I have the sense that people who support prohibitions on consensual, non-tortuous activity really have the mindset that if we can just engineer society to this end or that end that we can prevent all bad outcomes, all miserable outcomes. But this is the worst kind of foolishness. Society is best served by criminalizing tortuous behavior, not non-tortuous behavior. To criminalize non-tortuous behavior is to subsume the notion of free will and human choice beneath the spectre of a glorious and impossible future.
The end result of criminalizing consensual, non-tortuous behavior, is that you create markets and industries that are dependent on the existence of the law and the need for its enforcement and not the real demand for goods and services by individuals. Ultimately, you can criminalize the entire canon of human activity through some extension of the law. The phrase “slippery slope” is appropriate here.
This is the ugly machine of fascism. It is the request to abrogate your rights and your choices for the ever-greater pursuit of security. But it is an ontological abyss. From a vantage point above, one can see the Gulag below, the (in)evitable promise of the Soviet Dream.
*One might replace the Judeo-Christian origin story with any of the many other different origin stories of similar structure and plot for the purposes of this argument.
Karl Miller writes in his Missourian editorial that he is “siding with Chief Burton” on the manner in which the Dresner affair was handled. Miller has many things to say, but I wish to focus on the mistake Miller makes in describing this situation is as “a purely personal matter”.
It is clear to me that the only “purely personal” part of the story is the love story between Columbia Deputy police chief Tom Dresner and Columbia Police Public Information Officer Jessie Haden. Karl Miller is right to say that this is a personal matter. But official misconduct is not, and unfortunately Tom Dresner is guilty not only of the offense of conducting a secret affair with a direct surbordinate, he is guilty of compromising his integrity as a public servant, and that is a far more public issue that deserves to be addressed. We might ask the following follow-up questions:
Karl Miller might retort that there is no reason to believe that Tom Dresner and Jessie Haden ever did more than conduct a totally secret affair on their own time and property and that Dresner’s integrity is otherwise intact. Unfortunately, this is not the case either. We have known for years that the police department was structurally dysfunctional; it was only in the last two years that the police had a functional Internal Affairs division, and the only external check on internal misconduct is a toothless and ineffective Citizens’ Police Review Board.
This is the important point. It is the structure of the police department that is our true enemy here, not the individual officers. There are individual officers in Columbia’s police department who deserve prosecution and public shaming, but without reforming the structure of the police department, Columbia will continue to see lawsuits over the conduct of its police officers and the protocols that guide them.
Imagine a 2 period wealth maximization game. In period one, consumers receive unitless endowment N and can choose to use that endowment to consume, invest (at some interest rate i) or do nothing. In period 2, consumers choose to consume or do nothing, payoffs are made, and the game ends. We can introduce an exogenous income tax on investments, and an exogenous sales tax on consumption and utilize Monte Carlo simulations to do comparative analysis on different regime states to analyze the hypothesis that taxation of income retards stimulative investment and that a sales tax mechanism is preferable to maximize economic growth.
The basic design seems sound to me. . But flaws are not always obvious. Thoughts?
So I haven’t been writing much here because I’ve had a lot of other things on my plate, and because I haven’t really felt clever enough to write much. But I thought that I might start posting a series on the economics of South Park, the iconoclastic and terrifically profane cartoon syndicated by Comedy Central. In almost every episode there is some plot wrinkle that references, explains, or satirizes something that can be understood in an economic sense. And of course watching episodes is amusing and a great stress relief. So stay tuned.
Over at the MoneyIllusion:
I had known for quite some time that Wilson’s economic policies were perhaps the worst in American history. He presided over the creation of the Fed and the income tax, which went from 0% to something like 70% while he was president. In the long run the Fed may have been a good thing, but there can be no doubt that 1913 was premature, we didn’t know anywhere near enough about monetary policy to warrant a central bank meddling in the gold standard. He presided over a period of very high inflation after WWI, when we actually needed somewhat lower prices. Then we had a severe depression in his last year of office. Industrial production had fallen by 32.5% by March 1921 when Harding took office (and you think things are bad now!)
I had occasion to reflect on this topic today as I was packing my books in preparation for a move. There are two that come immediately to mind, and I think they are must-reads for not just the specific audience of political science or economics readers, but also to the general public.
The True Believer, by Eric Hoffer. This book taxonomizes and characterizes mass movements brilliantly and with extremely elegant, sophisticated analysis. I think you should read this book with Hayek because Hayek, as smart as he is, has limits, and does not engage much beyond an analysis of why markets are good. Reality of course is more complex than markets, and markets should be understood in context of the cultural, institutional, and historical dynamics it exists in.
The Once and Future King, T.H. White. No, you shouldn’t read the book because it got plugged in X-Men. You should read the book because it really is a brilliant piece of work and there are many individual passages that are superb explications of political and economic systems. As a work of literature it is sublime.
I’ll add to this later when I think of something.
These two pieces are some of the best economic writing I’ve read in the last couple of months, and I thought that they were really important, because they articulate a position that is far more intelligent than the knee-jerk GOP narrative that unfortunately takes up too much space in the public discourse.
In any case, here is Karl Smith on why taxation should focus on consumption, not wealth:
This is why its important that we keep our eye on consumption, not income. There is no inherent social harm in someone amassing a large fortune. Nor, does it necessarily contrast with our Rawlsian sense of justice. It matters crucially what they do with that fortune.
If they spend it all on gold rims and mansions in the Hills, then by all means tax that. However, it they keep putting the profits back into the business to create bigger and better organizations, then we should let that process feed on itself, rather than slowly bleeding it. Nor is there any particular reason why we should want to tax away income that was going to go to charity in the end.
Yes, many of the wealthy spend their money on lives of luxury while poor children attend classes in broken down schools. But, then go after the life of luxury, not the wealth.
And here is Arnold Kling, in an essay called When Labor is Capital:
From our more Austrian perspective, the Keynesian prescription will fail. Government spending tends to create or reinforce unsustainable patterns of production—temporary housing booms, transitory increases in auto sales, and the like. However, there is no reason to expect unsustainable patterns of production to stimulate the creation of sustainable patterns of specialization and trade. If anything, it would seem likely that government support for unsustainable patterns of production could make the market’s recalculation problem more confusing. It will delay long-term recovery, rather than hasten it.
Some Keynesian economists have proposed an even more unlikely solution, which is to revive the New Deal program of government-created jobs, as in the Works Progress Administration. This idea represents a complete denial of the contemporary reality that labor is capital. Real employment in today’s economy represents a long-term investment, not short-term make-work.
What needs to emerge are new, sustainable patterns of specialization and trade. Government does not have much incentive to create sustainable patterns of specialization and trade. In fact, the political system tends to favor subsidies to outmoded and unsustainable businesses.
Government could reduce the cost of investing in labor-capital. If it can be done in a fiscally responsible way, it would help to reduce the marginal tax rates on investment (the corporate profits tax) and employment (the payroll tax). This may require offsetting tax changes, such as eliminating the mortgage interest deduction or the deductibility of employer-provided health insurance.
Deutsche Börse’s electronic trading system Xetra features volatility interruptions as safeguards against potential flash crashes. Volatility interruptions are automatically initiated if the potential execution price of an order lies outside a pre-defined price range around a given reference price. Once a volatility interruption has been initiated, continuous trading is interrupted and a change in trading form to auction is triggered. Market participants are informed of this market situation and may react to it by either adding, modifying or deleting orders and quotes. Continuous trading resumes after a certain minimum duration of the auction. In case of larger price deviations, the auction is extended until the volatility interruption is terminated manually. Given the described circuit breaker mechanism, a scenario similar to May 6 in the US is impossible to happen on Xetra. This is particularly true since the calculation of the DAX is based on Xetra data only, thereby effectively taking into account trading interruptions on Xetra while other platforms may continue to trade.
The Amish population boom. Actually, the analogy isn’t exact, because to my knowledge the Amish don’t actively convert, or if they do, they aren’t that successful. At least not when compared to the Mormons, who convert and retain in-group homogenization of norms very very well. at least over comparative time. Allotropic religious speciation, anyone?
But really, the success of any major religion dwarfs all of the above.
H/T: Tyler Cowen
Ducks and Economics 