Bastiat’s Bastions

One of my students commented on my prior post “In for a penny, in for a pound.” My reply was getting too long for the blog editor, so I am taking this route, a post to comment on a comment.

Rape and murder are a bit independent of one another but there are undoubtedly benefits to the sickos of killing their victims, as I mentioned, dead victims neither identify nor testify. But, these benefits, whether independent between crimes or not, need to be though as separate from the costs, and need to be analyzed as separate or independent.

While I would generally argue that rape is less of a crime than murder, I don’t need to make that case here to argue that the death penalty is dangerously too harsh of a penalty for rape alone. I will concede that these two crimes may be equally serious. All I really need to argue here is that the combination of rape and murder should receive a harsher penalty than either alone.

Here is the point. If we give someone a death sentence, we can do little more to them than that. What more could be done? The only penalty worse than the death penalty would be to torture the criminal before they die, as happened in the closing scenes of Brave Heart. That would only serve to make us sickos, too. When the MARGINAL PENALTY drops to zero, as it does for murdering the child rape victim, we will see more murders of child rape victims, independent of the marginal benefits, or as economists say, Ceteris Paribus.

I would argue that neither single murders alone, nor child rapes alone should be punished by the death penalty (see the Tollison article cited in my original post on Jessica’s law and the perverted effects of stiff penalties, or at least read the abstract to that article). Rather, I would argue that only when a single muder is combined with other murder, or with rape, should the death penalty be imposed. Otherwise the marginal penalty for additional crimes falls to zero if we rush to impose the death penalty.

There is an additional problem that I have not mentioned previously. Sometimes, when sentences are seen as too harsh for a crime, especially when judges or juries see them as overly harsh, instead of imposing the sentence, juries often prefer to let criminals go free and find them “not guilty,” and we should understand that as not guilty enough for the punishment that might be given.

-MC

As we have seen recently, high energy prices along with rent-seeking from Midwestern farmers have prompted politicians in the U.S. to subsidize ethanol production.  This has, raised the price of corn, other crops that grow on land that could grow corn, and other crops that could serve as substitutes for consumers for corn.  With crop prices going up, farmers are encouraged to grow more and to grow more on the same amount of land, so with a high output price, the derived demand for inputs has gone up as well.  In class, we concentrated on the derived demand for labor.  Take a look at this story from the New York Times on the demand for fertilizer in Vietnam. 

Higher output prices for corn, rice, wheat, barley, soybeans and other crops has driven up the price for an important input in agriculture–fertilizer.  We begin with a surplus of fertilizer in Washington, D.C. and end up with a shortage of fertilizer in Vietnam, but we cannot seem to get rid of that fertilizer surplus in D.C. Talk about a misallocation of resources!

-MC

In this recent front page headline story in the Thibodaux Daily Comet, Landrieu calls for imported-shrimp ban, Sen. Mary Landrieu follows the lead of the AFL-CIO in calling for a ban on shrimp from Thailand and Bangladesh. The reason, the AFL-CIO and Sen. Landrieu cite for requesting a ban on importing shrimp from these countries is the condition of labor in these countries. The real reason, of course, that Sen. Landrieu wants to ban any foreign shrimp is to curry favor with Louisiana shrimp fishermen. Of course, as we know from basic consumer and producer surplus analysis, the gains of Louisiana fishermen are more than offset by losses to U.S. consumers who are being asked to pay more for shrimp while they are already paying subsidies for ethanol, higher prices for corn and other grains, and so, for meat, as well.

Of course, a U.S. ban on shrimp from Thailand and Bangladesh will only slightly depress the prices and production of shrimp from those Asian countries. But, for the life of me, I have a difficult time grasping how putting Asian shrimp fishermen out of business or reducing the prices of shrimp in those countries could ever hope to do anything but worsen the working conditions in those countries. If the AFL-CIO or Sen. Landrieu cared anything about foreign workers, they would work to increase their sales of shrimp in the U.S. Surely she would not advocate that other countries ban our shrimp, or any other product from Louisiana as a way of helping Louisianans.

What she and the AFL-CIO are protesting are the low prices that these countries are able to sell shrimp at–prices that worry Louisiana producers.

Here is a short essay written by this blog’s namesake, Bastiat, about a similar request for a ban of an inexpensive foreign import. So cheap, in fact, that the foreign supplier was giving away this cheap subsidy for domestic production of energy.

Consumers, of course, don’t speak up for their own interests because most do no realize that they are in line to be fleeced. Even if they knew, few, except for a handful of seafood restaurants are in a position to realize what is going on or to have an incentive to fight these attempts to take more money out of consumers’ pockets to buy votes for politicians, like Sen. Landrieu, who owe their offices to special interest groups such as Louisiana shrimpers and the AFL-CIO.

-MC

If you haven’t heard, the U.S. Supreme Court has taken up the Louisiana case of Patrick Kennedy, who raped his 8 year old stepdaughter. Under Louisiana law, the death penalty can be applied to someone found guilty of rape of a young child. Kennedy’s attorney claims that for rape, the death penalty amounts to cruel and unusual penalty. Several states are following Louisiana’s lead with allowing the death penalty for the rape of a child. Missouri seems to be considering the death penalty for child rape, and here are some articles from Missouri on the issue: Blunt seeks law, Nixon, too, seeks death penalty and Death penalty for child rape.Personally, like most people, I find the rape of a child sick beyond comprehension, and I am not that opposed to the death penalty, per se. However, I think we should first examine the incentives that would then be in place when we adopt the ultimate punishment for a less than ultimate crime. As reprehensible as the rape of a child may be, it is not as final as the death of that child. Here is the problem I see with this punishment. Once someone has raped a child, he can then let the child go free. If he gets caught and convicted, he is likely to go to jail for a long time. If instead, he murders the child, he is likely to face a death sentence if caught. The extra penalty for the extra crime, the death sentence instead of the lesser punishment, what an economist would call the marginal penalty, is still rather high and may act as a deterrent against the further crime of murder.

At the College of Business Honors Banquet this past Sunday, Associate Justice of the Louisiana Supreme Court, Hon. John Weimer, mentioned a case where a defendant, after being sentenced for life, became violent in his courtroom, and Weimer sentenced him to a short extra term for Contempt of Court. The defendant made the point that he could not serve any more time than his current life sentence. You can be sure that the violent outlash was because the fellow knew there was no further penalty he could face, the marginal penalty was zero.

With the death penalty for child rape, there is nothing else that can be done to the sicko that would be more severe than the death penalty. In addition, the sicko has a reason to go ahead and kill his victim: Dead victims don’t identify, and they don’t testify. By imposing the ultimate penalty for child rape, the marginal penalty for murder is considerably reduced to zero. Economists would expect that the higher penalty will reduce the incidence of child rapists, but increase the incidence of child murders, especially ones who have been sexually assaulted.

The British have a saying, “In for a penny, in for a pound.” The saying actually has a few meanings, but one of them is this: If someone is going to get the same punishment for stealing a penny as stealing a pound, he may as well steal the pound. After all, you will get the same punishment in either case. Same punishment but bigger reward! Or in the present case, same punishment but lower chance of being caught and found guilty.

I should mention that I wrote a blog post in February of 2006 along similar lines. In that post, you will notice that I cite an article by your Econ 211 textbook authors, Ekelund, Ressler and Tollison, who make a similar point about mass versus single murders.

-MC

In this article from the New York Sun on the current demand and supply of food in the U.S., the author, Josh Gerstein, seems to miss the “whys” and the “hows” that supply and demand ever come into balance in the first place. As every college student who has taken an introductory economics course should know, shortages are short lived and self correcting when prices are allowed to adjust. The prices of commodities increase in response to increases in demand and decrease in response to increases in supply. The price of the commodity, when it is allowed flexibility, performs the function of rationing the good according to its scarcity.

The price of rice, wheat, corn, and any other agricultural commodity, and anything else, for that matter, reflects the scarcity of the good, and will increase in the face of shortages, both by choking off the amount buyers seek to buy and by providing an incentive to sellers to increase production at the same time. This makes shortages short lived or self correcting. Rationing by price is already ongoing and is nothing new, not as Gerstein puts it: ”Many parts of America, long considered the breadbasket of the world, are now confronting a once unthinkable phenomenon: food rationing.” In other words, if he were speaking of price rationing, he would not have suggested that rationing has never happened.

By food rationing, Gerstein could have only meant the sort of rationing we saw with gasoline or food and almost everything else was in WWII. What he fails to see is that any of these measures beyond price rationing, such as requiring coupons or limiting the amount that people can purchase, are both unnecessary and counterproductive. If the price is allowed to perform its natural function in a society, sellers, when they see that re-marking their prices is cost effective, raise their prices in the face of shortages and lines of buyers who can’t seem to get enough at the current price. Not only do these higher prices work to subdue consumers’ requests for “more, please,” but also brings to market any segment of previous harvests that speculators saw fit to hold back from the market. In addition, when farmers see these higher prices for their crops, they increase their efforts both by attempting to grow more per acre and by planting more acres. They become less willing to take home builders’ and mall developers’ offers for their land.

Prices are incentives to both the buyers and the sellers. When buyers and sellers are out of sync with one another, the prices they face bring them back into harmony. If prices are kept artificially low by some legal limit on prices, buyers will no longer conserve nor will producers to seek to be increase production. Rationing of the WWII variety or the odd-even days of gasoline rationing in the 70s will only come about if there is a persistent shortage.

Shortages persist under three basic conditions: first, when there is some sort of price cap is placed on the commodity, second, when those who decide the price do not profit from the sale of the commodity, and finally, when there is only a single buyer of the good or service, as there is with nurses. None of these is the case with food. Shortages will, however, occur in certain countries where prices of food are capped and in socialist countries where sellers of food do not profit from good business decisions. Rationing of food by anything but price in the U.S. is both unlikely and unnecessary.

Here is an article from the London Times-online, that gets it right.Some past blog posts on shortages here on Bastiat’s Bastions:

John Barleycorn DownUnder

Revenge of John Barleycorn

Bread and Circuses in Egypt

Water Shortages in Atlanta

Gasoline Rationing in Iran

Rationing in Zimbabwe

Chavez and Rationing

Chavez

–MC

Folks, I have been busy. I haven’t been posting to the old blog, but should pick up the pace down the home stretch of the semester.

If you’ve missed it, baseball season has begun. My beloved Cubbies haven’t won a world series in 100 years, so they are due.

And then I came across a story about Wrigley today.

For those of you who don’t know, Wrigley Field, home of the Chicago Cubs, is in the middle of a fairly residential neighborhood in Chicago. (To be sure, there are few bars in the neighborhood.)

There are several buildings that are just across the street from the outfield bleachers, and these buildings have excellent views of the ball parks. The owners of the buildings rent out the “roof tops” to groups, generating revenue in the process.

A while back, the Cubs and the building owners had a dispute. The Cubs claimed the owners should give them a portion of the revenue these owners generated. Naturally, the building owners would have preferred not to.

Surely this makes sense from the Cubs perspective. It is quite likely that watching from the stadium and watching from the stands are substitutes. The Cubs were not generating any revenue from the rooftop rentals, even though without the Cubs game, there would be no rental of the rooftops. In fact, the building owners and the Cubs got together and made an agreement – the Cubs would get a fraction of the revenue generated.

This discussion should ring a bell with our discussion of public goods, or more pointedly, of free-riders. The question is – are the views of the Cubs games from the rooftops non-excludable? Is it prohibitively costly for the Cubs to keep people who haven’t “paid” for the right from enjoying the view?

If so, the Cubs will have a hard time getting the building owners to “reveal their willingess to pay” for the right to watch cubs games (and charge people to rent their rooftops).

How might the cubs exclude non-payers from enjoying the game? Read this mini-article here. Do you think it will work?

Extra credit for the answer, but only for the first answer (not for the “I agree” posts).

–CT