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July 14, 2006

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GARY

Who is going to pay for Wal-Mart giving away every item under $25.00? The rest of us who shop there of course.

It is always good to decrease the cost of enforcement. The best way to decrease the cost of enforcement is to decrease the number of crimes committed.

There still is a deterrent effect at work in the criminal justice system – do-gooders to the contrary. If we put every first offense shop-lifter in jail over night, regardless of the amount, there will be a decline in shop-lifting. The towns that have tried it find that it works. The word gets around. The kids and even adults do not want to spend a night in jail. It becomes a risk – benefit analysis at its most fundamental level.

There is a certain hypocrisy involved in picking and choosing which crimes we prosecute. If we do not want actions criminalized, we should change the law that makes it a crime, not pick and chose.

Is there a message for the kids? Sure! Its OK to break the law if it about a small matter. Perhaps this is just another step in the destruction of our moral fabric that some of us ignore and others promote

Gary


YLlama

From an economic standpoint, the question is this: is the added cost of Wal-Mart's products as a result of increased shoplifting of products under $25 ofset by the decreased cost to everyone in taxes to pay for the enforcement and prosecution of all shoplifting of products under $25?

Most crimes have non-economic considerations, to be sure. But is minor shoplifting the sort of crime with substantial enough moral implications that the economic considerations are trumped?

Tim Lee

It seems to me there's a distinction to be drawn between enforcing property rights and enforcing contracts. Lowering the costs of enforcing property rights seems like it's almost always a good thing, because stealing is almost always a bad thing. But contracts are different, because lowering the costs of enforcing contracts may change the types of contracts that get negotiated, and that's not necessarily a good thing.

Case in point: a lot of consumer software contains provisions prohibiting the publication of benchmarks of the software. These are routinely ignored by the computer press, and the companies generally don't sue the journalists because it would lead to bad publicity. If we passed a law making it a felony to publish benchmarks in contravention of a contract, that would probably make it cheaper to enforce such contracts, but it's not clear that would be a good thing.

Another problem is that the terms of a contract won't always perfectly express the policy that the drafter of the contract wants to enforce. For example, I'm pretty sure I'm technically violating my terms of service by having a wireless access point attached to my cable modem (since the contract says only one device may be connected). But I'm also pretty sure Charter doesn't really mind, as long as I'm not sharing the connection with my neighbors. But it's easier to draft the contract broadly prohibiting connecting devices, and then softening it with benign neglect, than to try to specify exactly which types of connections are permitted.

This problem is compounded by the fact that consumers are often extremely ignorant of the details of the contracts they sign. (or click "I agree" to in the case of iTunes) One of the useful functions of requiring parties to a contract to enforce them through the courts is that it can help publicize what the terms are. For example, if Apple started suing consumers who play their iTunes songs on Windows-based MP3 players, that would probably generate a lot of negative publicity for Apple and lose them a lot of customers. But because the DRM "contract" is enforced indirectly, many customers don't even realize the incompatibility is a deliberate choice on Apple's part rather than a technical glitch. The automatic way in which the contract is enforced makes it possible for Apple to set contract terms that consumers might never accept if they fully understood them.

The Law Fairy

I'm slightly confused here: is Wal-Mart's new policy simply not to press charges, or is there an accompanying policy on the part of DAs everywhere not to prosecute? No matter what Wal-Mart says it intends, it can't control what the DA's office decides to do. Maybe they're trying to trick low-level shoplifters into being more careless, thereby lowering the enforcement costs? If it works, it would be a pretty ingenious, albeit temporary, approach to curbing shoplifting.

And if that's not Wal-Mart's intent, why publicize the policy? Seems like if the policy makes economic sense, go ahead and do it: but don't tell people about it! Surely Wal-Mart realizes that to do so gives minor league criminals carte blanche to lift CDs and DVDs. It seems to me we are missing a major piece of the puzzle here.

Kimball Corson

Reading this I was thinking along different lines. A release statement on the doors that as a condition of entering the store, if you are caught shoplifting, you agree to be put in stocks (see http://en.wikipedia.org/wiki/stocks) in the front of the store for three hours per episode might work. Summary justice to be sure, but agreed to in advance, so there can be no complaint. If you don't agree, then you don't shop there. Might be really effective and cheap, freeing up a lot of people working in a system that is not cost effective. This approach probably would be.

Kimball Corson

Whoops. I dropped the capital "S" in "Stocks" and it matters. The address should be http://en.wikipedia.org/wiki/Stocks

Kimball Corson

We could have wrist only stocks with easy chairs for the elderly and infirmed and full stocks with a stool for teenagers. Such adjustments and others would go far to make the use of stocks not cruel and unusual punishment and the release statement on the doors would elicit agreement on that point, as a condition of entry. Water would be available to all and use of restroom facilities before lock up would be required. An attendant to scratch itches would be provided. Times of lock up could be adjusted to meet special needs, but all shoplifters would be locked up in some way for some time. A suit for wrongful stocking would be permitted where, by a shift in the burden of proof, it would have to be proved the individual did engage in the shoplifting alleged, with fees and costs to the prevailing party.

The Law Fairy

And what happens when they leave the stocks and sue Wal-Mart for false imprisonment, invasion of privacy, assault, and battery? They would likely win, since 1) to even have an argument you've consented to something like this you'd need a written, knowing waiver of rights, 2) walking into a store certainly doesn't constitute this, and 3) it's quite possible that people are legally incapable of such consent.

But, hey, I am a trial lawyer, so I win either way :)

Kimball Corson

Hi, Law Fairy. I too was a trial lawyer, but in my former life. I am really being facetious here with my stocking suggestion. The point is old technology could do quite well to address these simple problems and do it very cost effectively, too, in many areas, but for ‘higher powered and extreme law’ quashing such options into oblivion, just as you suggest. Every case, no matter how small, can be turned into World War III, at least until the judge wakes up. Of course, the legislature could, in passing the stocking statute, (a) deem the door sign to be sufficient notice (if there were Spanish and Farsi translations along side), and (b) declare all other claims preempted by the stocking statute. We have made our legal lives too complicated for smaller matters and in so doing have ironically and in effect deprived ourselves of some rights.

LAK

Wouldn't this be moot if we simply had the courage as a country to tackle the problem of abject poverty? Again, economists with their dynamics exercises with little to say of initial conditions.

Kimball Corson

Voucher programs for schooling are targeted on improving education by inducing competition between schools and specialization among them and especially on equalizing opportunity or, if you will, initial conditions. That the upper 4% own 60% of all the wealth in America necessarily means a good percentage are short changed at the other end, especially if the wealthy get to keep it and pass it on to their children upon death. I have argued for a 100% Estate tax elsewhere here, with the money given as a grant over three of four years equally to all adults of college age to jump start them in life financially. Friedman also said a negative income tax could also be used to correct the poor distribution of income in America too, by the wealth paying taxes and the poor receiving supplemental income checks. But the wealthy (including our millionaire Congress men and women and the Executive too) largely own the political process in America so nothing is likely to happen there . . . yet. And the numbers of poor in America continue to grow. It is not good for our political system or our economy. We are coming increasingly to look like a Third World country such as Mexico, for an example, and in more ways than one. But I am whistling in the wind here and I know it. However, the poor have the voting numbers. If they ever woke up and used that power, much could be done along the lines suggested here. See, economists are not so useless in these regards afterall.

LAK

Which raises the issue, why is election day not a national holiday, yet columbus day is?

Why is jury duty mandatory put polling place attendance not?

4% owninging 60% of all the wealth is not as important a statistic as "control" of wealth, and when you include the corporations and foundations and other aggreagasted pools of capital the rich run, the numbers go closer to 1% and 98%.

Kimball I'll toast you wherever you are on your boat, as I drink a bottle of expensive wine tonight purchased on the expense account of one of my wealthy corporate friends.

The Law Fairy

Oh great, and now we're back to "people who give their kids money are the devil"... really, the government is such a more benevolent father/mother, no?

LAK

LF,

Did you mean to post that on this thread?
I'd love to get into the esate tax with you. As someone who grew up merely privileged with the children of the super rich, I can tell you it isn't the parents or the children who are the devil, it is the ridiculous quanity of money itself in which the devil resides. I'm not sure why anyone would argue that people worth over $100M should be exempt from an estate tax. being left with $50M isn't such a bad thing, and money spent on schools and healthcare is probably better tha maniney spent on 4th homes, face lifts and Ferraris. Aston Martins might be ok though.

LAK

My bad. Just needed to re-read Kimball's post. I'm usually far left of Kimball, but even I would allow a reasonable, even a large, amount of wealth to pass without taxation. Say $15M per deceased? I do not see many arguments other than the explicit preservation of class society, to allow the super rich (net assets of $50M or above) to pass all of their wealth tax free.

people don't make money in a vacuum, LF, and therefore they should not be treated like they alone, and not myriad other social factors, are involved in their accumulation of extreme wealth.

or do you not recognize the role of chance, even, in determining who is lucky enough to accumulate huge quanities of wealth? Luck is a huge factor, not to mention technological inevitablity. I'm happy to reward those who discover or happen into things that are super valuable to humanity, but I'm not sure how it is one justifies that their offspring should be entitled to enjoy all of the wealth they were lucky enough to accumulate.

The funny thing is, most of my friends who stand to inheret over $20M are for the estate tax, while those who grew up in the middle class, and in whose eyes the fleeting possiblity of great wealth still flickers, are the ones who support the abolition of the estate tax. Their crotchety rich parents tend to be a different story.


Kimball Corson

What if we exempted from any estate tax Law Fairy's and LAK's inheritances and then emplimented the program I suggest, any takers candid enough to say so.

LAK

Yea, I'd be down with that. It would be unfair to implement the 100% tax on my parents, as I would have many promissory estoppel arguments to lay on you related to my half ass efforts at conventional success due to my built in safety net. I might have taken that job at Skadden had I know otherwise, you know?


Kimball Corson

If we don't care about the maldistribution of wealth, control over it and income in this country, as well as the deterioration of those distributions with their attendantt consequences, then we can, as we are do nothing or worse, reduce or eliminate the Estate taxes. Come on LAK and Law Fairy, in all seriousness where are you two on this issue and what do each of you think should be really be done, if anything?? Or do you care, especially about equal opportunity? Seems to me you are either for equal opportunity or against it and favor something else. True?

Kimball Corson

LAK identifies an expectational transition problem so lets work up to 100% Estate tax over time to take care of that.

Kimball Corson

Also, I said LAK's and Law Fairy's inheritances slip through unscathed, 0% tax, so LAK does not need his estoppel aruments or a transitional adjustment.

The Law Fairy

Kimball, I'm not likely to get much. My dad, though I love him dearly, is a selfish bastard. I might get some money when my grandma dies. Not sure, I haven't seen the will. Other grandma is dirt poor, and of my aunts and uncles who have money, I probably wouldn't see much of it, not that by the time they die it would matter so terribly.

I've never said, and I don't believe, that estate tax should be eliminated. But I don't think the other extreme, 100%, is at all desirable.

I'm in favor of closing the tax loopholes for corporations and the very rich. I don't like the hefty income tax I pay, but I'll pay it, in spite of the fact that I would much rather own my own home someday. I don't think that's very much to ask, but my salary makes me I think, just so slightly above "middle class," so I guess I am not allowed to complain.

I'd be in favor of investing money into mandatory adult education, R&D to develop energy-efficient means of keeping society running, harsher restrictions on major food providers and R&D for more effective, safe, and affordable health care -- NOT government-operated, as I think I make it clear from my postings here I don't trust the government as far as I can throw it.

My position here has never been that we shouldn't do anything to remedy inequality -- but I'm inherently suspicious of government-operated Robin Hood schemes. Cutting tax loopholes would make a big difference. Term limits and campaign spending caps could also help.

LAK

No, I do support your proposal Kimball. Equal oportunity needs to start in early childhood though, and involves much more than just money, so schools are a lot more important than redistribution for young adults. But yes, in theory I believe in your proposal. Its just the greedy lazy bastard in me that does not.

I'm all for the government being a part owner of major corporations as well, so I'd fully support passive ownership of corporate equity by the government, through the estate tax. That would be a good way to generate revenue as well without taxation. Direct dividends to the governemnet to be putto work for the greater good.


Kimball Corson

LF,
If you are not likely to get much, at least in the near term, and you have a good law degree and good longer term income prospects in LA, an excellent legal market, why not seriously think about how to try to equalize opportunity better for (a) those just starting school and (b) those just starting out in life? They are the next us and we need to view them as such. Paying more taxes yourself and closing government loopholes would not help those goals because, as you will agree I am sure, our government will just buy more of what it is now buying or was buying from the 4% owning the 60% and controlling, as LAK points out, even more. Higher income tax dollars won’t really help (a) or (b). We need first a commitment to the ends of (a) and (b) and then a means to more fairly finance them, accepting that neither of us much trust government. (My Estate tax proposal was designed to attack both ends of the problem and the lack of trust in government, but I concede it is radical.) Both policy goals (a) and (b) are seriously and sadly lacking in American domestic policy. Indeed, the student loan program is getting a hair cut as we speak and private lenders at higher rates are being pushed in to take up the slack, if they will. And estate taxes are trending down, not up. Backasswards in both regards, as I see it. As for health care, I would sure like to see a Kaiser Permanente like insurance program adopted for all Americans, even if it had to be scaled back a bit to control the cost. The idea is superior and caring. Doctors actually like working in the program and patients love it. Of course, other insurers think it sucks. They would. Indeed, they have worked hard to block Kaiser Permanent from qualifying in some other states with preclusive legislative changes lobbied through. We all need to stop worrying so short sightedly about our own purses and worry more about what is good for all of us and for our social order too. For each of us to be happy campers we need to have others around us be happy campers too.

Kimball Corson

LAK,
I appreciate your candor, I really do. Your greedy lazy bastard problem is in us all. Realizing it is a major first step. We arrive naked in this life, bringing nothing and we leave with as little. We cannot take even our smallest treasures with us. Our lives are very short. Why we need to be such piggies in that brief interium is not really clear to me except we are trained and schooled to it, a significant diservice I contend. Instead, why not have a good fair race while we are here with equalize starts at (a) and (b), accepting that by luck, skill, happenstance or whatever some of us are going to finish out ahead of others of us, but not by enough to keep us all from enjoying each other and realizing we all leave empty handed. At my age (65) it is the breity of life that impresses me most. If only we could learn to be fair for that brief time.

However, these things said, you are much more trusting of government than Law Fairy and I are. Government is only up to doing simple things sometimes, and it gets too little right too often even then.

LAK

You only don't trust government because it is incompetent. It is only as good as the people who populate it. You pointed out that there are already some fancy people in government, but that is only at the top - people who already have money and are willing to trade mega income for mega power and status. Government jobs (including public school teachers) should pay as much as entry level jobs at Skadden and Goldman. That is the way to get a competent government.

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