Tough on the causes of crime

Let’s be very reductionist and say that the prevalence of crime is affected by people’s biology, their upbringings, social environment and finally the crime and punishment system. In many ways the hardest things to change are their biology, so let’s just ignore these for the time being (although see 1 2).

Then what we have are upbringings/society and the crime and punishment system. Being very broad brushed we could say that before 1800 people put little faith in the former and lots in the latter. Nowadays people tend to be split between whether they place their faith in being tough on crime or tough on the causes of crime (can’t resist dropping this link here).

I favour both approaches, but outside of the fact that being just selected into a better school makes you a bit less likely to commit crimes, most social interventions we know don’t seem to have much effect. It might be a dead end. Start with the fact that 65% of UK boys with a father in prison will go on to offend. That’s easy to understand on the social-upbringing account: these people probably lack nurturing environments, live in bad neighbourhoods and so on.

The problem is that these just-so explanations don’t seem to fit the data.

  • Parenting: here’s a 2015 US paper showing “very little evidence of parental socialization effects on criminal behavior before controlling for genetic confounding and no evidence of parental socialization effects on criminal involvement after controlling for genetic confounding”.
  • Family income: here’s a 2014 Swedish paper showing “here were no associations between childhood family income and subsequent violent criminality and substance misuse once we had adjusted for unobserved familial risk factors”.
  • Bad neighbourhood: here’s a 2013 Swedish paper finding “the adverse effect of neighbourhood deprivation on adolescent violent criminality and substance misuse in Sweden was not consistent with a causal inference. Instead, our findings highlight the need to control for familial confounding in multilevel studies of criminality and substance misuse”. (In fact, this weird 2015 US paper found that low-income boys surrounded by affluent neighbours committed more crimes).

I realise there are other studies saying different things—I don’t want to sci-jack or be the Man of One Study—but many of these use caveman methodologies that don’t even attempt to account for the potential that some people are born different to others (e.g. some have more testosterone). And I think we can be cautiously confident in these findings because they fit with other things we know.

So we’re left with enforcement. Can that make a difference? Today black Americans commit many more crimes per capita than whites, despite committing fewer than them in the late 19th Century. It’s possible that the results above are only true for a narrow range of environments, and thus that social-familial affects are driving this.

But in any case do we really think that blacks in today’s USA live in worse environments than the blacks of the post-bellum USA? If environments are improving and people are pretty much the same genetically, then the criminal justice system may be the big changing factor.

I think the criminal justice system looks like the area where research could most plausibly lead to improved outcomes. Consider the imposition and enforcement of restrictive drug laws, which coincided with the crime wave, and which may increase violent crime (e.g. by inducting people into the criminal life, or by providing a lucrative trade to fight over).

Some way of changing improper or inadequate enforcement—e.g. liberalising drug laws—may be a can opener to assume but it’s nothing like the assuming the can opener of changing genetics or magic social interventions that actually work.

Of all the idiot suggestions

Of the idiot policies that politicians have tried to bake over the years this one rather takes the cake:

Scottish Labour MP Thomas Docherty is calling for a national debate on whether the sale of Adolf Hitler’s “repulsive” manifesto Mein Kampf should be prohibited in the UK.

Docherty has written to culture secretary Sajid Javid about the text, pointing out that it is currently “rated as an Amazon bestseller” and asking the cabinet member to consider leading a debate on the issue. An edition of Mein Kampf is currently in fifth place on Amazon’s “history of Germany” chart, in fourth place in its “history references” chart, and in 665th place overall.

“Of course Amazon – and indeed any other bookseller – is doing nothing wrong in selling the book. However, I think that there is a compelling case for a national debate on whether there should be limits on the freedom of expression,” writes Docherty to Javid.

Excellent, let us have that debate.

The answer is no.

On the simple grounds that freedom of speech really does mean what it says. People, even dead people, are free to spout their opinions however absurd, racist, hateful, jejeune or potentially damaging they may be. They may not libel and they may not incite to violence but within those constraints freedom really does mean freedom.

“This is not a debate around political books or manifestos or books which cause offence … What Mein Kampf and books like it do is specifically set out to incite hatred. It is literally the manifesto for Nazism.”

And that is why this is so important for this specific book. Yes, Hitler really did write down what he was going to do and when he gained power he went and did it. Which is why this specific book must remain available. So that we all remember that people often do have their little plans and it’s wise to make sure that certain people don’t get to enact them. As with that other little book that contributed so much to the tragedies of the 20 th century. Sometimes those who talk about the elimination of the bourgeoisie as a class really do mean it. Better to be warned and avoid, no?

One way to narrow the North-South divide

We all know there’s a North-South divide, but from a policymakers perspective it’s not clear what – if anything – we should be doing about it.

To a significant degree, the relative economic success of London and the South East is due to factors beyond the powers of politicians to rebalance (without simply dragging the country’s capital down). The decline of manufacturing, the rise of London and Cambridge as tech hubs, and the cultural pull of the metropolis cannot be overturned – no matter how much money the government throws at it.

But even though we can’t turn the country upside-down, given that most of us would prefer wealth and opportunity to be a little more evenly distributed, we should try to identify instances where we are prejudicing the South at the expense of the North. Here, one thing stands out above all others: the decision to postpone the revaluation of business rates.

As Simon Danczuk MP wrote a few years ago in the Guardian: “The problem is in my constituency – and no doubt many others – some commercial property values have fallen by up to 40 per cent since 2008.” For Danczuk’s Rochdale constituency, the FT reported that “a study by Liverpool university showed that if business rates were set using up-to-date property values, shops in Rochdale would experience a 65 per cent fall in rates bills.” In contrast, London shops would see a 52 per cent increase.

These costs weigh heavily on the North. Of the top 10 town centres with the greatest percentage of empty shops, seven are in the North East or North West. The Daily Mail reported last year that the North West is suffering from 16.9 per cent empty shop space, versus London’s 7.9 per cent. In Hartlepool, County Durham, 27.3 per cent of stores in the town are up for rent.

Demanding regular revaluations shouldn’t be confused with a call to cut business rates. As has been argued forcefully on this blog, business rates are about the least worst form of taxation: “Repeated taxes on property, that is business rates, have the lowest deadweight costs of any form of tax. The only one that could be better is a proper land value tax.” Nevertheless, landlords and the entrepreneurs that want to use the abandoned spaces deserve rates that reflect the value of the land – the first step of a Northern regeneration should be a revaluation.

Philip Salter is director of The Entrepreneurs Network.

The ethics and practice of blood donation

We’ve one of those lovely Guardian discussions over the morality of commercial practices. You can guess the tone just from the headline:

Blood money: is it wrong to pay donors?

And we of course observe the comments section filling up with outraged screams that of course it’s morally wrong.

Which isn’t actually the point that should be under discussion. What we’d really like to know is whether paid blood donation is efficient. And the answer there is that no, it’s not really. When offered a choice those who purchase blood place a higher price on blood that has been donated rather than that which has come from paid donors. Such pricing is because donations do tend to be og higher quality. So, if we could fulfill our requirements for blood and blood products purely from donations we would, by preference, do so.

But we can’t so fill our preferences. So, for blood products specifically in the UK, we purchase from paid donors in other countries. Shrug. It’s either that or simply don’t offer the treatment and it’s hardly moral to deny treatment because of some squeamishness that cash was involved in the process.

The important of this observation isn’t confined just to blood of course. We tend to think that kidney transplants are better than he slow death which is dialysis. But many do die simply because there aren’t enough kidneys available for transplant. And this would be true even if ever potentially usable organ was stripped from corpses, the wishes of their now deceased former owner be damned. To fill this gap we must therefore ask for live donations (much the same being true of liver and lung transplants, heart such cannot of course be carried out from a live donor). But there’s a rather limited supply of people willing to live donate a kidney.

When, as we do from time to time, we suggest that the obvious answer is simply to pay donors, as they do in Iran, we’re told that paying for kidneys would simply be immoral. As with those shouting about blood. Shrug: this means that people will die because of some squeamishness over cash having been involved.

Oh yes, most moral that outcome is.

NGDP targeting: Hayek’s Rule

One thing I go on about on this blog is how nominal GDP targeting—a market monetarist policy proposal that has even won over a small group of New Keynesians—is also the kind of policy an Austrian should want in the medium term. Of course, in the long term we’d like to abolish the Bank of England altogether, but even then we’d get, with free banking, something like a stable level of nominal GDP, so it’s a pretty good target to work towards.

The economist Nicholas Cachanosky wrote a paper in the Journal of Stock & Forex Trading about a year ago, which I missed, called “Hayek’s Rule, NGDP Targeting, and the Productivity Norm: Theory and Application” which lays a lot of the Austrian arguments for targeting the level of nominal income in a very clear and cogent fashion. I include some key extracts below:

The term productivity norm is associated with the idea that the price level should be allowed to adjust inversely to changes in productivity. If total factor productivity increases, the price level (P) should be allowed to fall, and if total factor productivity falls, the price level should be allowed to increase. A general increase in productivity affecting the economy at large changes the relative supply of goods and services with respect to money supply. Therefore, the relative price of money (1/P) should be allowed to adjust accordingly. In other words, money supply should react to changes in money demand, not to changes in production efficiency.

The productivity norm was a common stance between monetary economists before the Keynesian revolution. Selgin [14, Ch 7,8] recalls that Edgeworth, Giffen, Haberler, Hawtrey, Koopmans, Laughlin, Lindahl, Marshall, Mises, Myrdal, Newcome, Pierson, Pigou, Robertson, Tausig, Roepke and Wicksell are a few of the economists from different geographical locations and schools of thought who, at some point, viewed the productivity norm positively.

One of the attractive features of productivity norm-inspired monetary policy rules is the tendency of the results to mimic the potential outcome of a free banking system, one defined as a market in money and banking with no central bank and no regulations. Among the conclusions of the free banking literature is that monetary equilibrium yields a stable nominal income.

Throughout Cachanosky distinguishes carefully between an NGDP target and a productivity norm, though I think these are overstated; and between ‘emergent’ stability in NGDP and ‘designed’ stability, which he (like Alex Salter) thinks are importantly different (I am not convinced).

Cachanosky believes that the 2008 crisis implies that NGDP growth beforehand was too fast, and led to capital being misallocated, but I still doubt the Austrian theory of the business cycle makes any sense when you have approximately efficient capital markets.

Despite our differences, I think that Cachanosky’s papers are very valuable contributions to the debate, and hopefully they can go some of the way to convincing Austrian economists that the market monetarist approach is not Keynesian.