On Obeying & Not Obeying Laws

Which laws should we abide by and which should we not? There are three main categories of belief one could have on this matter.

1) We should abide by every law, even if we don’t agree with it, because we should respect the law, and no one should be above it

2) We should only abide by the laws we agree with, and we should ignore the ones we disagree with (see my blog on rational crimes)

3) We should not abide by any laws at all

I’m going to assume that pretty much everyone claims to fall in either category 1 or 2, and that no one reading this thinks we should not abide by any laws at all. Incidentally, I did once meet a guy at a festival who claimed to be an authority-hating anarchist who thinks everyone should be entirely free to do exactly what they want at all times; but then literally one minute after declaring this he became vociferously annoyed at the sight of some newly-arrived campers pitching their tents in the wrong zone of the campsite. A few moments after I experienced that, I knew I would have a funny story for life.

Anyway, this faux-anarchist festival goer aside, I think if you asked the UK population whether they subscribe to category 1 or 2, most would say they belong in category 1, with a minority claiming to be in category 2. I want to contend that despite what many people claim, I think pretty much everyone actually belongs in category 2, and believes that we should only abide by the laws we agree with, and ignore the ones we disagree with. To argue to the contrary would be to claim that there are no laws that could be invented that we wouldn’t choose to ignore - and I don’t think that is true. Suppose a new law came in banning Bibles on the ground of imposing an Islamic theocracy, I don’t think many people would support it. Or suppose chocolate was outlawed by a nanny state that wanted to smother our every temptation, most would claim that’s a step too far.

The point is not that I think these laws are very likely. It’s that everyone has their limit: so anyone who claims to support number 1 - that we should abide by every law, even if we don’t agree with it - actually has their limit in where they betray that principle. In other words, no one really believes that we should abide by every law, even if we don’t agree with it – they simply follow laws they disagree with out of convenience and social pressure, or there aren’t yet any laws they find particularly objectionable enough to disobey. There is also, as Aristotle said in his Nicomachean Ethics, little virtue in obeying laws merely because we are legally compelled to. Real virtue comes from a desire to be virtuous, irrespective of the law.

Given the foregoing, then, which laws could we reasonably disobey? As you may know, the things that the state deems illegal boil down to two distinct categories: malum in se laws (wrong in itself), which are prohibitions (like rape and murder) that are wrong by their very nature; and malum prohibitum laws (wrong because prohibited), which are prohibitions (like regulations and price controls) that are not wrong by their very nature, but are wrong because the state says so.

Politicians, therefore, impose lots of restrictions on us merely on the basis that politicians say they should be prohibited. Malum in se prohibitions like rape and murder are things we all should obey, because we want them to be prohibited, and would choose them as laws ourselves anyway if we were in charge. The malum prohibitum restrictions, on the other hand, are not necessarily prohibitions we would choose for ourselves - they are chosen for us by people that don't know our preferences better than we do (taken to extreme, things like illegality of homosexual practice, fewer black rights, lack of free press against the dictator, illegality of abortion, and many more have been strictures of the state against its citizens).

If there are any laws we should be free to disobey, they are likely to be malum prohibitum laws - things that many of us may not think are wrong, but that are deemed wrong merely on the basis that the state says so for no apparent good reason. As any good dictator or authoritarian planner knows, the best way to wield ultimate control over people is to gradually erode away their freedoms until they reach a state of voluntary servility, where they will do pretty much anything you tell them. That is why it's essential to ask yourself which laws you should obey - otherwise you become an intellectual serf, like dead salmon floating down the stream.

But we needn't stop at the observation that pretty much everyone thinks we should only abide by the laws we agree with, and ignore the ones we disagree with - we can observe too that that principle is nested in a higher market-based wisdom that plays out more subtly. If we felt the full costs of many of the malum prohibitum laws, we probably would not support them. It is unlikely that the average Jill would be willing to pay as much to prevent the average Jack from using cannabis as he himself would pay to use it, therefore it is unlikely that a market based system would create an anti-cannabis law. It is unlikely that the total enforcement cost of the speeding laws would be willingly picked up by the citizens of the UK if it was spread evenly throughout the population, therefore it is unlikely that a market based system would create any speeding laws.

Consider an illustration. 500 million people are about to experience a quite discomforting but not too serious earache for the next hour. However if one innocent person is killed the 500 million won't have to go through with the earache for an hour. Should we kill the innocent person or let the 500 million people go through with the earache? I tried out this question on Facebook about seven years ago, and unsurprisingly everybody on my friends list said we should spare the one innocent life for the sake of 500 million earaches. That’s because, presumably, people want to minimise suffering, but yet at the same time they thought that the death of one innocent person was worse than 500 million earaches.

Fair enough, but this only goes to show that humans are weirdly inconsistent. Here’s why. I'll bet most of my Facebook friends insure their domestic goods. Then I asked them the following question:

Would you choose a certain earache for an hour or a 1 in 500 million chance of being the innocent person of dying?

Roughly 50% of people said they would choose the certain earache for an hour – which I found to be absolutely barmy. I take it that they are having trouble envisaging just how much 500 million is. How do I know that most rational people would rather have a 1 in 500 million chance of being the innocent person of dying than a certain earache? It’s not just because the probability is so heavily in their favour of surviving; it’s because in everyday life humans have multiple opportunities to buy all kinds of safety devices for their modes of travel, for their DIY, for their mowing the lawn, for climbing ladders, or whatever, each with a much less than 1 in 500 million chance of death or serious injury, and they prefer to take the chance. That’s how I know: people show me with their revealed preferences. 

When considered with proper rationality, the observation of people’s general day to day behaviour shows that most people would not pay one pound coin to avoid a 1 in 500 million chance of death, but most people would pay a pound coin to get rid of an earache that was going to go on for another hour. This is why the insurance issue is relevant – we choose an optimal deal because probability is hugely in our favour. We should do the same with the earache conundrum, because given that most people would not pay one pound coin to avoid a 1 in 500 million chance of death, but most people would pay a pound coin to get rid of an earache that was going to go on for another hour, this means that most people think an earache for an hour is worse that a 1 in 500 million chance of death, even though they claim to believe the opposite when the question was asked more abstractly. We know that rational people will pay £1 to cure an earache, but not to avoid a 1 in 500 million chance of death - therefore if you approach 500 million earache sufferers and offer to rid them all of their earache at the cost of killing 1 of them through a random draw, their revealed preferences in everyday life indicate that they should thank you.

This is very relevant to many of the malum prohibitum laws we see instituted in our statute. Recently I asked my Facebook friends, apart from speeding, which other current UK law(s) do you feel it's morally ok to break? Some of the answers they gave were streaming, having a wee behind a hedge, parking on yellow lines, drug use, skipping fares and not paying taxes. There is wisdom behind these answers, because what they are expressing is the revealed preference that they don't feel that the cost of those law enforcements are worth the price of having those laws, especially as there are so many deadweight costs associated with taxes, regulations and government spending.  

It's like the old joke about Tom and Pete stumbling upon a bear in the woods. Tom reasons that he doesn't have to run faster than the bear to survive, he only has to run faster than Pete. But the bear has a stake in this too, and wants the most efficient outcome - he doesn't want to waste resources chasing Tom when it would be easier chasing Pete. Most humans act as though they feel that way about most malum prohibitum laws, while at the same time speaking as though they don't.

A Fascinating Article That Comes To Totally The Wrong Conclusion

I stumbled upon this intriguing article in the New York Times by Nicholas Kristof, entitled “What Monkeys Can Teach Us About Fairness” in which the author tells us about an experiment in which monkeys were taught to hand over pebbles in exchange for cucumber slices. They were happy with this deal. He goes on:

"Then the researcher randomly offered one monkey — in sight of a second — an even better deal: a grape for a pebble. Monkeys love grapes, so this fellow was thrilled. The researcher then returned to the second monkey, but presented just a cucumber for the pebble. Now, this offer was insulting. In some cases the monkey would throw the cucumber back at the primatologist in disgust. In other words, the monkeys cared deeply about fairness. What mattered to them was not just what they received but also what others got."

If Kristof had stopped there, that would have been an interesting account - when monkeys receive something but see other monkeys receiving something better they react dissonantly. That in itself is fascinating.

Unfortunately, Kristof uses this to propound the theory that what monkeys care about here is income disparities, and that this has parallels with the wider human concern about income inequalities. This is a step too far, and takes the conclusions into illogicality, because interpretations of income distribution are based on something fundamental that is missing from the monkey experiment - and that is, what people do to earn what they received.

If the teacher gives little Johnny 2 chocolate bars and little Freddy 1 chocolate bar, it might be that she has treated Johnny better than Freddy. But if beforehand she stipulated that there will be a classroom maths test, and the person who scores top marks will get 2 chocolate bars, and the runner-up 1 chocolate bar, then nothing she has done has been unfair, because Johnny and Freddy's chocolate bars were given based on merit. Their rewards were commensurate with what they did to earn those rewards.

The same is true of wages - they are not arbitrarily distributed like the cucumber and grapes in the monkey experiment - they are based on what people produce for their employer. Monkeys may suffer dissonance at income disparities irrespective of how those incomes came about, but humans generally do not - they recognise the source of the variance in the incomes.

I Think There's One Big Flaw In These Sexual Abuse Trials

Like me, you may have been distracted recently by a little thing called the General Election, as well as terrorist atrocities in our major cities and now the Grenfell fire tragedy. So much so that if you blinked you might have missed the news that Rolf Harris will face no further legal action over allegations of historical sex abuse after a jury was unable to reach verdicts on four charges, and prosecutors said they would not seek a second retrial.

The disgraced entertainer and artist, who was jailed in July 2014 for unconnected sex attacks on young girls and women, was being tried for the second time over alleged sex attacks on teenage girls in the 1970s.

At the time of Harris's conviction I remember having a discussion with some Facebook friends regarding what I thought was a very interesting but highly contentious issue surrounding the matter of jurisprudence and how things change over time. I never got round to blogging about it, so thought I would today as it should at the very least give you pause for consideration of something litigiously debatable.

What’s extremely contentious about the original outcome is that Rolf Harris was charged under the sexual offences Act of 1956, because the offences happened at a time of old legislation. Basically, if he’d have done the same things now he would have received a heftier sentence, because cultural evolution has shifted people’s perspective and tolerance on crimes like paedophilia, with penalties now being severer.

Now I'm not 100% certain that this view of mine is correct, although I think it is probably more correct than incorrect, but I don’t think it is right that someone should receive a shorter sentence that has been matched to the legislative time of the crime(s). It seems clear to me that past crimes should be penalised according to the present legislation (and I mean this generally speaking, not just taking into account Rolf Harris’s situation).

Let's face it, crimes like rape, child sex offences, racism, homophobia, and social legacies like sexism and misogyny, belong to a class of behaviour that society used to treat too lightly. And while far from perfect, today's UK society is at least a society that treats these things much more seriously, and has less tolerance for these things than at any time in history.

Given that legislative measures and acts of jurisprudence are built on a cultural evolution of the increased wisdom and revisions of human beings over time, I’m of the view that sentencing for any crime should be administered according to the legislation of the time of the trial, not the offence. Otherwise it rather undermines the perceived wisdom that went into the revision processes of jurisprudence over time.

I remember at the time, my friend Mark made an interesting point; he warned that it could set a dangerous precedent. He says: “If we raised the age of consent to 18 we could then punish all those who had sex at 16″. My friend Jacqui added a good point which illustrates a thin end of the edge-type of caveat. She says: “We had hanging back in the early 60s, so if somebody was now found guilty of murder back in 1960 do we get to hang them?”. Quite! These are good observations made.

Apart from a difference in scale of penalty, the legislators at the Rolf Harris trial agreed with this action *in principle*, just not in practice. They were willing to penalise in accordance with past legislation – but only if it was the right kind of past of legislation (I’m certain that if tomorrow they had a trial in which a man was found guilty of committing murder in 1959 they would not sentence him to hanging).

The thing about Mark and Jacqui’s points, though, is that two different things are being conflated. Mark makes his point in relation to a change of law, whereas Jacqui makes her point in relation to a change of perception of appropriate sentencing.

The Rolf Harris incident should be assessed under the terms of Jacqui’s analogy because the Rolf Harris legislative issue is not to do with a change of law (his crimes were still illegal in the sixties) but a change in the perception of appropriate sentencing. The key difference is that if we raised the age of consent to 18 we could not reasonably punish all those who had sex at 16, because they were doing so at the time from within the orbit of the law. Conversely, in terms of jurisprudence, murderers that were hung in the 1950s differ from murderers now only to the extent that punitive measures differed – the act of murder was still against the law.

Hence, in conclusion, if revision of jurisprudence is to avoid being undermined, I think people should be convicted and sentenced under the (present) legislation at the time of their trial, not under the legislation of the time of their crimes, as Rolf Harris was. As I say, it's a not a view I definitely know I'm right on, I could be persuaded it's wrong if anyone has a robustly convincing counterargument (if so I invite you to share), but as things stand I think it's the right view.

On Two Types Of Fairness

Do you think women should always be paid the same as men for doing the same job, or can you think of any conditions under which one or the other should be paid more? Your answer to this question is based on how you perceive fairness? Let's explore this further.

There are usually two kinds of perception of fairness, which we'll call Fairness A and Fairness B. Fairness A says if workers are treated equally while at the same time benefiting from their endeavours then we should support a flat tax rate for all (say 25%). That means that Tom who earns £100,000 per year and Dick who earns £30,000 per year each pays the same rate of tax, but Tom pays more due to having higher earnings.

Fairness B says that it's fair to treat people unequally to try to bring about a fairer equalisation overall. That means that Tom who earns £100,000 a year and in absolute terms already pays more tax than Dick on £30,000 per year also pays a higher rate of tax than Dick, because it is seen as a good thing that high earners, although not often willing to help out voluntarily, do instead have the compassion to accept or embrace the kind of taxation that redistributes the top-end money to those with less.

Isn’t our tax system like that?

Yes, currently it is. Fairness A is often referred to as flat taxation and Fairness B is often referred to as progressive taxation. Those on the left tend to prefer progressive tax - but it is hard to be consistently progressive because people's ideas of fairness are inconsistent. That is to say, people are clumsy, and they tend to cherry pick between Fairness A and Fairness B while believing they are sticking firmly to either A or B. If you asked them whether women should always be paid the same as men for doing the same job, they'd probably say yes. But then that can go against their progressive ethos, because there are conditions under which unequal pay for men and women could be progressive (and, in fact, this once was the case).

For example, a married man with a non-working wife and children would find it harder to live than a single, childless woman doing the same job. In fact, it used to be thought to be justified to pay a man more than a woman on those grounds. Given that once upon a time most men were working breadwinners and most women were stay-at-home-housewives, it was thought to make sense to pay men more, as that extra money also benefitted the wife and children. Whether you think that's good depends on how you view the situation of a single, childless woman getting paid the same as a married man with a non-working wife and children. Most people now are proponents of the “equal pay for equal work” maxim, whereas one hundred years ago those people would have been in the minority.

The question, then, for proponents of Fairness B is why they'd support richer people paying a greater rate of tax but not support the same method of equalisation when it comes to single women being better off than their male colleague who's married with three children?

One good response might be that although we’ve been selectively a la carte over the years, we’ve done so for good reason, because it’s important to adapt to changing landscapes. Now that more women are working women, the ‘equal pay for equal work’ maxim makes the previous male-dominated sensibility seem rather outmoded. 

Another good response is that tax policies are largely based on buying votes. Creating a tax system that hits the minority hardest and benefits the majority at their cost is seen as a good way to buy votes, which is what governments base their tax systems on. Here's a simple illustration. Imagine you are governor of an island with a population of 150, and you want to obtain votes for re-election in a democracy. Out of the population, 100 of those 150 earn £25,000 per year and the other 50 earn £100,000 per year. Your rival governor candidate wants everyone to be free to spend their own money, and you want all the money to be pooled into a state pot and shared out evenly among the 150 people.

Under your opponent's system two thirds get to spend £25,000 and one third gets to spend £100,000. Under your rule those £25,000 earners who make up the two thirds get to have a share of the £100,000 earned by the minority group. Under your system everyone in the two thirds group is £25,000 better off and everyone in the one third group is £50,000 worse off (for those still counting, each of the population has £50,000 to spend). My prediction is that on Election Day your opponent will obtain one third of the votes and you'll obtain two thirds.

Before universal suffrage, the primary voters were men who earned money, so it was best for the government to adopt a flat rate tax policy. When universal suffrage came in, things changed, because now there were a lot more votes to buy, so it made sense to appeal to the majority (the low and medium earners) against the minority (the high earners) . A political party that promised to tax the wealthiest people at a higher rate and distribute it to the poorer people would gain plenty of support, so their policies were tactical. 

This is what we find in the modern age in the UK. In the UK the median income is lower than the average income, meaning most people earn less than the UK’s average wage. This presents a tactical no-brainer for political parties; endorse progressive taxation because then if you tax the wealthiest more than the poorest you bestow gifts on the majority of the people – which, for most people, basically amounts to voting for your own gifts.

This all sounds nice; surely voting for things that you like is a positive thing, and surely a nation in which the majority benefits from the government’s beneficence is a good thing too, right?

It depends how you look at it. If you like efficiency then no, it’s not great, because it is a recipe for profligacy. The reason being; if you buy something that’s worth less than it costs, you’ll find lots of wasteful spending. And if you spend other people’s money you’ll spend it less wisely than if you spend your own. Free markets are efficient because the product or service price from a supplier won’t usually be less than its production costs, and it won’t usually be more than the consumer is willing to pay for it.

In progressive tax systems things change. Most people reading this Blog will contribute far less than what would be their average share of a government’s spending policy, which means their incentive to see prudence and efficiency is diminished. Consider this illustration: Imagine you and I are at a large banquet with 98 other people, where the richest few are going to pick up the vast majority of the bill, and what’s left will be split between the rest of us. If everyone decides to have an extra bottle of wine per person and a supplementary box of chocolates, the proportion of the wine and chocolates costs with regards the overall bill will be less for you and I than the value of the wine and chocolates.

So even if we’d ordinarily not be willing to pay for the extra wine and chocolates, we won’t mind having it because the cost for us will be significantly less. What’s worse, there are bound to be lots of stuffed diners who didn’t really want the wine and chocolates who would not care too much because the majority of the expense is being taken care of by the richest few. This is what’s happening in real life with our politics.

Work Out What You Want To Say And Find A Fact That Sounds Like You're Saying It

Open any left wing paper and on a weekly basis you'll be overrun with stories of societal injustice where we are told the income gap between rich and poor is disastrous, that the rich get rich at the poor's expense, that real incomes have stagnated for the majority, and that the poor have been getting poorer.

All of those claims are untrue, but the left wing newspapers are regularly providing us with skewed or bogus statistics to show why they think they are true. A puzzling question in scenarios like this is to consider whether these distortions are cases of economic naïveté or cases of mendacity where they try to be creative with the facts in order to get people to believe their fabrications.

It's probably a bit of both, and as such I will tell you where I think they are going wrong. One category error here is in reading too much into statistics without trying to understand how those statistics actually relate to the dynamical nature of human beings.

Take the statistics we often see relating to income inequality. The first thing to point out is that those statistics begin with a false premise, because there are actually no static income categories - people move around in different categories depending on where they are in their life stage (age being a big determiner of where you are in your career). Secondly, different statistical groups have different numbers of people, which also skews the data.

For example, it is totally possible for the richest people to receive a higher share of the UK's overall income yet still see their personal incomes fall. This is not a contradiction, it is simply the case that some people were in the top 1% and then dropped out, and others increased their income at the expensive of those in the top quintile. Equally, it is possible that the share of the income going to those in the lowest quintile can decline even though those in that group see an increase in their own personal incomes.  

To highlight another case where statistics deceive, let's take for example a claim I saw in the Guardian this week about households not feeling the benefit of economic growth. The writer made this claim by asserting that there has only been about a 6% increase in household incomes in the past 40 years. As you can imagine, the people writing in the comments section were outraged.

The statistic though is deceptive because household income is a misleading way to gather data. What you should look at instead is real income per person, where you'll find it has risen by about 51% (or something close to that last I checked). How can both those stats be true?

Well, what's been happening in those 40 years is that average household numbers have dwindled in terms of individuals in a household, whereas number of households has increased as more people have bought their own place and moved out of the family home. The increase in the average number of persons per household is caused by increased economic growth. That is, people move out and become home owners because they can now afford to do so. Complaints about household stagnation are really complaints about individuals doing better.

Being a regular Guardian reader, but not on their side in most economic arguments, I have to find myself wondering why you will never see a Guardian writer talking about the positive parts to the human growth story. When they wanted to talk about Labour's term in office in 1997 to 2010 they would usually use per capita income statistics to talk of its successes; whereas when they wanted to criticise Cameron and Osborne they would usually use household income statistics when they wanted to depict failure.

Not only is it the case that increases in real income enables more people to live on their own, and no longer with their parents, or house sharing - what we have is a statistic that actually results from increased real incomes but yet can be used to look like stagnation when describing households. A reduction in the number of people living in a household will bring down average household income when better off individual start their own household.

If the Guardian printed something along those lines their piece wouldn't technically be inaccurate, but it would be wholly misleading. Suppose there are, as I think there are in America, approximately 40 million people living in households whose income is in the bottom 20% and 65 million living in households in the top 20%, measuring income inequality is going to mislead.

If different groups contain different numbers of people, a stat about income inequality concerning the bottom and top percentages is deceptive. Moreover, in a changing time when people get paid more for their work, those that either don't work or work part time will fall behind those that work full time. But it goes deeper, because there are other factors that contribute to income inequality that are not merely society's injustices, they are simply the result of billions of individual choices that people have made.

Remember even St Paul in his letter to the Galatians declared that we do actually reap what we sow as well - not that we should hold back from caring for and helping those less well off than us, but that actually society is not a melting pot of injustices, but rather it is an aggregate of millions of people reaping what they sow in terms of millions of life decisions made every year of their lives.

As I've said before in a previous blog or two, the biggest determiner of how well people are doing is work. A household that has two workers in it will usually be doing better than a household with one. A household with no workers will be doing worse still. Last time I fact checked, the top 20% of households have four times as many workers as those in the bottom 20%, and more than five times more in full-time work. That is going to make a huge difference - and it is one of the most disingenuous things we do to say this doesn't matter.

Alas, Ken Loach, the director of very enjoyable films such as Kes, Riff-Raff and Raining Stones, treated us to a litany of these basic category errors on Question Time this Thursday - demonstrating to the entire country that while he's a good movie-maker, he is basically clueless about how economies work, and blind to how individual choices eventuate in the societal outcomes we see.

 

Income inequality is caused by people contributing different amounts to society, and that is reflected in the wage differentials. The left are always going on about how unfair society is because there is so much income inequality. But even by the time we reach puberty we ought to have worked out that this is the opposite of the truth. A society that has unequal income distributions based on having unequal societal contributions is hardly one that ought to be called unfair - it is the playing out of what Paul said in Galatians.

Yes in spite of this, the very notion that inequality is caused by some contributing a great deal to society and some producing considerably less is scarcely mentioned, which is surprising because every person reading this will know of people to whom both examples apply.

Those in the bottom 20% of earnings not only have far fewer people in work, they have fewer skills and less education with which to contribute as much as the top earners to society. The bottom 20% will have far fewer university graduates and people with college qualifications than the top 20%, and these are important statistics that demonstrate not an unjust society, but one that is a lot more just than many care to acknowledge.

Moreover, that's not quite the end of it either, because as well as the Guardian's and Ken Loach's mendacity in skewing the narrative, income inequality stats are quite naturally misleading in other ways too. For example, they omit the welfare received by those in the bottom 20%, which amounts to substantial benefits to which the recipients contribute nothing. In fact, it may shock you to know, but the bottom 50% of earners in society pay only about 5% of the total tax generated.

Last time I checked, transfers from the government to the welfare recipient accounted for around 78% of resources for people in the lowest quintile. Not only does this mean we live in a society in which the rich heavily subsidise the poor; it means that the inequality statistics that are always appearing in the social commentary of the left are based on just 22% of the lower quintile's income - their earned income, where the rest constitutes handouts.

Another popular way to underestimate growth and overestimate inflations is to refer to a price index to make your case - the most popular one being the consumer price index (CPI). It's easy to use the consumer price index to focus more heavily on the lower prices of the recent past (thus flagging price increases) and focuses less heavily on the higher prices of the recent past (thus overlooking price reductions).

When you go to Tesco and come away happy that your bananas and your cereal and your flaxseed were all cheaper than last month, do you honestly think that those reductions came from nowhere? Had you bought grapes and tinned fruit and fresh fish you might well have found that you had paid more than last month. Only a fool would focus on the goods they happen to flag as being reduced and naturally assume that Tesco’s net price index was lower than last month. 

It’s another easy way to create a false impression by only focusing on one aspect of the situation. You might be perturbed by price rises if I only told you about the increase in price in train and bus fares, newspaper obituaries, postage stamps, and chocolate bars over the past 25 years. Less so if I only told you about mobile phones, computers, media players, and most household electrical goods (televisions, fridges, freezers, microwaves, washing machines, cookers, etc).

That is what the consumer price index does – it focuses most heavily on the things we used to get cheaper and overlooks all the things we used to pay more for. It is impossible to present a meaningful value index that encapsulates all elements and is without bias. Even a totalised economic price index would still be devoid of many factors that are related to good consumption – pleasure, utility, happiness, and well-being are four examples.

Moreover, as will be pointed out in the early chapters of many economic text books, analysis of inflation must also factor in changes in products that are concomitant with price increases. The most obvious example is cars, which are more expensive these days, but also full of features that would have been considered a luxury a few decades ago (I remember as a young boy being fascinated by a neighbour's new Ford Sierra because it had electric windows).

Think back to when cars were first prototyped and think about the vast progressions since those early days. Not only have cars become safer every year, they have improved their speed, their efficiency, their technology and their luxury, as well coming equipped with alarms, air conditioning, satellite navigation systems and CD players (these days it's actually now an iPhone played through the car stereo with an auxiliary port).

Cars that used to be luxury are now standard and affordable for the majority, and this applies to laptops, mobile phones, video cameras and similar such things. Also someone of today has access to all the world's knowledge, access to the most up to date research, countless public services benefits that were once inaccessible, and communication with the world's most developed countries.

Most of the taxes paid are by people with an above average income, and many with a below average income are receiving transfers of wealth from the top downwards. Statistics about income greatly exaggerate the differences in standards of living, particularly so nowadays. Lefties have a tendency to exaggerate what Jack has and understate was Jill has, to construct fallacies of injustice.

I think a lot of the problem is that people tend to assume that when people get rich they do so at the expense of others getting rich. But this is to fall for the fixed pie fallacy. Think about it; if having billionaires was detrimental to the rest of the population then America would be one of the poorest countries in the world, as it has over 500 billionaires.

But the wealth of the richest doesn't occur at the expense of the poor - just the opposite - it helps create wealth for others in the population. In fact, last I read in Forbes the number of billionaires and millionaires in the world began to decline, which indicates that more people are seeing their real incomes go up. Just over 50% of American households have incomes of $50,000 and higher, whereas fifty years ago the number of households with the equivalent purchasing power was less than half that.

A lot of people who are statistically recorded as being not well off in terms of income are actually some of the most well off people in the land - wives of high-earning husbands, pensioners who have retired, but who own their own home and have assets that do not count as income; university graduates who are going to go on to earn a good living, young adults who are still in the high income family home, and young professionals at the start of their career who've yet to start earning what their qualifications and training will see them go on to earn.

All of the above will fall under the Guardian's statistics as being low earners, because statistics don't differentiate between the people who are going to have low incomes for much of their lives and those that have not or will not. Many of the people whose incomes are in the bottom two quintiles in the early parts of their working life will go on to be in the top two quintiles in the next 10 to 20 years of their working life.

For this reason, income inequality measured at any given time is not representative of income inequality over people's lifetimes. Nor is it representative when huge cash transfers from the government are omitted, nor the large taxes paid by the higher earners, nor the wealth of pensioners and the future wealth of the young but well educated post-graduates. The rhetoric from the media-celebrity left is all a bit of a mess really, and unless more people in the country stop encouraging them, wise-up and learn some of the basics, they won't grow out of it anytime soon. 

In failing to admit these truths, the left are letting down the people whose causes they are purporting to champion. While they assert that the poor are victims of injustice and that through no fault of their own society has placed roadblocks in front of their path to success, they gloss over many of the actual reasons why some do less well than others.

In other words, in many cases (although not all cases, of course) what those falling behind need is not so much a character embellishment but a reality check and a few home truths about the decisions they've made. I don't mean we should turn into a society that is judgemental towards those who've made a series of bad life decisions - but to do as the left does and not only fail to acknowledge these things but also pretend they are not there by writing their own hackneyed, distorted version of the reality, is helping nobody.

Four Quick Things This Week: Racism, The Minimum Wage, Hillsborough & The Blame Culture

Thing Number 1 - Racism

Don’t know if you picked up on this yesterday, but after the furore surrounding Ken Livingstone’s inappropriate comments about an easily identifiable group, there was a similarly inappropriate comment by Andy Burnham on Question Time last night, where he told us his policy about foreigners. He said that he’d like to introduce a law that bans an easily identifiable group of foreigners from being able work in the UK purely on the grounds that they are foreign. Of course, he didn’t use those words, he said it the other way round – that he wanted a law to protect British wages so companies could not look to recruit labour at a more competitive rate from abroad. Apart from the different choice of wording, the statements made by both men should have made the headlines as being dodgy – but, alas, we live in a society in which that is highly unlikely to happen.

Thing Number 2 - The Minimum Wage

So, a chap I know called John told me today that having applied for the government’s cycle to work scheme in which he purchases a bike and accessories, and through the salary sacrifice initiative makes savings of 42% via reduced tax and National Insurance contributions, his application has been rejected because the monthly deductions on this (don’t forget voluntary and beneficial) purchase will take his earnings below the legal minimum wage, and makes him ineligible for the scheme. 

Great – another of the many minimum wage stories of lament – the consequence of which, in this case, is that staff in his firm on 20-100k per year could obtain the full 42% tax savings on a bike, but John who earns just above the minimum wage cannot. You don’t have to be that bright to see what’s wrong here. I phoned on his behalf and made what was to me the obvious suggestion that in order that minimum wage earners don’t miss out they could extend the 12 month payback duration to 18 months to keep them above the earnings threshold, but they couldn’t alter it as it’s driven by central government. Thanks central government! Thanks Chancellor!

Thing Number 3 - Hillsborough

Despite his ill-conceived comment on Question Time, Andy Burnham covered himself in glory this week with his part in the Hillsborough inquest. The recent Hillsborough ‘Justice for the 96’ outcome was the end result of a controversial process that has lasted 27 years, largely to do with the issue of blame. Initially the police blamed the fans, but given the falsity of this claim it was always likely that eventually, and with an impressive degree of tenacity and perseverance, the campaigners would see the truth exposed – that, in fact, the police were to blame, as were the Football club, and many others involved in the organisation the of this tragic FA Cup semi-final event. The outcome has been pleasing not just because it’s good when justice prevails, but also because it is a lovely demonstration of how honest people working together for a worthwhile cause can find justice in the end and see that the blame is apportioned to the right people, which, as they knew all along, wasn’t the fans.

Thing Number 4 - The Blame Culture

Alas, unlike the Hillsborough campaign, quite often blame does not go to the right people. In a society solidly riveted to the recourse of the blame culture, this often makes for frustrating reading, particularly in the political arena. I’m afraid to have to say that very often politicians and the media get this backwards – that is, they go about their business in a culture in which too many people get blamed for things that aren’t really their fault, and don’t get blamed for things that are their fault. A lot of the things politicians do that are their fault – like imputing price controls, over-regulating industries, and creating artificial shortages – elicit praise and support from large swathes of the population when really these things should be met with ignominy. On the other hand, a lot of the things politicians get blamed for, for which the fault ascribed to them is an exaggeration – like crime levels increasing under their time in office, increased inequality, and increased poverty – elicit reproach and hostility when really these things should be opined about with a more balanced and informed view. 

A Strange Argument About Whether Prison Is A Deterrent

Some of you may be interested in my response to an IEA writer’s peculiar argument for why Prisons do not act as a deterrent to crime. Some of you may not. 

I have to take issue with the claim that “Prisons do not act as a deterrent to crime”. There is a small group for whom that is the case – and that group is the recidivists who, as you say, have a high re-offending rate, and are being sub-optimally helped by the prison system. But saying that prison isn't fit for purpose because of high re-offending rates is an absurd complaint, and a peculiar error of reasoning. It's a bit like complaining that sea defences aren't fit for purpose because occasionally there are extreme coastal conditions that break those barriers.

It would be good if the sea defences prevented all flooding, but their primary job is to protect the land from the ordinary thrust of the sea on a daily basis. Similarly, prison's primary function is to reduce offending (by deterrence and by keeping criminals out of society), not re-offending. If it reduces re-offending then all well and good, but that is not its primary function. It's preposterous to consider whether prison is fit for purpose by only considering the recidivism rates. It's as preposterous as considering how many men in the UK take steroids by only interviewing weight-trainers in gymnasiums.

Such a biased research method would drastically skew the overall figures, and this is what is happening with Vicky Pryce’s “Prisons do not act as a deterrent to crime” claim, as recidivists are people who've already been convicted of a crime, so they are people for whom the threat of prison was no real deterrent first time out. Consequently, they are the biased sample of the population for whom prison is the least likely to be a deterrent second time around. The only proper way to enquire whether prison is fit for purpose is to ask how much of a deterrent it is for the vast majority of people in the UK - those who haven't found themselves outside of the orbit of the law. As far as we can gather, the threat of prison, loss of liberty, loss of employment, and so forth has been a very successful deterrent for a majority of the population.

This is compounded by the fact that when it comes to the change in social status from being an ordinary citizen to a convicted criminal, the first cut really is the deepest. That is to say, the first time a recidivist became a criminal was the worst time for him (or her). It was on that first occasion that he became incarcerated, when up until then he had only been used to freedom, and it was then that he first experienced the change in status that would give him a social stigma and make him harder to employ. If that wasn't a sufficient deterrent, we shouldn't be too surprised that criminals are even less likely to be deterred second time around. I should finish by saying that it’s only on that point I have a quibble – I agree with the rest of the article.

Best 

James

On Fairness & Equality

What's the difference between a parsnip and fairness? Their differences are too numerous to mention, but here's just one: Everyone agrees what a parsnip is without necessarily agreeing that they like it, whereas everyone likes fairness without necessarily agreeing what it is.

When I was a boy and my parents had company I would often want to stay up late to join in the merriment. My parents, knowing better, would still send me to bed if I had school in the morning. I would cry foul that their decision wasn't 'fair'. When children grow up into adults they understand more clearly what fairness means, and that decisions made on our behalf for our benefit are not as unfair as they seem. Sadly, when adults become politicians they often forget many of the things they learned about fairness. What they actually do is oscillate between two different types of fairness - the Marxist type and the Aristotelian type.

Just about everyone knows the Marxist conception of fairness, based on the maxim "To each according to his need, from each according to his ability.", where people can justifiably be treated unequally to bring about a perceived 'fair' outcome. And most people know the Aristotelian conception of fairness, which is a principle of proportionality about the need to treat equals with full equality when required, but also unequals unequally when required too.

In life we sometimes treat people unequally in order to achieve a more equal (i.e. perceived fairer) outcome. Other times we treat people equally in order to achieve a perceived fairer outcome even if that outcome produces less equal outcomes. Call the first one A} and the second one B}. An example of A} is progressive income tax. Earners are not treated equally in the tax system but the intention is to equalise society slightly more than it is by having higher earners contributing proportionally more tax. An example of B} is sport. A referee applies the same rules to both football teams (equality) even though it's more likely that the better team will win (less equal outcome).

 

When it comes to sport we are all pretty much agreed. If Real Madrid played Norwich in the European Cup they probably would win. A fair referee would adopt the Aristotelian type of fairness and treat both teams equally in terms of the rules. An unfair referee might adopt a Marxist type fairness and make biased decisions in favour of Norwich to give them a better chance of winning* .But I think the majority of fair-minded people are glad that sport is conducted under the Aristotelian type of fairness and not the Marxist one.

 

But when it comes to income tax we are not all agreed. Some people take a more Marxist view of fairness and want high and low earners treated unequally to bring about a fairer society, whereas some people would prefer an 'all people equally' Aristotelian approach which confers a flat rate of tax on everyone. And it’s not just income tax – there are many others socio-political issues about which people regularly disagree regarding fairness: the minimum wage, positive discrimination, drug use, education, and so on.

The problem that underpins this situation in politics is that most leading politicians are slightly more hamstrung because they work on the basis of "That which is good for vote-winning is a good model for fairness" - which means they apply the Marxist type and the Aristotelian type of fairness for their convenience, often inconsistently.

It’s exasperating to keep hearing politicians saying they want a 'fair' welfare system or a 'fair' pension system or a 'fair' tax system, without giving even the slightest elaboration on what they mean by fair. Is something 'fair' if the process by which it arrived is fair? Or is fairness an equitable distribution of something? If a politician fails to explain what he means by 'fair' his statement is ambiguous to the point of being facile.

 

They often mean equitable distributions when they talk of fairness - but an inequitable distribution need not be unfair. Take a factory as a good example: a floor worker, a supervisor, a manager and a company director have an inequitable distribution of the business's money but that doesn't make their salary unfair. Equally, stealing from the business in order to give everyone a fair slice of the pie would be an equitable distribution but the process by which it arrived is unfair.

They also often mean inequitable distributions when they talk of fairness - but an equitable distribution need not be unfair either. Take university education as an example. Cambridge and Oxford universities are the seat of academic excellence in the UK. The statistics show that only 10% of UK pupils are privately educated yet around 50% of Cambridge and Oxford graduates are privately educated. Politicians on the left continually bemoan this 'unfairness'. They are confused. A scholastic system is fair if results match ability, hard work and diligence. If Cambridge and Oxford are trying to attract the most academically gifted students in the country, and if 50% of the most academically gifted students in the country are in private schools, then Cambridge and Oxford's admission policy is completely fair.

 

Because of the ambiguity regarding fairness, politicians switch back and forth from A} an “equal to achieve an unequal outcome” meaning (like sport) and B} an “unequal to achieve an equal outcome” meaning (like progressive income tax), knowing they can get away with it because most people won’t notice. Sadly, there are plenty of instances of A} that should be a B}, and B} that should be an A}.

Here are some examples where politicians or the authorities adopt a Marxist conception of fairness when they should be adopting an Aristotelian concept, and vice-versa. The mansion tax, the minimum wage and positive discrimination are all examples where an Aristotelian conception of fairness would be better employed instead of the Marxist conception that is usually employed. People with mansions should be treated equally with regard to tax on their property but instead they are penalised unfairly. People in the labour market should have an opportunity to work commensurate with the value of their labour, but instead the imposition of a minimum wage unfairly precludes many low-skilled workers from employment. Positive discrimination laws artificially smooth the path for some by artificially disadvantaging others.

 

On the other hand there are examples where the Marxist conception of fairness would be better employed instead of the Aristotelian conception that is usually employed. Stop and search regulations are good cases in point. The authorities treat people far too equally here when instead they should be targeting people who have a greater probability of being the people actually committing the crimes.

Generally, this notion of equality has a lot to answer for, because humans are not equal. For a start there is the key differences between women and men, there is the difference between those who try hard and those who do not; there are differences in people's genetics, family background, upbringing, geography, natural talents, mental capacity, and so on. One also mustn't forget that nature is not very democratic at all. When it comes to health, looks, size, shape, talents, intelligence, sensory apparatus, opportunity and background - there is a notable difference in all of these human qualities in each of us, as nature pays no regard to democracy.

Not only do too many of our politicians hyper-inflate the notion of equality - they also pick and choose which conceptions of fairness they want to use in a way that best enhances their popularity and reputation. And that's not 'fair' on the general public at all.

 

 

* Sometimes in sport there is handicapping. In horse racing, handicaps are races which make more equal horses of varying levels of ability. The idea is that the better horses in the race carry more weight than the poorer horses, giving a more equal chance of slower horses winning, if they all run to the best of their ability. But handicapping aside I think the majority of fair-minded people are glad that sport is conducted under the Aristotelian type of fairness.

What Really Motivates Our Lawfulness Isn't The Law

In my last Blog post I pointed out a Home Office error of reasoning about prison deterrence. I wanted to say something else about deterrence, but felt it would be better in a separate Blog post. Despite what I said about prison being mainly a deterrent against first time offences, it's also the case that the law is not the strong motivational, incentivising device many think it is - human rationality is the real motivational, incentivising device that enables us to have the relatively peaceable co-existence we have in places like the UK.

Imagine a man in the ancient Assyrian empire living in 1200 BC - a time of sieges, cross-border invasions, sanguinary conflicts and relative lawlessness. Suppose he gets transported to modern day Britain. As well as marvelling at the technological advances, the thing that will strike him most would probably be how peaceful, tolerant and stable it is.

Anyone who has studied history knows that peace and good order are far from the natural condition of human beings. The freedom, liberty, stability and security we have in the UK would probably strike our Assyrian man as being as marvellous as all the modern day technology (of course, if you transported him to present day Syria, or Ukraine, or Burma - or London during the 2011 riots - he'd soon feel more at home).

How have we become so ordered? Clearly not just by authority. If the majority of UK citizens decided to seize control over the authorities, they would have more than enough numbers to do so. Suppose you were asked to form an allegiance with an ever-expanding majority group who wanted to take control of the UK, and had the power to do so. Under this power you could join them in running riot - stealing from banks and shops, raping whomever you fancied, commandeering rich people's houses, swim in their pools, drive their Aston Martins around, and generally take advantage of being able to do what you wanted. I think you know straight away that you'd be prohibitively reluctant to join - in fact, you'd probably be on your knees praying that they don't go through with it.

The reason is obvious - despite some possible temporary gains, the losses are greater, as no one wants to live in such a society. Clearly, then, we are ordered not primarily out of fear of the law, but because we want to be ordered and want to live in a stable and safe society. Some moral philosophers will tell you that we are ordered because we all share the same views about what is right and wrong.  One careful look at society shows that this is moonshine - we differ greatly on all kinds of moral views. Therefore I would suggest that the moral philosophers who postulate this view have got their reasoning backwards - it is precisely because we have little chance of agreeing if all left to our own devices that we leave it to the devices of an elected government instead, and volunteer our active part in ensuring that those State-run devices are used as little as possible.

In all likelihood, until the past few decades a great many people had been brought up on a diet of people like Thomas Hobbes' and his portents in the Leviathan, according to which the benefit of the State is that it helps engender the kind of order of which we'd be devoid without a heavy authority in place. Without it life would be "nasty, brutish and short" according to Hobbes - which, as we know from history and from present day places without a stable State and rule of law, can be the case.

What Hobbes underestimated is the extent to which people have an incentive to adhere to the law if it is consistently enforced and that the State has an easier time policing a nation whose citizens adhere to the law, as well as an incentive to create laws that best incentivise. Hobbes got this part wrong - he believed that our natural brutishness necessitated a strict authoritarian State that could keep us in good order. He failed to appreciate the true strength of the symbiosis between willing citizens and willing State to work together to constrain us only to the extent to which our willingness to be co-operative was realised.

* Photo courtesy of hurstpublishers.com

The Prison Deterrence Fallacy

Now it's fairly obvious that there are a number of factors behind this difference between Sweden and the USA; things like number of laws, population size, levels of diversity, and varying levels of cultural tolerance on things like social behaviour, drugs, and so forth. On the last one, which is a big determiner of crime, apparently - "The drug policy of Sweden is based on zero tolerance focusing on prevention, treatment, and control, aiming to reduce both the supply of and demand for illegal drugs".

 

I won't comment any further on the prison situation in Sweden or the USA, because I'm not extensively researched on either. But I do have something to say on UK prisons, as there seems to be a fundamental error of understanding that I can hardly believe is uttered by our Home Office representatives. Here's what led me to witness this strange piece of logical foolishness.

 

Apparently, the story goes like this: after Vicky Pryce emerged from her period of incarceration and publicly claimed that prison is 'not fit for purpose', our Home Office team have been working hard to address the reasons why. Guess what their conclusion was? They concluded that it is primarily due to the high re-offending rate that prison is not fit for purpose as a deterrent against crime.

They base this on the fact that, according to Home Office statistics, 3/4 of criminals are recidivists. What that means is that 75 out of every 100 criminals released from prison re-offend. Actually, that's how many are convicted - and given that not all crimes result in a conviction, it's a fairly safe bet that more than 3/4 of criminals end up reoffending.

 

But saying that prison isn't fit for purpose because of high re-offending rates is an absurd complaint, and a peculiar error of reasoning. It's a bit like complaining that sea defences aren't fit for purpose because occasionally there are extreme coastal conditions that break those barriers. It would be good if the sea defences prevented all flooding, but their primary job is to protect the land from the ordinary thrust of the sea on a daily basis. Similarly, prison's primary function is to reduce offending (by deterrence and by keeping criminals out of society), not re-offending. If it reduces re-offending then all well and good, but that is not its primary function.

It's preposterous to consider whether prison is fit for purpose by only considering the recidivism rates. It's as preposterous as considering how many men in the UK take steroids by only interviewing weight-trainers in gymnasiums. Such a biased research method would drastically skew the overall figures, and this is what is going on with the Home Office's consideration of prison's success rate. Recidivists are people who've already been convicted of a crime, so they are people for whom the threat of prison was no real deterrent first time out. Therefore they are the biased sample of the population for whom prison is the least likely to be a deterrent second time around.

The only proper way to enquire whether prison is fit for purpose is to ask how much of a deterrent it is for the vast majority of people in the UK - those who haven't found themselves outside of the orbit of the law. As far as we can gather, the threat of prison, loss of liberty, loss of employment, and so forth has been a very successful deterrent for a majority of the population.

 

This is compounded by the fact that when it comes to the change in social status from being an ordinary citizen to a convicted criminal, the first cut really is the deepest. That is to say, the first time a recidivist became a criminal was the worst time for him (or her). It was on that first occasion that he became incarcerated, when up until then he had only been used to freedom, and it was then that he first experienced the change in status that would give him a social stigma and make him harder to employ. If that wasn't a sufficient deterrent, we shouldn't be too surprised that criminals are even less likely to be deterred second time around.

 

Now, it's here that we must mention perhaps the most important word - 'rehabilitation'. A prison system works if it successfully rehabilitates offenders. And, alas, high re-offending rates in the UK shows that prison is not working as well as it could in its quest for rehabilitation. I think that's a better argument for prison 'not being fit for purpose' than saying it's failing as a deterrent - but there is a caveat.

 

I fully support the notion that rehabilitation is a primary goal in the judicial system, but unless deterrence and incapacitation are part of that process, a strong rehabilitation ethos might by itself actually increase crime instead of reduce it. Here's why. If rehabilitation is made a primacy at the cost of diminishing deterrence and incapacitation, would-be criminals will see the cost of committing crimes diminish, and this would likely increase their desire to take risks and commit crimes. Yet equally, I don't actually like the notion of punishment for punishment's sake at all - I don't think it has the desired effect on the individual, even if it does stop would-be criminals trivialising the risks by seeing rehabilitation as a too softly-softly measure. If there is to be punishment, let it be part of the overall effect of incapacitation and a strong focus on rehabilitation.

* Picture courtesy of Facebook

Live TV Trials, Judges & Probability

In the midst of the Oscar Pistorius trial there has been some debate about whether live TV trials are a good thing or not. I suspect it’s as broad as it is long, but ironically the probability of whether live TV trials are a good thing or not is similar to the probability the judge faces in the trial itself (there are no juries in South African trials).

In both situations we have a probability of 1 or 0, but asymmetry of information too - so even though there is a decision to be made, its efficacy is based on a system where, when considering 1 or 0, all bets are made up of amateur decisions made by one person with incomplete information. If the judge thinks that Oscar Pistorius is guilty with a .6 probability of being right then that's as good as a guilty verdict. If the judge thinks he's guilty with a 0.3 probability of being right then that's as good as an innocent verdict.

In other words, all probabilities less than .5 are tantamount to one verdict, and all probabilities greater than .5 as are tantamount to the opposite verdict. That is why I say the jurisprudence mechanism is 'amateurish' - not that it necessarily needs to be revised (although I do offer some suggestions for revision in these Blog posts here and here) - but that it operates under a loose probability system that you'd never see in a science lab, or in manufacturing, or engineering, or cartography, or NASA, or places of a similar nature. For that reason, the case *for* live TV trials and the case *against* them may not have much in them in terms of their persuasiveness. 

* Photo courtesy of digital spy