Economic Crime Kills

Going PostalI’ve been sick and so I’ve been re-watching some movies. Last night, I put on Terry Pratchett’s Going Postal. At one point, Mr. Pump says that Moist Von Lipwig has killed many people. Lipwig counters that he never even drew a sword. Pump responds, “You have stolen, embezzled, and swindled. You have ruined businesses and destroyed lives. When banks fail, it’s not bankers who starve. In a thousand small ways, you have hastened the deaths of many. You did not know them. You did not see them bleed. But you snatched bread from their mouths.”

There is a conservative reading of this, of course. It’s the old “get tough on the criminals” line. But that isn’t what Terry Pratchett is saying. The whole of Going Postal is a radical critique of free market idolatry. The point is this: economic crime kills. But in our system, we don’t talk about that. We pretend that physical and economic harm are different. If a criminal tied a victim to a chair and let him starve to death, that would be considered murder. If the same criminal merely prevented a victim from having a job so he could buy food, that would not be considered murder. (See my article Property Rights for a discussion of the myth of freedom in a modern economy.)

We know that poor people have much lower life expectancies than rich people. In the upper half of the income distribution, people live about 5 years longer than people in the lower half. This means that our economic system hastens the deaths of many. When a venture capitalist fires hundreds of manufacturing workers, he lowers the life expectancies of those workers. Let’s suppose he does that to 1,200 workers and takes an average of one month of life away from each. That’s a hundred years of life. That’s a lot more life than your average murder takes away from his victim. Yet we don’t even see what the venture capitalist does as a crime, much less punish him for it.

I realize it is more complicated than this. And I am not calling for a communist revolution. In fact, I am actually a big proponent of a market system. My problem is not with the venture capitalist. He is just doing what society tells him to. The problem is the society itself. We live in a rich nation. If we wanted to, we could provide everyone with a base level of support. There is no reason why Americans need to feel insecure about their futures. But it’s a choice. And the choice that we’ve made is to allow some to become insanely rich while others live under the eaves of the downtown library.

And where might that money come from? I’ve written about this a lot because I think the most important issue we face as a country is economic inequality. The explosion of inequality is the direct and indirect result of government policy. According to the Economic Policy Institute, in the years from 1917-1981, the bottom 90% of income earners received 69% of the gains from productivity increases. In the years 1981-2012, the bottom 90% of income earners received 4% of the gains from productivity increases.

An indication of this can be seen in CEO compensation data from Bloomberg. In 1950, CEOs of Fortune 500 companies made 20 times what the average employee at their firm made. (Average, not minimum.) By 1980, the number had risen to 42. Today, it is 204. This is not all about taxes. There are plenty of other ways that the government over the last 60 years has made owners rich at the expense of the poor. One of the most important is the way that Reagan basically abolished all labor law and allowed unions to be all but destroyed in the private economy. (And Democrats have done nothing but help that along since then.)

Economic crime kills. Legal economic activity kills. The government should do something about that. But as income inequality has skyrocketed, the government has only become more beholden to the rich. It is far more interested in seeing to it that the rich can transfer their wealth to their kids without paying taxes than that the poor can live with a modicum of dignity.


Data were taken from The Young Turks May Day video.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

0 thoughts on “Economic Crime Kills

  1. You should become an evil, powerful person. They never get sick. Or they do, and jet to the best advanced-treatment facility in the world. Either way, they stay healthy.

    I’m new to Pratchett, but I will be reading more. "Small Gods" was a witty joy, with an ending so wonderful I actually became a little sentimental. (Not usually in my nature.)

    "How would we pay for it?" Well, taxing the hell out of the rich would be a good start. But the average person should pay for essential services, too. Problem is, the average person doesn’t have much money to spare, and what taxes he/she pays are wasted by the military.

    Unions not only protect workers from abuse, they raise wages. And rising wages are a good thing (as long as essential needs are price-controlled to protect inflation.) They enable people to afford paying taxes (all the better if their tax money is allocated to useful expenditures like infrastructure and a social safety net instead of murderous, expensive, and generally poorly-made weaponry.) They enable people to buy more things beyond necessities (which should not be taxed), like entertainment and luxury items (which should.)

    One thing that’s never mentioned — raising the standard of living for EVERY job (through unions or mandatory wage levels or whatever) increases productivity madly. How many bright people who work in the financial sector, or as medical specialists, really enjoy their jobs? Some. most do it for the money and social cachet.

    Imagine if people did their jobs because they liked the work. Some people like cleaning. (My SO would make a fabulous janitor.) Some people like organizing parts into a whole. Some like building good brick walls or doing a masterful paint job.

    Many people who perform "manual labor" are bright, but many also dislike the work, doing it because they lacked the privileges which ease one’s way into more lucrative careers. Many who do like the work half-ass it because the benefits of their efforts go entirely to other people.

    If everyone (after trial-and-error) found work they enjoyed (and every job paid reasonably well, with some difficult or dangerous jobs paying more than others), productivity would skyrocket. People who enjoy their work take pride in doing it right. The brighter ones would be able to instruct the less naturally-gifted. What’s more, the people in finance and medicine would be those who enjoyed their work, and felt less need to cut corners for higher benefits.

    Would a few people choose not to work? Sure. It’d be awfully socially isolating, though, and probably only the clinically depressed would do so. Would a few still obsess over being able to afford mansions and yachts? Sure, but those things would lose a lot of their appeal if they represented vanity instead of "success." Nor would it matter, in fact, if a few vain people did want those things. I don’t hate fancy restaurants because I secretly wish to dine in them (I prefer ethnic restaurants or my own cooking.) I hate fancy restaurants because some people can afford them while other people die because their health insurance wouldn’t cover something.

    An equitable system would work better. It DOES work better in every country which has one (although those countries are always under pressure to dismantle their systems for the benefit rich investors.) "Free markets" are a tenet of faith, not results. Americans are a very faith-based people . . .

  2. @JMF – I think you are being a tad idealistic. A great many of us might find janitorial work reasonably fun. (I did it for a while and rather liked it; it is immediately rewarding.) But there is a [i]huge[/i] opportunity cost for me: I could be doing something that I liked a lot more. And that’s why I didn’t do it for long.

    I don’t think people have to love their jobs. I think most people are happy to be able to support themselves and make the best of their jobs. What they want is a reasonable standard of living for their effort. I remember in [i]Nickel and Dimed[/i] there was a cleaning woman who said more or less: I don’t mind cleaning up after the rich, but what I do mind is that I can’t afford to take a day off every once and a while.

    The solution is what we and all the other advanced countries have: a mixed system of socialism and free markets. The problem we have in the US is that we are far too close to the free market side of things. Of course, this is why it is just about impossible to talk to conservatives (especially libertarians) about this. We do [i]not[/i] have a pure free market system. I’m not sure such a thing is even possible once you get past 2 people. But the argument always comes up, "I think free markets are a great idea; we should try them!" So they will always be able to say, "It’s because the economy is not truly free!" Milton Friedman did exactly this when his "reforms" in Chile only made things worse.

    There is an interesting bit of math in this. When solving a complex model numerically, a common technique is to use a gradient search. The problem with it is that you can find a local minimum (of error) that is not the ultimate minimum. But the truth is that this is actually really uncommon. Generally, the errors get gradually smaller to the minimum. It is likely the economy is the same way. But people like Friedman want us to think that sure, things will get worse the closer you get to a totally free market system, but then right at the end, it will get much, much better. That just isn’t believable.

  3. When it comes to imagining better societies, I am not a tad idealistic — I am off the wall, crazy dingbat-idealistic. Dumb, but so am I.

    When I first visited Denmark four years ago, it was a revelation. Sailors and garage-door installers were both charming hosts and more interesting to speak with than almost any random American. Under no circumstances did anyone who performed manual labor feel the need to apologize for it. And why should they?

    Visiting it last year, I noticed a significant difference. Some people were decrying foreigners and welfare queens. Others were disturbed by this change in Denmark’s culture. The assholes were more confident and loud than the nice ones. The nice ones only opened up and expressed their views after many beverages. That wasn’t the case four years ago.

    I’ve seen what it’s like when regular people feel no need to abase themselves before winners. It’s the way things should be, and I’ll never go back.

    Me and the SO attended a wedding between two sailors. It was held in a Danish church, which, like every other Danish church, exists for weddings and funerals. The reception had fancy food (think exquisitely prepared tentacles) and fancy wine. The reception was something entirely different, with naval experts commenting on the ship that appeared to be on fire in the distance (it was on fire) and the younguns dancing badly to doofy Danish versions of American rock.

    It was magical. I loved it. It would never happen here. We hate each other based on our socio-economic status. Next to religion, that’s the dumbest reason to hate someone.

    Anyhoo . . . I’m not very good at math above calculus. I tested well but I fucking hated it. Teachers called my house and told my parents I should be more devoted to math. They were probably right.

    "Free markets" are a faith construct. If lenders giving loans have no legal means of enforcing repayment (this was the case in 15th-century Islam) then one could call that system a "free market." As it is, our legal structure makes debts owed to powerful institutions a penalizable offense. If they screw us, no harm. no foul. These are completely arbitrary distinctions and can/should be changed.

    End of rant, and sorry I don’t get the math.

  4. @JMF – I will grant you that it could be so much better. It drives me crazy that people are always saying we are number one about this or that. Do they not have a TV?

    Anyway, the thing about the math was just that if a free market was such a great thing, then free market reforms should make things better. What we’ve seen is that free market reforms make rich people richer, but otherwise are bad. Thus, a pure free market system would likely make the rich ridiculously rich and everyone else’s life would suck. It isn’t a matter of us having to get a true free market system; moving towards one shows us all we need to know.

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