Sunday, July 5, 2009

The Competitive Market and Survival Economics

"Hunger can be a positive motivator" - MO State Representative Cynthia Davis

http://www.colbertnation.com/the-colbert-report-videos/232637/july-01-2009/tip-wag---cynthia-davis---fox-news

The First Welfare Theorem and most of economic theory relies on a presumption of property rights. Property rights however must be protected and enforced, and this protection and enforcement has a cost.


When an individual makes a decision whether or not to steal and violate property rights, the individual weighs his or her perception of the expected value of the attempt against the expected value of declining.


Since the expected value of an attempt includes consideration of the probability of success, a property owner can protect his or her property by manipulating these odds or the perception thereof. The property owner can build a safe or a fence or get a guard dog or hang a credible sign that such a dog may exist.


A civil society typically deters theft in a combination of three ways:

1. Patrol - reducing the odds of success

2. Investigation and prosecution - increasing the odds of capture and punishment

3. Punish - increase the negative incentive to steal


Considering that most attempts at theivery are often more "expensive" in the dangers involved than obeying the law, these methods are generally successful.


In the case of survival crime, for example, stealing to eat, these methods do not work effectively if at all.


An individual who believes that he or she must steal in order to survive will pursue theft against all but the most extreme odds and dangers. The cost of detering such an individual is extremely high as the resources spent on enforcement and punishment must be such that an individual will risk starvation rather than challenge the law.


A much more cost-effective solution (in a rich country) to prevent survival crimes is to feed the hungry. If individuals no longer believe that they will die if they do not steal, then the opportunity cost of crime is much greater.



In the case of school lunches and other school nutrition, there are further benefits from increased reception to education (which further increases the opportunity costs of crime).

2 comments:

  1. Hey, this exactly goes back to what I've said along , I once had a question about how the poor put up in this country, its because America is viewed as the land of more opportunity and America is not exactly as bad as the third world although far behind.

    Although welfare benefits are very low and subject to stingy criteria, food stamps and school lunches are a bit lets stigent.

    The video was great , but one of the authors pointed out back in a previous article

    One theory is this quote and quote middle voted against the poor in conservative areas , since most people are not hungry

    http://forums.opendemocracy.net/node/45737.

    , also people in america are hopeful at times and delusional so that keeps revolts done and crime done.

    The past couple days I was thinking about the necesity of welfare benefits and capitalism.

    If people cannot find jobs, they should receive benefits and training, however contrary to conservative mis-information, capitalism may very well cause this.

    For instance, suppose a company has 3 workers doing job X and due to advances in technology or more qualified people (lets say 2 very strong men can pick up things and move things such as in a furniture store more quickly than 3 regular guys) the company will lay off one person.

    That other person may not be able to find a job right away, well job skills and training could remedy the problem, it may take years and in a future recession no guarantees. Thus subsidies are the best option, besides and argument can be made that maybe he/she should be rewarded by past work paid in taxes.

    Conservatives then are hyopcritical because not everybody can work in a capitalisitc country , machines are lesser people may be required and its up to the companies themselves to invest and bring jobs if the former layed off employees want to work again, this may not happen soon especially in recessions. Money then is floated around not going to people, ideally then the unemployment rate can not be zero in this scenario.

    In Mississippi, due to extreme poverty , low wages, stinginess of welfare benefits the only choice is to turn to say drug dealing, especially in rural areas where lack of social services are more lacking and harder to obtain than urban areas like the south bronx which is a few stops away.

    I don't think school lunches have that much effect, its usually one meal a day, and not everybody qualifies, and it may or not be nutritious . I also don't think food is being tied to education, and education itself may or not be ecoomically beneficial (supply and demand wise) although in the long run it could be non-economically in the short run (less tennage pregancies for example, crime, social problems, boredom) .

    Feeding the hungry is not just good enough though , more subsidies are needed, as is health care which is very complex and I haven't really posted on it.

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  2. Remeber too , if people are out of work, and the government gives tax subsidies to a corporation that in itself is welfare, corporate welfare and for every tax subsidy its a cost, or it reduces competitivness by having other corporations pay the regular share.

    Thus subsidies also exist to keep people satisfied and happy, even if they are discontent they are not so disontent and dire. Its also true with a parent relationship , there may be arguments but as long as food, shelter, love and care and money are provided, the individual may decide to put up with a few inconviences living and arguing with their parents.

    This is also a perfect example or reducing opportunity costs, especially since once is heavily depending on their parents in that scenario.

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