We can view crime as a prisoner’s dilemma problem. If one criminal gets away with a crime, they profit at the expense of others. But if everyone gets away with crime, the situation is worse for everybody, even the criminals. What I call coercion, therefore, can be classed as a collective action problem.
There are a few possible remediations. One is social capital. Another solution, which I have defended, is state enforcement.
I have overviewed the responsibilities I think the state should take on. However, there is a deeper question to ask. How is it that government can even work as a solution?
One challenge to the whole concept of government is that laws cost more to enforce than to break. This is only true in individual isolation, without viewing deterrence.
Suppose, of a population of 10,000, there are 1,000 potential thieves. How many burglaries does the government have to stop? The naive answer is “1,000.” In fact, this number decreases when we incorporate an understanding of incentives.
Here’s the solution. Tell all 10,000 people that thievery will be punished. Then live up to that promise by punishing all thieves you find. You may have to actually punish only 100. The other 900 of the potential 1,000 will get the message. They won’t even attempt thievery, because they worry about being caught. Their cost-benefit matrix has changed. It’s like you’re stopping 1,000 burglaries for the cost of just 100.
The main purpose of punishment is and has always been deterrence. Any statement to the contrary is a platitude. Because deterrence is a type of prevention, punishment and prevention can be one and the same. Police fight crime by scoping crime scenes, taking records, and making arrests; it’s rare to catch criminals “in the act.”
Deterrence is doubly useful because of the fact that humans are loss-averse. Loss-aversion is arguably rational, but deterrence takes advantage of it. People are especially sensitive to the risk of sudden, disproportionate losses.
The next challenge to the idea of government is more fundamental. I have justified government use of force in some circumstances, but what if they use force in unjustified circumstances?
Doesn’t the government fall victim to the same trappings? Can’t the state be unfairly coercive? Aren’t I just kicking the ball down the road?
As a matter of fact, there is an english word for this problem: corruption. Broadly speaking, political corruption is the use the powers of a political office for personal gain.
There are quite a few English words for corruption, actually. Tribalism, bias/parochialism, nepotism, political networking, influence peddling, clientelism/patronage, favoritism, collusion, embezzlement, kickbacks, graft, cronyism, bribery, extortion/blackmail, political repression, above the law, extrajudicial punishment, obstruction, voter suppression, election fraud, voter fraud, freedom crackdown, misinformation/deceit, lying, lack of transparency, mob justice, subversion/insurgency, overreach, treason. I don’t want to define all of those words, but they’re all a slight different type of corruption.
I should emphasize this problem. I view corruption as fundamentally a form of unjustified coercion.
Take, for example, three extremely common forms of soft corruption: unnecessary licensing requirements, selectively waived zoning rules, and economic development incentives. Let’s play a game: spot the coercion.
Unnecessarily licensing requirements are protectionist rackets. They are drafted, in the interest of existing businesses, to prevent entry of new businesses into the market. The result is rent-seeking through regulatory capture. The coercion in this case is pretty obvious: people are being forcefully prevented from practicing in an industry.
Some famously very-high paying jobs are physician, lawyer, and fiduciary. Of course, all three have licensing requirements. The licensing requirements are perhaps necessary in those cases. However, they are too strict, I think. Their high pay is good, but it comes at the cost of expensive health care, expensive legal representation, and expensive financial advice. Special interest groups can always lobby to tighten the regulatory strictness in their industries to selectively benefit themselves at the expense of the economy.
The second case is selectively enforced zoning laws. The coercion is in the word “laws,” as laws are always coercive. They are “unjustified” because they are selectively enforced. Laws should not privilege some people over others; they should apply evenly. Just as a tax break is the same as a subsidy, selectively enforced laws are the same as special gifts.
At whose expense? Of the people for whom taxes, regulations, and laws do apply. When strict laws are laxly enforced, it effectively removes the separation between lawmaker and enforcer.
The third type of corruption is economic development incentives. You may not know what these are. Economic development incentives are special incentives that state or local governments offer to corporations for them build, relocate, or expand into their area. They come in the form of special tax breaks, regulatory exceptions, special gifts, or other perks.
Economic development incentives cost local governments billions. They are framed as capitalist. They are quite the opposite. They are corporatist, and the antithesis to fair competition. Large companies have advantages over small companies here, because they have more weight to pressure government with. This makes it more difficult for smaller companies to compete. It’s not just a way for governments to pick winners and losers in the economy; it’s fundamentally a way for governments to pick the status quo.
The most frustrating thing is that no one seems angry enough about this. Some people are oblivious to the problem with whole industries playing by different rules. Others only criticize these schemes on the grounds that they don’t hold companies accountable enough. The hell with that, these schemes should’t exist in the first place! Amazon recently held a competition for cities to offer them special perks, and no one complained. So much for laboratories of democracy.
So, corruption exists. No big surprise. What’s the solution?
A naive fix is to appoint an overseer, or a commission of overseers, to watch over government workers, to crack down on corruption. But that just pushes the ball down the field. You are simply increasing the number of people who can be corrupt! You need to appoint a overseer for the overseer, and an overseer for him, and an overseer for him, and so on, until what? This is a classic problem of “who watches the watcher?” Making a chain longer only creates more weakest links.
This problem seems impervious. But what if it wasn’t a chain of command, but a web? What if it wasn’t a hierarchy, but a network?
You were taught a classic case in elementary school. There are three branches of government, all theoretically equal, and every branch theoretically “checks” every other branch. You were taught that this is called “separation of powers.”
If three separated powers, why not 300? Better yet, 3 equal committees within 3 equal departments within 3 equal branches within 3… and so on.
The key is that the network as a whole structurally “checks” each node, much like a cryptocurrency, making the network is stronger than any of its components.
And now we have a collective action problem in our benefit. Even if most government workers want to be corrupt, most can’t, because each has to gain by ratting out the other. Under such a system, corruption would require (hopefully) unachievable levels of coordination between corrupt officials. Otherwise, corruption is punished, and therefore deterred.
These are self-reinforcing mechanisms. The fewer people cheat, the fewer resources are needed to catch the cheaters, which makes it even harder to cheat. And vice versa. There is a tipping point; high-trust societies on one side, and state collapse on the other. It’s easier to be corrupt in a society where corruption is expected.
With that said, this is more than just an engineering problem. There are demographic and cultural factors that influence movements on the spectrum of trust. Corruption will ooze from the cracks in cultures of short-term self-interest, despite how the system may be designed.
So coordination problems can uphold liberty. But be warned: so too can they be abused by tyrannies. I never said all governments are good. I say only that they can uphold whatever principles their societies value, by punishing objectors within their ranks.