Every time we turn on the news, we are consumed with outrageous stories of people committing violent crimes. Since our first instinct is to cast stones at these criminals, we often neglect asking ourselves why it is these people commit crime. This isn’t to say that victims of crimes should not receive a just compensation, but rather this is an intellectual discernment of the criminal’s incentive to commit such acts.
Before diving into my rationale, I must let the reader know that my analysis is based in economic theory and praxeology. While we typically believe that economics only has to do with monetary transactions, Ludwig Von Mises proposed that all human action is in turn economical. The subjective value theory holds that individuals act because the action is of value to them. Voluntarily deciding to read this article is economical because you value it more than using your time to do something else right now.
There are four main principles in microeconomics. They are:
- People face tradeoffs: to obtain one thing, you must give up something else
- The cost of something is what you give up to get it: opportunity cost
- Rational people think at the margin and will act if the marginal benefit exceeds the marginal cost
- People respond to incentives
Simply put, man is self-interested and will naturally seek to improve his living conditions in order to maximize his utility. History has shown us that the most moral and efficient means of accomplishing this is by peacefully and voluntarily cooperating with one another through trade. When two parties come together to trade, they mutually benefit. If I trade $10 for a hamburger, I benefit because I value the hamburger more than the money, and the seller benefits because he values the money more than the hamburger. This is why an unfettered free market is able to ensure maximum utility and efficiency.
Unfortunately however, we live in a society where trade is heavily regulated and voluntary transactions are hindered. I cannot even open a lemonade stand or create my own currency without the threat of being kidnapped and locked in a cage. Because such intrusions into the market exist, productivity is stifled. As a result of this, opportunities are also squandered, and people are not allowed to naturally flourish without being threatened with violence by the state.
As such, the state holds monopoly power over very important services. A monopoly as large as the state answers to no one since it is funded by theft, and therefore the benefits are not mutual. Their services will always be corrupt since they can abuse their powers without the worry of losing customers. Because of this, they can continually interfere in people’s private affairs without any market repercussion.
The more the state interferes in a person’s life, the more his opportunities to provide for himself and his fellow loved ones dissipate. Despite the fact that his opportunities will take a nosedive, the principles of economics will still remain constant. Man will still be self-interested and seek to gain maximum utility.
Let us take a look at the city of Chicago, where crime runs high and the government intervenes in nearly every aspect of life. Chicago recently increased the city’s minimum wage to $10 an hour, and as basic economics shows us, increasing the minimum wage creates unemployment. As Austrian economist Murray Rothbard once stated, “In truth, there is only one way to regard a minimum wage law: it is compulsory unemployment, period. The law says: it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result.”
The following chart further enumerates Rothbard’s point about how the minimum wage creates a surplus of labor.
Chicago consequently has a staggering 91% unemployment rate among black youths. By outlawing free and voluntary interactions below a certain pay wage, these youths have had their opportunities greatly limited. The market for baseline jobs that require little to no skill are now that much harder to attain, since the state does not permit these youths to volunteer their labor for anything less than the mandated wage.
While the minimum wage is one example of an intrusion into the market, it is of course not the only factor at play here. There are many other market intrusions that exponentially raise costs for business owners, such as permits, licenses, utilities, and property taxes. For each of these factors, the same principles apply. The more government intrudes into the economy, the more free and voluntary interactions become either directly or indirectly outlawed, leading to a greater number of unemployed people facing these tradeoffs. It’s no wonder then that a city such as Chicago, which was once voted the most unfree city in America, has a murder rate 4 times greater than the national average. Chicago’s stringent gun control laws also raise the incentive to commit violent crime, since criminals can count on their subjects being disarmed.
The self-interested man will still look for incentives to provide for himself, and as a result, many will turn to street crime for quick cash. While they likely recognize that such acts are immoral, the marginal benefit gained from committing street crimes surpasses the marginal cost of arduously searching for a non-existent job. Because they are left with little to no alternatives to provide for themselves, they resort to either black market activities or violent crime as a means of accomplishing this.
Many conservatives will refuse to sympathize with such economic reasoning, but the fact of the matter is that this is how the laws of economics work. The theory that people commit crime because of their culture does not hold up to honest scrutiny and wholly ignores the underlying problem that created a culture of violence to begin with. The root of the issue will always stem back to the fact that people had their opportunities squandered and were left with no other alternatives.
Most people would also probably say that choosing to commit crime is not a rational decision. However, when we say “rational people think at the margin,” the word ‘rational’ does not inherently imply ‘moral’ or ‘wise,’ as we are attuned to believe. As Ludwig Von Mises stated in his book Human Action, “Human action is necessarily always rational. The term ‘rational action’ is therefore pleonastic and must be rejected as such. When applied to the ultimate ends of action, the terms rational and irrational are inappropriate and meaningless. The ultimate end of action is always the satisfaction of some desires of the acting man. Since nobody is in a position to substitute his own value judgments for those of the acting individual, it is vain to pass judgment on other people’s aims and volitions. No man is qualified to declare what would make another man happier or less discontented” (Mises, Human Action, pg. 19).
Mises continues by stating, “The impulse to live, to preserve one’s own Iife, and to take advantage of every opportunity of strengthening one’s vital forces is a primal feature of life, present in every living being.” Therefore when one commits crime to put food on his table, it is oft not because he finds pleasure in such activities but because his opportunities have been squandered and he must fend for his very survival.
The American liberal will contend that people commit crime because government is not interfering enough in people’s lives. They believe that if only the state would steal more wealth from people, they would be able to redistribute more funds to failing public schools to better educate the youth. However this will have two adverse consequences. The first consequence would be that businesses would have to layoff employees in order to accommodate the rising cost of taxation, which will then force the newly unemployed folks to face the same tradeoffs as the Chicago teenagers committing crime.
The second consequence is that since the state has a virtual monopoly over education, failing public schools will never face market repercussions. Costs for education will remain high since there is no competition to lower the prices. In addition to this, no matter how much money you siphon to public schools, situations will never improve if the product is still a failed one. Funneling more money into failing schools that cannot fire bad teachers is akin to investing in Sony VCR players when you want to watch Blu Ray movies.
The biggest fear people have of a free society is that it would lead to chaos. It is first worth noting that what we have now is utterly chaotic. And secondly, based on the laws of economics, there would be zero incentive to commit crime in a free society. This isn’t to say it will be a perfect utopia free of crazy loons, but the fact of the matter is that the marginal benefits of committing violent crime will never outweigh the marginal costs. In a society where the economic opportunities are literally endless, there would be no incentive to pick up a gun and acquire wealth through force. Those that wish to do harm would also not have any vulnerable victims to prey on since they would have no idea who is armed. Violent crime would be as low as humanly possible, and the market would continue to adapt to find better ways to quell whatever crime does manage to exist.