David R. Henderson  

The Bottom One Percent

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I gave a short talk yesterday at a mixer of the Monterey County Libertarian Party, Libertarians for Peace, and Seaside Taxpayers' Association. I always try to come up wth something a little new that I haven't said before, so I don't get stale. Here's part of what I said. I started with:


The issues today--whether local, state, or national--are our issues. In each of the major issues of the day, the government is the problem, not the solution. And we libertarians and anti-tax groups are the leaders.

I don't have time for all the issues because I promise to stick to a 10-minute limit. But let me hit a few of them:

The Debt, the Poor, the War.


The new part is about the poor:
We hear a lot about the top 1%. We don't hear a lot about the bottom 1%. There are about 313 million people in America today. 1% of 313 million is 3,130,000. In our prisons today are 2,200,000 people. So the people in prison are 2/3 of one percent. And their wages are typically about 23 cents an hour. They are, essentially, the bottom 1%.
Many of them are there for violent crimes, theft, fraud, and other such things. But hundreds of thousands of them are there for buying, selling, or producing illegal drugs. The drug war has put them there. And we taxpayers are paying $30,000 a year and more to keep them there.
So let me get this straight: high-income people are paying lots of taxes so that the government can put poor people in prison and keep them poor or put non-poor people in prison and make them poor.
We hear the occupy people advocate taxing the top 1% more. I've got a better idea: let's tax the top 1% less--they're already paying a disproportionately high share of taxes--and let a few hundred thousand of the bottom one percent out of prison and out of their grinding poverty in prison.


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COMMENTS (17 to date)
Evie Adomait writes:

I completely agree and in Canada it seems that it is the Federal Conservatives (anti-tax and anti-government spending in theory) who are committed to the costly (on many levels) anti-crime agenda. I don't think Canada's conservatives are particularily unique. Why is this combination so prevalent?

[url directed to blog--Econlib Ed.]

Jack writes:

I think this is a clever and logical argument to make, creating a bridge between anti-poverty crusaders and drug-decriminalization crusaders. Nicely put!

Becky Hargrove writes:

How did the group respond? I try to be an advocate for the marginalized, of which our prison population is a huge part. Any efforts in the future for the poor to create their own wealth will especially need to focus on those who will be getting out of prison at some point.

John Goodman writes:

I agree. And for those who are kept in prison, let's allow factories behind bars, so that they earn more than 23 cents an hour.

Here is the principle: just because a person is imprisoned does not mean he should lose his right to work. In fact, prisoners should be able to work for any employer at any task, consistent with the prison's need for order and security

David R. Henderson writes:

@Evie Adomait,
I don't think Canada's conservatives are particularily unique. Why is this combination so prevalent?
Good question. My best guess is that it’s a “people like us” thing: We don’t use drugs and so we don’t sympathize with those who do.
@Jack,
Thanks.
@Becky Hargrove,
They responded quite positively to the speech. But I packed a lot in to 10 minutes and so I don’t know specifically about this part. Good for you for being an advocate for the marginalized. I’m more so now that I’ve had friends who went to prison or barely avoided doing so, all for victimless crimes.
@John Goodman,
In fact, prisoners should be able to work for any employer at any task, consistent with the prison's need for order and security.
Fantastic idea. Also, it’s a two-fer: they make more money, acquire skills, or slow the erosion of skills, and some of it could go to pay for their room and board.

Loyal Achates writes:

You're silly. It's the top 1% who are already profiting from the prison-industrial complex and the country's excessively harsh criminal penalties. They have no reason to want to end the cycle.

Becky Hargrove writes:

Loyal Achates,
As a single item on the nation' agenda, you certainly have a point. But when this issue is placed into a larger context that really starts to coalesce, that's another matter.

Tracy W writes:

Loyal Achates - do you have an empirical base for your assertion? For example, are the top 1% unusually invested in the equipment supplied to prisons? (relative to the rest of the asset-owning population, which of course includes people with money in pension funds).

I find your claim surprising, really, as for example I understood the Marxist analysis to be that rich capitalists initially benefit from a lot of unemployment keeping down wage demands (albeit Marxist analysis then goes onto say that the rich capitalists lose in the long-run from the impoverishment of the population). If people are locked up, and forbidden to work, they can't be putting downward pressures on wage demands.

And, on a more empirical basis, I've lived in poor neighbourhoods and rich ones, and in the poor ones there's been quite a few more attempted burglaries on my home than in rich ones. While I was at high school, I was living in a poor area and attending a high school mostly attended by those living in rich areas, and the anecdotal rate of attempted burglaries in my home area was far more than that amongst my school-friends living in rich areas. I think statistics bear this out - most of the people who suffer from crime live close to the criminals, and thus don't tend to be the top 1% in wealth.

R. Richard Schweitzer writes:

It seems quite common when statistics of these kinds are noted, that they are seldom (if ever) followed up by the questions (let alone tentative conjectures) as to what group or individual interests in our social order are served (or benefited) by the creation or maintenance of the conditions recited.

Most conditions extant in an open society (so it is thought) are the result of the inter-play of competing, complementary, or cooperative interests reflected in the relations among its members.

Is it likely that that these recited conditions would exist if there were not discernable interests served to cause or maintain them?

Ken B writes:

DRH:


@Evie Adomait,
I don't think Canada's conservatives are particularily unique. Why is this combination so prevalent?
Good question. My best guess is that it’s a “people like us” thing: We don’t use drugs and so we don’t sympathize with those who do.

Let me posit another consideration. It's a 'caring' credential. Those who want to cut governemtn are called uncaring. Tough-on-crime is a way to prove you care about innocent victims.

Note that David's theory is yet another example of 'small govt types are uncaring'! In this case, the charge they are just parochial -- the same charge made when they want to cut taxes or programs. Ironic.

Methinks writes:

I'm in the top 1%, Loyal, and I fail to see how I'm benefiting from being forced to keep drug users and dealers in prison. Nor do I understand how I benefit from the resulting encroachment of the police state and the rise of civil asset forfeiture. Maybe you can enlighten me on these invisible "benefits" because all I see is the rise of the menacing state.

Roger Magyar writes:

What is the difference between advocating that the Department of Corrections operate factories and having the Department of Commerce operate facories?

Francis Menton writes:

Excellent point, but why do you think that people who actually have some income (23 cents per hour times 1000 hours = $230 of cash income) are the bottom 1%? I think that the bottom several percentiles have negative or, at most, 0 income. Examples: (1) Trust funder with no job sells assets at a loss and lives off the proceeds; (2) early retired couple with million-dollar house takes reverse mortgage on house and lives off proceeds prior to taking social security; (3) graduate student gets tuition, room and board provided in-kind (these don't count as income). There are plenty more examples to get you through several percentiles before getting to people with actual positive income. The real bottom consists of very wealthy people who sell big assets at a loss. They can very easily have income in the negative millions in any given year.

NL_ writes:
I completely agree and in Canada it seems that it is the Federal Conservatives (anti-tax and anti-government spending in theory) who are committed to the costly (on many levels) anti-crime agenda. I don't think Canada's conservatives are particularily unique. Why is this combination so prevalent?

Because conservatives support traditional institutions and traditional values. To conservatives, policies are bad if they seek to remake society and good if they seek to retrench society. So obviously a vigorous policy of policing and imprisoning is a good thing if it keeps the criminal element in check. But taxes intended to punish the successful mainstream for the benefit of non-mainstream people is bad. However, conservatives are fine with taxes to the extent they think taxes pay to strengthen traditional society (the army, the police, welfare for people who "deserve" it, etc.).

Progressives are just the reverse. They have an instinctive urge to (mildly and symbolically) oppose the established modes of society and position themselves against tradition. High taxes are great to make society better for people who aren't traditionally powerful, regardless of whether that's the actual outcome. Mild signals like recycling and organic food are good for a progressive because they denote somebody who will challenge orthodoxy without imposing an excessive personal cost (as contrasted with donating your entire paycheck to starving Africans, which is a huge personal cost).

In practice, both sides are mostly ridiculously moderate in the policy positions they prefer and there's an enormous degree of overlap between them. They use lots of signaling and verbiage to pretend they have a huge philosophical disagreement. Very few people seem to focus on the fact that all this signaling results in actual violence by the state against a variety of innocent targets.

Steve Roth writes:

"I always try to come up wth something a little new that I haven't said before, so I don't get stale. ..."

"...the government is the problem, not the solution."

This is new? Doesn't get much staler...

"let a few hundred thousand of the bottom one percent out of prison and out of their grinding poverty in prison."

Great idea but actual policy suggestions instead of utopian notions would be great. i.e.: shorter sentences across the board based on decreasing marginal return to sentence length. (cf. Europe.) Hard-eyed, economic-thinking, frugal conservatives (and libertarians) should love the idea.

David R. Henderson writes:

@Steve Roth,
Regarding the “get stale” part: you did read the whole post above and realize that the new part is about the poor, right?
I agree with your proposal, by the way. I confess, though, that I’m not sure why mine is utopian. Maybe we use the word “utopian” differently.

Ted Levy writes:

What a foolish notion...whatever would society do with the large number of unemployed prison union correction officers? It would create a huge unemployment problem, rivaling that of the unemployment of overseers after the Civil War...

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