Crime and Punishment: Some Costs of Inequality - Economix Blog - NYTimes.com

Crime and Punishment: Some Costs of Inequality - Economix Blog - NYTimes.com

Nancy Folbre is a professor of economics at the University of Massachusetts Amherst.

Once upon a time, economists told us that efforts to reduce income inequality would be punished by lower economic growth. The title of a famous book published by Arthur Okun in 1975 tells the story — “Equality and Efficiency: The Big Tradeoff.”

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Economists across the political spectrum have turned the logic of laissez-faire around, emphasizing that rational economic agents are easily tempted to misbehave. Jack Hirshleifer, a highly respected mainstream economist, has called attention to “the dark side of the force” — crime, war and politics. Why participate in the market if you can do better by engaging in theft or fraud?

To paraphrase Bob Dylan, if you ain’t got much, you ain’t got much to lose. On the other hand, the more you got, the more you got to protect. Richard Wilkinson’s new book, “The Impact of Inequality,” summarizes evidence from comparative studies that violence is greater — and trust and cooperation lower — in more unequal societies. (He also argues that inequality is bad for health, a topic I’ll return to in a future post.)

Both crime and incarceration go up along with inequality. In the United States, we incarcerate a higher percentage of our population than any other country in the world. The sociologist Bruce Western and others argue that reduced economic opportunities for young black men help explain increases in our incarceration rates over the past 20 years.

The average cost of maintaining a prisoner in a federal facility, estimated at over $23,876 in 2005, was higher than the average cost of attending a private college or university in that year.

In an article titled “Garrison America,” the economists Samuel Bowles and Arjun Jayadev argue that “guard labor” (defined broadly to include all those who protect property or impose discipline on others) diverts resources from more productive uses. In more egalitarian countries like Sweden, less guard labor is required.

Even small differences in inequality have a discernible effect. For instance, the percentage of total employment represented by private detectives, investigators and security guards goes up in major cities along with household income inequality as measured by a Gini coefficient (see chart). More than 1.2 percent of all employees in New York, Los Angeles and Miami — all relatively unequal cities — worked as private guards in 2000, compared to 0.6 percent in more egalitarian Minneapolis.

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