Quartz #26—>The Government and the Mob

Link to the Column on Quartz

Here is the full text of my 26th Quartz column, “The US government’s spying is straight out of the mob’s playbook,” now brought home to supplysideliberal.com. It was first published on July 4, 2013. Links to all my other columns can be found here. My preferred title above better represents my broader theme: what governments need to do to foster economic growth.

I pitched this column to my editors as an Independence Day column. I am proud of our American experiment: attempting government of the people, by the people, and for the people. This column is about the principles behind that American experiment, from an economic perspective. 

If you want to mirror the content of this post on another site, that is possible for a limited time if you read the legal notice at this link and include both a link to the original Quartz column and the following copyright notice:

© July 4, 2013: Miles Kimball, as first published on Quartz. Used by permission according to a temporary nonexclusive license expiring June 30, 2014. All rights reserved.

Reading Ben Zimmer’s “How to talk like Whitey Bulger: Mobster lingo gets its day in court“ in the International Herald Tribune provided by the hotel during my recent stay in Tokyo reminded me of my litany of the basics the government must provide to make anything close to market efficiency possible:

  1. blocking theft,
  2. blocking deception, 
  3. blocking threats of violence.

Let me give two examples of what I have written in this vein. The first is from “So You Want to Save the World“:

If someone’s overall objective is evil or self-serving, the only way what they do will have a good effect on the world is if all their attempts to get their way by harming others are forestalled by careful social engineering. It is exactly such social engineering to prevent people from stealing, deceiving, or threatening violence that yields the good results from free markets that Adam Smith talks about in The Wealth of Nations—the book that got modern economics off the ground.

The second is from ”Leveling Up: Making the Transition from Poor Country to Rich Country“:

The entry levels in the quest to become a rich country are the hardest.  The basic problem is that any government strong enough to stop people from stealing from each other, deceiving each other, and threatening each other with violence, is itself strong enough to steal, deceive, and threaten with violence.  Designing strong but limited government that will prevent theft, deceit, and threats of violence, without perpetrating theft, deceit, and threats of violence at a horrific level is quite a difficult trick that most countries throughout history have not managed to perform.

How to talk like Whitey Bulger: Mobster lingo gets its day in court“ describes the example I have in mind when I write about “threats of violence”:

Charging “rent” is extorting money from business owners under the threat of violence.

I have thought about whether I should include actual violence in the list, but decided that, with only a few exceptions, the motivations for violence boil down to either theft or being able to provide some credibility for one’s threats of violence.

Deception covers a wide range of destructive activities. The idea that the free market requires tolerance of corporate deception is itself a big lie. Even routine secrets have a measure of deception to them, and as Sissela Bok demonstrates in her book Secrets: On the Ethics of Concealment and Revelation, the ethical justification for keeping secrets is much trickier than many people think.

Blackmail presents an interesting case that doesn’t quite fit my litany: the threat to reveal deception is used to distort the deceiver’s behavior. But there is an element of deception in such a revelation, since the selective revelation of one person’s secrets and not the secrets of others makes the person whose secret is revealed look much worse than if all secrets were revealed. I think I would fare very well if the day ever came that Jesus predicted when he said:

For there is nothing hidden that will not be disclosed, and nothing concealed that will not be known or brought out into the open. (Luke 8:17)

But I have no doubt that if someone revealed all of my secrets, while everyone else got to keep theirs, I could be made to look very bad.

The possibility that threats of selective revelation of secrets could be used by members of the government to blackmail others—or to deceive the public about the relative merits of different individuals—is the most serious concern raised by government spying. That is why I join Max Frankel in advocating that government spying be overseen not by judges in their spare time, but by a dedicated court whose judges can develop special expertise, with lawyers who have high-level security clearance given the task of representing the interests of those whose communications are being monitored, whether directly or indirectly. Frankel said it this way in his New York Times editorial ”Where did our ‘inalienable rights’ go?“:

Despite the predilections of federal judges to defer to the executive branch, I think in the long run we have no choice but to entrust our freedom to them. But the secret world of intelligence demands its own special, permanent court, like the United States Tax Court, whose members are confirmed by the Senate for terms that allow them to become real experts in the subject. Such a court should inform the public about the nature of its cases and its record of approvals and denials. Most important, it should summon special attorneys to test the government’s secret evidence in every case, so that a full court hears a genuine adversarial debate before intruding on a citizen’s civil rights. That, too, might cost a little time in some crisis. There’s no escaping the fact that freedom is expensive.

If modern technology makes it harder to keep secrets in general, I think that is all to the good. People usually behave better when they believe that their actions could become known. (See for example this TedEducation talk by Jeff Hancock, “The Future of Lying,” which reports evidence that people are more honest online than offline.) Those overthrowing tyrants may benefit from secrecy in putting together their revolutions, but tyrants need secrecy even more. So a general decline in the ability to keep secrets is likely to be a net plus even there.

Above, I pointed out the fundamental problem of political economy:

… any government strong enough to stop people from stealing from each other, deceiving each other, and threatening each other with violence, is itself strong enough to steal, deceive, and threaten with violence.

Although it pains me to say so, the literature on economic growth (see for example Pranab Bardhan’s Journal of Economic Literature survey article ”Corruption and Development: A Review of the Issues“) argues that centralized corruption by a strong but evil state can yield better economic outcomes than decentralized corruption by many local mob bosses or warlords. Nevertheless, I believe the elimination of tyrants and the progress of democracy throughout the world will be one of the most important contributors to human welfare in the coming decades. May those of us who enjoy the blessings of democracy be willing to make the sacrifices that could be necessary to help others enjoy that blessing. And may all nations add to democracy all of the other restraints on government necessary to make government our servant rather than our master.