Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don't (22 page)

In the early 1980s, James Q. Wilson and George L. Kelling articulated a persuasive new theory about crime. They argued that petty crime such as window breaking creates a vicious cycle whereby law-abiding
citizens in a deteriorating neighborhood continually leave, to be replaced by criminals. If crime is rampant as evidenced by broken windows, criminals find it even easier to commit crimes with fewer law-abiding citizens around to witness them. So the key to fighting crime is to begin by cracking down on petty offenses. Some experts credit the huge drop in crime in New York City during the 1990s to a “broken windows” policy that strictly enforced laws against minor crimes like vandalism, public drunkenness, panhandling, and public urination.

There were 7,921 fewer murders in the United States in 2000 than in 1990.
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New York City accounted for 1,572, or 20 percent, of that decline. The fall in New York City’s murder rate in the 1990s was 2.4 times larger than the average drop for the thirty largest cities.
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The declines in New York City’s overall violent crime and property crime rates were not quite as large as the fall in murder rates, but they were still more than twice the national average.
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However, other factors in the city besides policing strategies were also changing in the 1990s. Probably the single most important factor was the increase in the number of full-time sworn police officers, which grew from 26,844 in 1990 to 39,779 by 2000.
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The growth in the per capita number of officers in New York City was roughly two and a half times the rate in other large cities.
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The city also greatly improved its hiring standards and increased officer pay.
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In fact, the entire nature of the city’s police force was transformed in the 1990s. In the 1980s, the NYPD was undermanned, demoralized, and hamstrung by debilitating regulations. Michael Julian, a former NYPD chief of personnel, described how the department was hindered by the kinds of counterproductive affirmative action policies discussed earlier: “The department abandoned all physical screening of applicants in the ’80s out of fear of lawsuits by minority applicants and women. Some officers hired under relaxed testing lack the strength to pull the trigger of a gun. There are hundreds, if not thousands of police officers on the streets today who, when a suspect runs from them, have no other option than to call another cop, because they do not have the physical ability to
pursue them.”
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The NYPD, however, was one of the few departments during the 1990s that rejected the affirmative action trend. Starting in 1994, the police academy re-imposed strength standards that had been abandoned.
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With more officers of higher quality, New York’s arrest rates rose and criminals found it more difficult to commit crime.

Evidence for the overall effectiveness of the “broken windows” policy is mixed. On the one hand, there is strong evidence that when police step up enforcement efforts in an area through more frequent arrests or when private citizens become more able to defend themselves, criminals move on to more hospitable areas.
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On the other hand, some analysts have found little relationship between young males’ view of their neighborhoods as being crime-prone and the rate at which they themselves would commit crime.
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A more direct approach is to analyze crime rates across a range of cities that adopt the “broken-windows” approach or other similar policing strategies. Examining all U.S. cities with more than 10,000 people, I found that the effect of the different policing policies is decidedly mixed, with crime rates apparently going up and down in almost a random pattern. For cities with a “broken-windows” policy, murder and auto theft actually rose, while rapes and larceny fell.
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Perhaps New York simply implemented this policy in a better way than other cities did. While “broken windows” may be one factor among many in reducing crime in the Big Apple, a city that implements the policy without taking additional measures should not expect positive results.

Enforcing the law is difficult enough for violent crimes committed against innocent victims. But it’s even more challenging in cases where both parties to an agreement want to break the law. A personal example
will not only show how the law in such situations can be effectively enforced, but can even bring about self-enforcement by the parties involved. This is accomplished by creating an unusual disincentive—distrust between the two parties.

When I was a student at UCLA, a friend of mine who was moving away asked if he could leave with me an old stray cat that he had recently adopted. Because of its gray coat, he had named it Confederate. My wife and I felt sorry for the cat, so we asked the apartment manager about keeping him. She said that she had to check with the apartment’s owners, but that we could keep the cat until she received an answer.

We didn’t hear back for a few weeks. During that time I found out that Confederate had feline leukemia, a highly contagious disease among cats. Affected cats can still live long lives if given antibiotics, but without medication they can die from the most minor infection.

The manager eventually told us that we could only keep the cat if we paid a higher rent. Although I was willing to do this, she told us that this was not actually an option because it would violate rent control laws. I tried without any luck to find a new home for Confederate. His former owner said he couldn’t keep pets in his new apartment, and other friends who I approached either already had a pet or simply didn’t want to take in an old, sick cat. Workers at animal shelters told me they’d have to put the cat to sleep to keep him from infecting their other cats.

I called the rent control board, explained the situation, and asked if I could get a waiver from the rent control laws so that the owners would allow me to keep Confederate. The board’s representative told me simply, “If they let you keep the cat, you can keep the cat. If they don’t let you keep the cat, you can’t keep the cat.” I again related that I could only keep the cat if I paid a higher rent, but that this was illegal. Growing exasperated, the representative just repeated that I could keep the cat if the owners let me. The conversation went on like this for a good forty minutes.

Frustrated, I went to the legal aid clinic at the UCLA Law School to get advice from its young, aspiring lawyers. Their counsel was pretty straightforward: just break the law and pay the extra rent under the table. But the owners wouldn’t consider it: if the city discovered that I was paying too much rent, the owners would have to repay me double the amount of the overpayment.

Perhaps, under some circumstances, a landlord might take the risk for a few months, but if someone were to overpay for several years, the penalty could be so huge that it would provide the tenant with an easy means to blackmail the landlord. Even if both the landlord and the tenant agreed to the overpayment, in such situations the landlord bears sole legal responsibility. The tenant is considered a victim.

This legal distinction is common in cities with rent control. Landlords who break rent-control laws in Los Angeles, for example, pay triple damages to the tenant. James Gordon of the Berkeley Rent Control board explained the law’s rationale to me: “Depending on tenants to bring charges of overcharging works very well,” he said.
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He added that even though a complaint from a single tenant of illegal payments was not enough to ensure a landlord’s conviction, “we do win most of these types of cases and the word of several different tenants is usually sufficient.” Ultimately, illegal overpayments are rare, he explained, because landlords are so likely to be held accountable. They cannot even rest soundly after the tenants move out, since tenants can sue to recover payments even after leaving the apartment.

Sadly, left with no other choice, we had to put Confederate to sleep. What can the tale of my late kitty cat teach us about economics? It indicates that rent-control laws, by establishing clear legal categories of “perpetrators” and “victims” in deals agreed to by both parties, create distrust by landlords toward their tenants. Even when both sides would benefit from an under-the-table deal, the landlord knows the tenant will have a steadily growing incentive eventually to break their agreement and report the landlord to the authorities. And this
distrust, in turn, creates an incredibly effective self-enforcement mechanism for the law.

The notion of creating self-enforcement through distrust may seem unusual, but we see the same mechanism at work in other realms, such as minimum wage regulations. Minimum wage laws naturally result in higher unemployment, since law-abiding firms will hire fewer workers if they have to pay more for them. Since some unemployed workers are willing to work for less than the minimum wage, and non-law-abiding firms want to hire them, it would seem that relying on workers themselves to enforce minimum wage laws would be doomed to failure. What can you do when both sides want to break the law?

Yet, self-enforcement of minimum wage laws is extremely effective. Only a fraction of 1 percent of U.S. citizens covered by the minimum wage are paid too little, and these rare violations primarily involve innocent mistakes by employers rather than outright lawbreaking. This law is successfully enforced by just a thousand federal agents who are additionally responsible for enforcing regulations on overtime pay, recordkeeping, and child labor standards. This result reflects the incentive that workers have to report the violations themselves. Although perhaps they first agree to the low salary because they badly need a job, the longer they work, the greater incentive they have to sue their employers, who are often forced to reimburse them double the amount of the underpayment. Thus we find that 75 to 80 percent of registered minimum wage violations are reported by the workers themselves.
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The self-enforcement mechanism, however, breaks down when it comes to illegal aliens. This group constitutes the overwhelming majority of workers who are paid less than the minimum wage. But why do companies prefer to hire illegals? Clearly, illegal aliens work for lower wages than U.S. citizens do. But firms have another, less widely-discussed incentive to hire them: they can count on illegals not to sue them at a later date for underpayment. Unlike U.S. citizens and legal residents, illegals risk being deported if they draw attention to themselves
by filing lawsuits. The principle is similar to that of a street gang that requires someone to commit a violent crime before it will accept him as a full member. Like companies who hire illegals, the gang knows that it’s safer to associate with others who would have something to lose by snitching to the police.

 

It seems indisputable that requiring gunlocks on handguns saves lives. President Bush clearly thinks so—although he may be perceived as a trigger-happy Texan cowboy, his administration distributed more than 32 million gunlocks by the end of 2005.
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Furthermore, Bush approved the 2005 federal legislation helping to protect gun makers from reckless lawsuits, a bill that also required that all handguns be sold with locks.
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State officials are increasingly adopting this view—eighteen states now impose criminal penalties on individuals whose guns are used improperly by juveniles.
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Unfortunately, all these efforts are counter-productive because gunlocks and self-storage laws cause more deaths than they prevent.

Economists have found that other safety regulations have the same unintended effect of decreasing safety and increasing fatalities.
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This is because some people offset the safety regulations by taking greater risks. One example is car safety regulations—some people drive faster and more recklessly when they feel safer inside their car. Car safety regulations reduce the number of injuries and deaths per accident, but they also lead to a greater total number of accidents. Overall, the number of deaths has stayed the same or actually increased with the adoption of car safety regulations.
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A similar problem is evident with safety caps for medicine bottles. In the 1980s, child-resistant bottle caps actually resulted in “3,500 additional poisonings of children under age five annually from [aspirin-related drugs] . . . [as] consumers have been lulled into a less-safety-conscious mode of behavior by the existence of safety caps.”
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Some evidence even indicates that more children are
being injured on playgrounds despite safety improvements because bored kids “are taking more risks in order to have fun.”
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There is a similar trade-off for gunlocks. Locks may reduce accidental deaths, but they also make it more difficult for people to use guns defensively. And this encourages more criminal attacks, while simultaneously increasing the attackers’ success rate. After these gunlock laws were adopted, there was about a 20 percent increase in the rate of both robberies and homicides inside people’s homes. As previously noted, having a gun is by far the safest course of action when one is confronted by a criminal. But a locked gun is not nearly as accessible for defensive purposes.

Accidental gun deaths among children are, fortunately, much rarer than most people believe. Among America’s 40 million children under the age of ten, there were just twenty accidental gun deaths in 2003.
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While gun deaths receive a lot of attention, children in the same age range were forty-one times more likely to die from accidental suffocations, thirty-two times more likely to die from accidental drownings, and twenty times more likely to die as a result of accidental fires.
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Among children under age fifteen, there were fifty-six accidental gun deaths in 2003—still a fraction of the deaths resulting from these other accidents for just the younger children.
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