Talking up the economic benefits of building prisons is a mistake.Whatever the government spends building and staffing them is a loss to the private sector elsewhere.
This is illustrated by the 'broken window' fallacy written about by Henry Hazlitt;
Hazlitt noted that "everything we get, outside the free gifts of nature, must in some way be paid for." Government spending ultimately comes from taxes. What is seen is the benefits of the spending, and often they are truly benefits to some people. But what is not seen is the goods that would have been bought had the workers not been forced to pay the taxes from their wages. The public as a whole loses, because the gain to some is less than the overall cost to the taxpayers and consumers.
To illustrate this he developed the broken window example;
If someone throws a stone into a shop window, the owner needs to repair it. This puts people to work and increases total output. Since this creates jobs, would we be better off breaking lots of windows and repairing them?
Substitute Collins' claim;
If someone commits an imprisonable crime, they need to be locked up. This puts people to work and increases total output. Since this creates jobs, would we be better off breaking lots of laws and locking people up?
We know the answer to that.
At best what Collins is trumpeting is the benefit to the recipient of government redistribution. But in the case of crime and prisons, the loss of the taxpayer is even greater than usual because, unlike a simple broken window, crime incurs many other costs along the way.
What Collins is pushing here is complete statist socialist claptrap.
8 comments:
Aside from the little matter of it being Frederic Bastiat who formulated the broken window fallacy in 1850 (from which Hazlitt expounded upon in his great book "Economics in one Lesson')you have nailed it Lindsay! ;-)
What Collins said may not be quite correct in terms of economic logic. I think she was really trying to say this
True Cost Of Crime
James, I Have the book Economics in one lesson. Wasn't sure whether Bastiat came up with theory and Hazlitt merely developed it with the example of the broken window, or the example was Bastiat's as well.
Was definitely Bastiat who came up with it first.
Treasury guidelines for cost-benefit warn against counting costs as benefits. Wages are an example they give: those are a cost, not a benefit, of a project. If they were a benefit, you could just pay everybody infinite and have infinite benefits, right?
Mildly curious who did their commissioned study...
This kind of toxic economic fuckwittery has something of a sinister edge to it, doesn't it Lindsay?
It certainly has a self-serving edge to it Sean. Collins was in her own stamping ground.
No Lucy, I meant the concept of locking up our citizens is good for the economy...
Exactly what I thought when I saw the news item, Lindsay. If prisons bring so much wealth to the regions, we should build one in every part of the country, then we'd all be rich!
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