Crime and Punishment in the Land of the Free

Earlier this week, the ballot measure in Ohio to legalize marijuana (Issue 3) failed, although according to most of the analysis out there, its failure was more about the oligopoly that it would have created than the issue of legalizing the drug. On Tuesday, a US commodity trader was the first to be found guilty of “spoofing” some of the world’s largest commodity futures markets in a landmark criminal case.  Spoofing consist of rapidly placing orders with the intent to cancel them before they trade in order to trick other investors by creating the illusion of demand. He now faces a maximum sentence of 25 years in prison and a $25,000 fine on each of the six counts of fraud and 10 years in prison and a $1 million fine on each of the six counts of spoofing.  He will be sentenced in March 2016. In late October the US attorney’s office sought to dismiss insider trading charges against a former SAC portfolio manager, Michael Steinberg, who was found guilty and sentenced to 3 1/2 years in prison in 2014.

Why am I mentioning these seemingly disparate situations? Because they all have one thing in common, prison. So lets look at crime and punishment in the land of the free.ISSUES-CRIME-CUFFS-370x270

The US has the highest incarceration rate in the world. The US has just 5% of the world’s population, but 25% of the world’s prison population.  One out of every four prisoners in the world is in a US prison.  American not only stands out amongst its peers of the rich and developed countries for its level of incarceration, but also far exceeds imprisonment in the poorest and cruelest dictatorships in the world – not exactly consistent with land of the free and home of the brave.  The globally unprecedented growth and unparalleled size of the U.S. prison population between the 1970s and 2009 has attracted a significant amount of attention and study by criminologists world-wide.  In 2009 imprisonment growth finally came to a halt and the number of people in prisons began to decline after nearly 40 years of steady growth.

The first question we need to ask, is what is the purpose of even having prisons?

A society has prisons in order to: 

  • impart respect for the law,
  • to serve as a deterrent to violating the law and,
  • to reintegrate those who have broken the law back into society in ways that ensure they will not reoffend.

So how are we doing?  Pretty bad on all three.

Respect for the law? The federal criminal code has gotten so large and expansive that no one knows just how many federal crimes actually are on the books, with estimates ranging from 4,000 to 300,000 and countless regulations are enforceable through criminal punishment at the discretion of an administrative agency!  Discretionary!?  I’m sure that power never gets abused.  It is difficult to have respect for the law when you can’t even wrap your head around the enormity of it and the consequences of violating a rule you didn’t know existed is up to the discretion of some faceless bureaucrat.

Respect for the law is difficult when little girls’ lemonade stand is shut down by the police.  When we outlaw peaceful and non-violent actions like smoking marijuana or feeding the homeless.  Cities such as Raleigh, N.C., Myrtle Beach S.C., Birmingham, Ala, and Daytona Beach, Fla has gone so far as to fine or threaten jail time for private groups that work to serve food to the needy.  How do we respect the law when a 12-year-old girl, Ansche Hedgepeth, is arrested and put in handcuffs for eating French fries in a Metro Station in Washington, DC, when a soccer mom, Gail Atwater, is put in jail in Texas for failing to wear a seatbelt and to seatbelt her children, when Jerry Williams of Los Angeles is sentenced to 25-years to life in prison after taking a slice of pizza from a group of children eating at Adam’s Pizza on Redondo Beach pier.

As a society we need to ask ourselves what really warrants criminalization? Under what circumstances do we want to remove someone from their family and friends and permanently damage their life-long income potential? Under what circumstances do we as a society really need or want to pay to keep someone away from the rest of society?

Serves as a deterrent to violating the law…

We’ve had many high profile politicians admit to having violated the laws themselves.  President Obama and President Clinton both smoked marijuana. Governor Jeb Bush, Senator Bernie Sanders, former Vice President Al Gore, former Senator Rick Santorum and former Speaker of the House of Representatives Newt Gingrich all have admitted they smoked it in their younger days.  Safe to say drug laws haven’t served as a deterrent.

Gun laws… those who commit crimes are unlikely to be deterred from using a gun to do so simply because the gun is illegal.  Enough said.

With the number of federal laws alone ranging from 4,000 to 300,000, it is tough to be a deterrent when you don’t even know they exist!

Reintegration and recidivism

Bureau of Justice Statistics studies have found high rates of recidivism among released prisoners. One study tracked 404,638 prisoners in 30 states after their release from prison in 2005. The researchers found that:

  • Within three years of release, about two-thirds (67.8%) of released prisoners were rearrested.
  • Within five years of release, about three-quarters (76.6%) of released prisoners were rearrested.
  • Of those prisoners who were rearrested, more than half (56.7%) were arrested by the end of the first year.
  • Property offenders were the most likely to be rearrested, with 82.1% of released property offenders arrested for a new crime compared with 76.9% of drug offenders, 73.6% of public order offenders and 71.3% of violent offenders.

Prisons clearly do very little to induce respect for the laws that the offender previously violated.

The United States spends billions on the prison system each year, often spending more in this department than most other services including education and excluding only social security while accomplishing very little.

Obviously criminal justice in the US could use a lot of work.  One place to start would be to decriminalize those non-violent acts that cause no physical harm to another person or their property rather than legislating moral choices.  When a nation criminalizes conduct that is generally viewed as harmless or at least undeserving of the severest of condemnations, the moral force of the penal code is greatly diminished and today has gone so far within certain groups as to be reduced to near irrelevance.

About the Author

Lenore Hawkins, Chief Macro Strategist
Lenore Hawkins serves as the Chief Macro Strategist for Tematica Research. With over 20 years of experience in finance, strategic planning, risk management, asset valuation and operations optimization, her focus is primarily on macroeconomic influences and identification of those long-term themes that create investing headwinds or tailwinds.

4 thoughts on “Crime and Punishment in the Land of the Free

  1. Michael Ternes - November 6, 2015 at 5:07 pm

    Just think how distressed all those moral marauders would be if they can’t regulate by law the size of a soda pop you might drink … or those bureaucrats who feel squeezing health department inspection & permit fees out of kids with Lemonade stands is necessary … they would be so shattered … oh and the prohibitionists who want to lock up a teenager for 5-10 for smoking a doobie on the beach @ 11:00 P.M. in Fort Lauderdale (unless he’s the son of one of the council members) … the asylum is run by the inmates … peace ☮

    • Elle - November 10, 2015 at 1:03 pm

      Yes, we’ve gone from the land of the free and home of the brave to the land of one-size-fits all lifestyle choices and a paternalistic government that treats its citizens as incorrigible children.

  2. ZZMike - November 6, 2015 at 6:21 pm

    In some states, the prison system is called a “Department of Corrections”, a fanciful term, probably a holdover from much earlier days.

    The large federal criminal code: Cardinal Richelieu said something like “give me five lines written by an honest man and I’ll find enough to convict him”. Today it might be “give me access to an honest man’s social media and I’ll find enough to convict him”.

    One thing that might explain the enormous scale of the prison system is the financial advantage to local governments where prisons are located. And in California, the prison guard union has considerable political power.

    But we should look at the other side of the problem: what I consider the breakdown of society. There are many causes, some of which have been brewing for decades, but the fact remains that too many of our citizens are uncivilized. For every lemonade stand shut down (due to the thousands of administrative laws and regulations), there are dozens of up-and-coming or already hard-core criminals whose expertise is in close up and personal contact (see, for example, any weekend in Chicago, Baltimore, even D.C.).

    I doubt we’ll turn around disrespect for law – not just for lawmen, but for law itself – until we turn around people’s character.

    Reintegration: There still seems to be some stigma attached to convicted felons who’ve served their time, in terms of getting hired. We used to say “paid their debt to society” (a nice-sounding but meaningless phrase), but not many are willing to risk hiring an ex-convict. The President is pushing for making that a confidential detail of an applicant’s history, but I don’t think that’s a good idea. An employer needs to know that about somebody he’s thinking of hiring.

    There are too many laws, too many of which are administrative laws (passed by bureaucrats, not Congress). The ancient Hebrews got it down to 10 lines (though generations of Talmudic scholars took it up to thousands (about 600 significant laws).

    In defense of the great number, we now have a lot more people than we did, and a few thousand more businesses and business types, so it’s not surprising that we need more laws. What we don’t need is more laws that duplicate existing ones.

    • Elle - November 10, 2015 at 1:02 pm

      Valid points and yes, we do have an insane number of laws. I’ll never be able to understand why this country thinks that it is a good idea to destroy so many lives over what are either non-violent offenses, or not credible offenses at all. The number of people in jail these days who have literally done nothing that a rational person would consider a crime is painful and embarrassing with respect to the rest of the world when we try to claim to be the champion of freedom.