Tough punishment, protection of rights, liberty and fairness are all achieved when PTB and PTC are coupled across society. Left and right can be brought together and spurious litigation reduced.

Rights and obligations are directly represented in the four axioms of freedom and have fundamental impacts on the incentives of individuals. Property rights are one of the most ingrained and well-functioning parts of democratic societies and capitalist economies, and they are also one of the tightest examples of coupled PTB and PTC. They are vital to the very existence of voluntary economic trade, because where individuals have no rights to the fruits of their effort, they have little incentive to contribute significantly in the economy.

The right to ‘pursue success with freedom without being taken advantage of through unfair rules’ is a principle consistent with both those on ‘the left’ and those on ‘the right’. In practice, differences between the right and left usually centre around interpretation in application beyond the words – when it comes down to measurement of factors and implementation of policies.  The left generally feels that the right tells a great story about free markets and freedom of opportunity, while at the same time fixing the rules for their benefit. The right generally feels that the left are making excuses for not being able to successfully compete in free markets, looking instead for handouts. As is usually the case, the answer is in the middle, with truth to both points, but with each position also undoubtedly containing massive exaggeration.

When people build businesses and maintain equity ownership – most often obtained at a high PTC in terms of both time and money as they persevered against Cumulative Counter Agent Effects – their PTB and PTC are fully coupled.  Where business owners hire executives without any required equity investment or performance-based compensation, mediocre performance can be typical. Transformational ventures almost always result from the entrepreneurial mindset where PTB and PTC are most closely coupled.  As a consequence, policies and systems that favour ‘big business’ at the expense of entrepreneurship will stifle growth significantly over time.

Various societal obligations are also required of individuals within any society to ensure that everyone has the opportunity to interact. These rules may exist in the form of unwritten traditions or as highly specific legislation. Looking at laws and obligatory traditions within the context of Give & Take Economics Theory, we see that they are essentially a formalization of attaching personal total cost to a certain behaviour. Laws and regulations simply attach an explicit personal total cost to certain endeavours in order to discourage the behaviour. As we see time and time again, laws will only work where the likely proceeds from the crime are exceeded by the likely costs of the punishment.

The United States has become a litigious society in recent years. This reflects the natural desire of people to attempt to decouple personal total cost and personal total benefit, seeking to omit or minimize the former and to obtain and maximize the latter. It is not this natural desire that has created a litigious society in itself, where we see lawsuits over spilled coffee.  The propelling element behind this trend is an intermediary effect, a combination of the legal profession which serves not only the constituent lawyers but also primarily populates the ranks of the politicians and justices that run the system. The legal community created the system and not surprisingly it most directly benefits the participants within it, serving as a very powerful intermediary.  Lawsuits are what feed the system and the entire adversarial legal system improves as more and more PTB and PTC can be decoupled in the minds of the public as blame replaces accountability.

Obligations need not necessarily be formalized as legislation, but can also encompass non-monetary community service impositions and even enforced public pressure from peers. Looking back to the example of the littering citizen we can compare these scenarios. The figure below illustrates the scenario where a penalty on littering makes the ‘Not Littering’ option the desirable choice for an individual in place of littering.

Impact of New Penalty

The figure shown below compares the differing perspectives of a typical law abiding citizen versus a typical petty criminal and a representative hard criminal – with respect to stealing. These diagrams are shown before any decision/action to steal or not to steal takes place, and as a result, the schematics could differ significantly under various scenarios. For example, an individual’s perspective will most often differ if they have recently been caught stealing or if they have experienced a long string of stealing successes without punishment.

Comparison of Responses to a Penalty

 

Share

Leave a Reply

Your email address will not be published. Required fields are marked *