Cost/Benefit Analysis of Ferguson Riots

During a reading of “Sacredness as Practiced by Religious Entrepreneurs“, I encountered a link to a G&*k#r article “The Economic Case for Riots in Ferguson“. Notice that the second link is wrapped via Unvis.it. This wrapper allows us to link to the ideas in the content, while removing the economic benefit from the content provider. I hope you will use this service in your posts to similarly deprive these sites of clicks.

The author of The Economic Case for Riots in Ferguson writes (emphasis mine):

To be sure, burning down AutoZones is not an optimal way to impose costs on state authorities. It would be, as some interviewed Ferguson residents noted, far more effective to target police equipment or other property nearer to criminal justice authorities. But these targets are often difficult and risky to reach, unlike local business interests. Since state authorities are always and everywhere most concerned about capital and business interests, threatening to impose costs on them via rioting should have a similar impact on police incentives.

Although rioting, through its imposition of costs, can theoretically deliver huge benefits by dissuading bad behavior, that doesn’t mean it makes sense to riot all the time and at any level of intensity. Just like enforcing and imposing criminal sanctions is costly, sanctioning via rioting is costly. Economic wealth is destroyed and economic activity is temporarily interrupted. For rioting to be economically efficient, it has to be the case that the costs of rioting (measured in terms of how much stuff is destroyed) are lower than the benefits of curbing bad police behavior.

Conducting such a cost-benefit analysis on the Ferguson riots, though necessarily speculative, is not impossible. It’s estimated that white officers kill black suspects 96 times a year[6]. Cost-benefit analyses conducted by safety regulators peg the value of a human life at $9.2 million[7]. This means the economic cost of white cops killing blacks is around $883 million per year. If the jolt caused by Ferguson’s rioting can chill police authorities and cause adjustments that save just 3 black lives per year, that’s an economic savings of $27.6 million. It’s hard to tell now how much damage rioting in Ferguson has caused, but I’d doubt it’s anywhere near that figure.

[snip]

Thus far, the rioting question has been focused on whether it’s good or bad, as if those are the only two answers. From an economic perspective, surely the question is whether the level of rioting is optimal: Do the potential benefits of Ferguson rioting as a police sanctioning tool outweigh its immediate wealth destruction? I suspect it does and, in fact, that the current rioting level is likely economically suboptimal.

The author supports the anti-racists and other critical race theory advocates. The interesting thing is that he is making his case in economic terms. Propertarians will immediately recognize this gambit. I detect memetic mutation: this is a novel approach from the Left. It appears that as Propertarians are attempting to build a scientific economic language to defend conservative intuitions, that the Left is similarly attempting to adopt this strategy. We might even call this Left-Propertarianism. So Propertarians will not have a problem with this re-worded the assertion that “The rioting question has been focused on whether rioting is good or bad… the real question is whether there is a level of rioting that is economically optimal“. Here we have the view of rioting as a social feedback loop. That leads to a question: What is the cost/benefit analysis of rioting as a social feedback loop? If the costs imposed by riots are less than the benefits accrued, then there is an economic benefit to rioting and it can then be viewed as a useful social feedback loop. We can then compare this cost/benefit to other feedback loops such as voting, protesting, and civil disobedience.

The article poses the calculation 96 black lives/year x $9.2M/life = $883M/year. If the cost of the Ferguson riots is less than the benefit accrued through the reduction in black killings, then the benefit outweighs the cost and rioting can be seen as a net positive and therefore is a useful tool as a feedback loop, because the process of feedback generates more benefits than costs. The question is then, what level of rioting is optimal, as there will be a crossover point where the cost of the riots can exceed the benefits. I hope you can see that this is an amazingly reasoned argument for a cultural Marxist to make.

I would like to take this analysis to task on a number of points:

The Cost of the Life

While I don’t doubt that the cost of the average American life is $9.2M, we have to understand that we are including a lot of Bill Gates and James Watsons in that equation. What we are really looking for is the value of the average American black. Considering that the socio-economic standing of blacks is below that of whites, then I would expect the value of the average American black life to be worth less. The median white household income in 2011 was $55.4K, while the median black household income was $32.2K, or about 58% of the white household. 58% of $9.2M is $5.3. Now that is household income. Could this figure be misleading? This is of course an analysis of those who are working and earning money. What would be the valuation of someone on welfare? That number would be a negative number. If someone worked and received welfare, then that number could be near zero or even negative. What would be the valuation of someone likely to be imprisoned for long periods of time? Those numbers could also be large negative numbers. If we calculate the cost of a life of a person on welfare or likely to go to prison, who is then breeding others who will then be on welfare and/or go to prison, then the number could be staggeringly negative. What is the valuation of the average black life taken by a white officer? Who are the types of people likely to arouse deadly force from a white cop? Are we to assume that the average 96 lives taken are rocket scientists, CEOs, and clergy? Or is it more reasonable to assume that those lives are held by violent and unproductive blacks? Would it be unreasonable to assume that the valuations of those lives would be low to negative?

I don’t have numbers, but a serious analysis could get an average worth of the average black killed by a white officer. If that worth is low, then the cost of rioting would also have to be very low in order to be optimal as a feedback loop. A serious analysis would have to take this into account. The provided analysis does no such thing, but instead uses an obviously inflated number to define the worth of the black lives lost. Take into consideration that if the worth of the lives is negative, then there is no level of rioting above zero that could be optimal.

Hidden Cost: Militarization

Rioting results in increased militarization of police around the country, in anticipation of further rioting. If there is an optimal level of rioting, then it is important to keep the rioting below that optimal threshold. Thus the impetus for militarization. Militarization obviously creates costs in terms of physical resources. MRAPs aren’t cheap. Neither is riot gear or the other physical items. Then there is a cost in time and coordination. Militarization of the police is extremely expensive. Then there is the costs to decreased trust between the police and the public when the police militarize. There is a destabilizing effect, creating friction at a myriad of interaction points. The cost of the rioting is not simply the buildings destroyed. The article’s analysis completely ignores the hidden cost of militarization.

Hidden Cost: Social Trust

When rioting has a strong racial component it also increases racism and racial tension, animosity and mistrust. This creates even more friction at even more points of interaction between racial groups. It increases balkanization. How many businesses will have their insurance rates rise in areas containing large amounts of blacks? How many more people will avoid black areas, not even stopping into convenience stores to by gum or gas? I imagine that the Ferguson riots have accelerated white flight from a number of areas. When white businesses move out of black areas because of the fear of an unstable black population, that hurts economic activity in the black areas. Where are these costs in the given equation?

I’m sure that there are a number of other hidden costs that could be highlighted. I actually welcome economic arguments such as that posited in the article. I think it is a step in the right direction that the author attempted to frame his argument in economic terms, rather than emotional and moral ones. Attempting to define, articulate and calculate the cost/benefit of activities such as riots versus protests or civil disobedience is a valuable task.

In summary, I think that it is obvious that the costs of rioting over white cops shooting black males probably far outweigh the benefits, when all costs are taken into account. It is even possible that: if the average economic worth of the average black life ended by a white cop is negative, then there is actually a net positive economic benefit to ending those those particular black lives. [Note: I am in no way saying that ending all black lives is an economic benefit, in this case I am referring only to those particular black lives ended by white cops.] In this case, rioting not only produces zero benefit, but actually increases costs. The author of the article began this calculation of riots in terms of economics and lives, but I have the feeling that his Marxist intuition will be quite offended by the perfectly logical conclusion reached in this summary. I would also offer that non-violent feedback loops are much more likely to be economically beneficial on net, simply because the economic costs imposed by them are so much lower.

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3 thoughts on “Cost/Benefit Analysis of Ferguson Riots

  1. Interesting argument. However lets remember that incarceration is a booming business. A little research will tell you that inmates are “traded” between penitentiaries (for a lack of a better term) in a similar fashion to that of financial equities. An inmate traded between 5 different states, over a 20 year sentence can create 20x (or more) as much as you pay in taxes. Lets not be naive and believe that money isn’t the motivating factor behind any American industry. In reality, black inmates are actually quite valuable. And considering the likelihood they will breed others like them…Count that up and add that to the equation.

    Side note : As a tax payer, one must ask themselves what is the real problem with this situation – the fact that my tax dollars pays for a black inmate OR the fact that my tax dollars are used so that a white guy can take home a few million while I get nothing in return?

    Also, statistics (from the US Census) show that there are more whites on welfare than blacks. Speaking in terms of cost, probability proves that the value of a black life costs less, thus is worth more than a white life.

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    • “In reality, black inmates are actually quite valuable. ”

      You are, of course, forgetting “concentrated benefit and distributed cost”. To some, yes, perhaps prisoners are ‘valuable’, but only because the cost is distributed. On net, the life of the prisoner is likely negative. By your logic, a bridge to nowhere is “quite valuable”. Engaging in practices which are net negative is parasitism, in any form. All parasitism is immoral and must be stamped out. This is basic human fairness, on which rational men should be able to agree.

      “OR the fact that my tax dollars are used so that a white guy can take home a few million while I get nothing in return?”

      Yes, yes, Marxist class warfare probably passes for an argument in your circles, but not here. You hate rich white people, I get it. Your irrational hatred is meaningless to me. I make decisions based on my personal interests and in the interest of my kin. I try to be logical and I demand logical argument. This is just lame.

      “Also, statistics (from the US Census) show that there are more whites on welfare than blacks. Speaking in terms of cost, probability proves that the value of a black life costs less, thus is worth more than a white life.”

      Ok, now this is an actual argument, although a bad one. Two problems with it: You are simply forgetting half of the equation and your numbers are wrong. Here’s the half you forgot: there are far more white taxpayers than black ones. Once we look at the whole, on net, white lives are economically more productive. Now, to be fair about welfare, we should look at the percentage of blacks on welfare, the rates of welfare. Blacks make up 13% of the population and account for almost 40% of welfare recipients, and whites account for 39% while comprising 63% of the population. It is clear that the rate of black welfare use is far higher than that of whites, which is why you don’t want to compare rates, you want to compare absolute numbers, which is pure obscurantism – which is a fancy word that means ‘lying’.

      Is intellectual honesty too much to ask? Just stop lying.

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