Post No.: 0731
Furrywisepuppy says:
It’s easier to not feel the need to commit any crimes if one is financially wealthy and comfortable compared to poor and in a desperate situation to survive.
…Having said that, if you had millions at stake – what would you possibly do to keep it?
People tend to cheat more when under immense pressure and the stakes are high. What if you’ve gotten used to a certain level of lifestyle and status but now they’re under threat? “I did it for my family” is a common rationalisation, when one’s family didn’t ask for it and it’s really about one’s own insecurities and shame to bear. What if you have the means to get away with it too? You might have the cash to grease the palms of those who could ‘do you a favour’ or ‘keep it a secret’ – enough incentive to make it quite rational for the other party to agree to a corrupt deal; especially within a culture of serving self-interests above all and an environment that presents insufficient independent external oversight. (Policing oneself is like marking your own exam papers, and voluntary codes are frequently toothless and thus pointless.) Greed has no bounds too…
So some already-rich people commit plenty of crimes too – not to obtain their next meal but because some are endlessly avaricious and/or have egos that mean that they don’t want to appear like someone who loses and so they’ll do anything in order to win. How many wealthy dynasties have their roots or involvement in some kind of iniquity, at least amongst generations past? Old accounting records are conveniently deliberately destroyed.
High-ranking executives in corporations actually cheat more because they don’t have as many people above them scrutinising their actions and they have greater authorised access to the funds of a company. It’s about the ease of potential personal gains weighed up alongside how one feels one could and would get away with the crime – as expressed in Post No.: 0659. And, in the US, especially if they’re ethnically white and wealthy – many ‘white collar’ criminals just don’t get caught, or if they do then they receive only relatively lenient penalties compared to ‘blue collar’ criminals, or they end up effectively unpunished anyway.
‘White collar’ crime is non-violent, financially-motivated crime of the type that can be broadly conducted behind a desk, hence is typically committed by those with a higher social status (e.g. wire fraud, bribery, defalcation, bid rigging, forgery, cybercrime, insider trading, pyramid schemes).
‘Blue collar’ crime often involves physical force and clear identifiable victims at the time of offence, and is typically attributed to those with a lower labour skill and a lower social class (e.g. shoplifting, burglary, armed robbery, vandalism, drug dealing, battery, sexual assault, kidnapping).
Despite blue collar crimes normally being smaller in scale than white collar crimes, blue collar crimes tend to get punished more severely than white collar crimes. The poor therefore in turn get disproportionally punished more than the rich overall relative to the severity of their crimes. For instance, a working-class rioter who physically damages property that costs £1,000 can receive a far longer jail sentence than a dishonest upper-middle-class hedge fund manager who embezzles £1,000,000 in funds.
Blue collar crime tends to be more obvious and viscerally terrifying for its victims, targets or witnesses, and therefore tends to attract more active police attention. Meanwhile, white collar criminal activities are usually concealed within or behind legitimate corporate activities, which makes them harder to spot. Information crimes like misappropriating customers’ private data rarely get detected because they neither leave an overt physical trace nor involve a tussle with the victims compared to physical possession losses after a physical object burglary. Commercial confidentially is also a major reason why a great deal of these crimes go undetected and unreported. So it’s not that there’s not much white collar crime happening – they’re just more hidden or overlooked.
It’s also the case that most white collar crime appears ‘victimless’. Stealing from a faceless company and faceless account numbers seems less emotionally abhorrent than stealing from a physically petrified individual on the street or in their home. But white collar crimes like tax evasion do generate real and serious human costs because that money could’ve been used to buy medicines to save dozens of lives, for instance.
A ‘victimless crime’ doesn’t hurt or kill innocent people directly or immediately but makes them suffer for a while first – for example, the government pays for it, which means it raises tax rates to make up for it and/or it means less public funds can be spent (which tends to hurt the poorest first and the most); or the entire market pays for it via increased prices (such as to enhance security measures or via higher insurance premiums). This means that white collar crimes are really paid for by nearly everybody rather than nobody – so everybody else apart from the criminals involved are effectively the victims in so-called ‘victimless crimes’. They’re kind of like a tax themselves, except the proceeds go into the hands of only a few, and usually a few relatively well-off people in white collar jobs rather than manual jobs too.
Whenever and wherever there’s a lot of money up for grabs or at stake, cheating will rear its head. For example, as esports (electronic sports) and online multiplayer gaming have become more lucrative, cheating has become more lucrative and motivated. An individualistic attitude of ‘as long as I’m getting paid then I don’t care what others do’ held by those who sell cheat hacks on the market obviously doesn’t help the market as a whole, even though it helps those who cheat or sell cheats. Those who are cheating or profiting from cheating are having fun but it ruins the fun for absolutely everybody else, hence they aren’t benefiting the industry when they benefit themselves.
Humans aren’t only incentivised by extrinsic factors like money and punishments (whether we consider this irrational or not) thus incentives aren’t perfect predictors of behaviour, for better or worse. But to an economist, incentives motivate behaviours. Almost everyone thinks they’re incorruptible, but given the right (or wrong) incentives, opportunities and circumstances, enough people to cause social harm will be motivated enough to cheat, lie or steal (e.g. bankers who have massive bonuses that entice them in a deregulated industry, or tax evasion when tax enforcement is weak). An economist would therefore say that in order to change behaviour, one must change the incentives in the system i.e. change the environment because the environment motivates behaviour.
There are social, moral, legal, as well as financial, incentives and risks that influence behaviour. So internal morality does play a role, but people will also respond to external incentives too. If there are loopholes then rather than morally follow the spirit of fairness, enough people in a position to exploit these loopholes will exploit them for their own gain. This is why we need enforced controls, regulations and laws to modify the incentives and discourage undesired behaviours – large enough fines, prison sentences, public humiliation or other penalties, and effective systems that’ll catch and convict criminals in the first place, to make a particular crime not worth the risk. The environment can encourage undesirable behaviours hence the environment can be changed to encourage better behaviours instead. Via enforced laws and sufficient punishments, we can change the expected value or payoff of cheating, lying or stealing to make it not rationally worth it. All options will remain available (e.g. you could still attempt to steal) but the expected payoffs for choosing some options will be altered (e.g. it’ll no longer be worth stealing a sausage for a month in the slammer; unless you’re a homeless hound perhaps – some unfortunately have less to lose than others and such factors will shape their choices or ‘choices’. Woof).
Alternatively, if the public funds are available, then we could incentivise desirable behaviours by affording grants, subsidies, tax breaks or other fluffy rewards to make particular ethical activities worth doing over less ethical ones. The problem in the real world though is having enough public funds in the first place.
Taxes and subsidies, laws and the threat of punishments, all affect our behaviour, as they’re designed to. But because of this, people will constantly search for loopholes to avoid a tax or punishment, and the laws will constantly try to plug them up, and so forth.
Although individual personality is a factor, it’s not so much that there are inherently ‘good people’ versus inherently ‘bad people’ – it’s more that different people encounter different contexts and incentives/disincentives in which they make their choices. Different people face different opportunities and threats. And where anti-fraud systems are inadequate, white collar workers generally have more opportunities to steal far greater amounts than blue collar workers can, and because their types of crimes are generally less visible, and they might also rationalise to their own internal moral compass that it’s victimless – they might weigh up these opportunities and threats and decide it’s worth committing fraud.
Incentives/disincentives are perceived too. For some, it’s their religious beliefs and the incentive of heaven and the disincentive of hell that must be factored into the calculation. Whether this supernatural threat and fear of sinning is regarded as part of a person’s internal moral compass or just another kind of external influence is up for debate? One might argue that it doesn’t matter – if it works to deter sinning then it works. Real, brutal, often excessive, punishments in this life are sometimes prescribed by religions too (e.g. lapidation or stoning).
Perceived social risks, like embarrassment, can work to prevent minor infringements, like breaking wind in public. Public social pressure prevents adults from doing many things that children do, at least in public! Likewise, social praise for desirable behaviours can work, like being thanked for being kind. But when a behaviour appears to be the cultural norm within a social group because ‘everyone’s doing it’ then it won’t quite be perceived as unethical. When child labour was more common, fewer employers saw an ethical problem with it.
Most people in society behave honestly enough most of the time whether because of the internal or external incentive systems in place. But the problem is that the few who do cheat can potentially do so much harm to so many others, especially in a modern highly-interconnected and high-technology environment. Cybercrime is considered a white collar crime and is an ever-growing global concern.
Because situations or circumstances play a major role in guiding behaviours and it’s not just people’s innate dispositions or personalities, it’s seldom just the case of ‘a few bad apples’ when a few people in a particular neighbourhood or industry are found guilty, but the case of systemic or structural issues. Not to say that everybody will behave identically but whenever a group of people face the same pressures and the same temptations then the odds are increased that they’ll do the same things. We are products of our genes and our environments.
An organism’s nature is to cheat where possible too because conserving energy (trying to get more out from what one puts in) is a core survival strategy in nature. Thus effective regulations, in this ever-advancing-technology world, where cheating is getting ever more sophisticated, are and will be needed more than ever.
We need sufficient power to act as a check and balance against power. The conundrum then is having sufficiently adequate democratic and anti-corruption systems in place so that we can trust law enforcement and the regulators too!
Woof. Be most wary of those who are single-mindedly into becoming rich or endlessly richer, rather than those who aren’t that bothered about measuring their own worth through money. Egotism is a key personality trait when it comes to those more likely to commit fraud. And plenty of people with large egos work in high-powered and highly-respected positions.
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