Friday, October 03, 2008

Federal Prisons:Mackerel Is The Currency of Choice

WSJ: There's been a mackerel economy in federal prisons since about 2004. That's when federal prisons prohibited smoking and, by default, the cigarette pack, which was the earlier gold standard.

Prisoners need a proxy for the dollar because they're not allowed to possess cash. Money they get from prison jobs (which pay a maximum of 40 cents an hour) or family members goes into commissary accounts that let them buy things such as food and toiletries. After the smokes disappeared, inmates turned to other items on the commissary menu to use as currency.

Books of stamps were one easy alternative. Elsewhere in the West, prisoners use PowerBars or cans of tuna. But in much of the federal prison system, he says, mackerel has become the currency of choice.

So inmates stash "macks" (prison lingo for mackerel) in lockers provided by the prison and use them to buy goods, including illicit ones such as stolen food and home-brewed "prison hooch," as well as services, such as shoeshines and cell cleaning.

HT: Clover Aguayo

Related: "
The Economic Organization of a P.O.W. Camp" in Economica 1945, a classic article about the "cigarette currency" system that emerged in most POW camps in WWII

Related: The word "salary," and the expression "being worth one's salt," derive from the word "salt," which was once a commodity form of money.


At 10/03/2008 10:17 AM, Anonymous Anonymous said...

What is te economists view on the criminal justice system? It seems like a big expense to house people who aren't dangerous. There must be some less expensive way to get people to change their behavior and obey laws.

Isn't it counter productive to imprison people, like one of the men in the article, for tax fraud? It's a crime because the government is entitled to the tax money but then they spend how much more money putting the guy in prison?

Its obvious the prisoners learn more about economics trading cans of fish (which is prohibited) than our legislators learn taking bribes, buying votes, and voting themselves pork, perks and pay raises.

At 10/03/2008 10:34 AM, Anonymous Anonymous said...

Anon 10:17 is completely correct. Only a small minority of offenders are unable to be rehabilitated, or should not be allowed to return to society due to the severity of their crimes. Nothing we can do for them.

However, the large majority should not be caged but rather trained in skills, and have their fundamental mental and social issues addressed so that they can return to functioning in society as a productive tax-payer. We want these people to emerge with the ability to apply for jobs that don't suck; no McD's. Because when it comes down to selling kilo's and rocks or selling Chicken Selects, you'd be surprised how many 'prison economists' there are.

The punitive aspect of the system is over-emphasized. Living in a lock-up facility away from everyone you know sucks, and despite the fact that a very few claim to say 'I'd rather be here, its nice', prison's suck, even the nice ones. Now add say a rehabilitation center with college and nice dorms and treat people with real respect and give them the ability to return as a productive member of society.

The objective is to get them out and get them paying taxes, and hey, maybe they can even pay off some of that cost of education they got.

Instead, we have a great school system in prison, but its a school system of the criminal trade. You can learn the ins and outs of virtually every type of crime in 6 months in prison. How to brew wine in a sock, to how to kill someone with a sharpened toothbrush, to how to scam ATM's.

Then we send them back out and expect a different result.

At 10/03/2008 12:58 PM, Anonymous Anonymous said...

This is an Austrian insight that goes all the way back to Carl Menger: money is a product of the market.

Note that this is a difference between the Austrians and Keynsians. Chicago school free market economists are like Keynsians on this stuff. They think money is a government phenomenon and the government should control it. Hence they support the Federal Reserve; a communist institution which control the supply of money like the Soviet Union controlled the supply of bread.

Larry Kudlow is a communist in this sense.

At 10/03/2008 1:46 PM, Blogger Arman said...

The stupid thing about the Keynesian is not that they think the Fed SHOULD control the money supply, but that they think the Fed DOES directly control the money supply. This foolish notion is replicated by Austrians, and IS at the heart of the problems in the US today.

At 10/03/2008 4:54 PM, Anonymous Anonymous said...

Anon at 10:34...there are multiple levels of security in the federal system. The inmates that are locked up at high security institutions, known as United States Penitentiary, are ones that have proven time and time again to be violent and unable to function in society. Inmates at all levels are able to particpate in programs to better themselves while in prison. The medium security facilities are known as Federal Correctional Institutions. Inmates here normally have shorter sentences than those at USPs and are a lot less violent.
Inmates will use anything they can as a source of currency. The ban on tobacco made it the most valuable contraband in the Bureau of Prisons.

At 10/03/2008 6:40 PM, Anonymous Anonymous said...

Arman: you're a fool. The Fed doesn't directly control the expansion of credit, but it encourages/discourages it through manipulation of the Fed Funds rate, using "open market operations".

At 10/04/2008 4:04 AM, Blogger Arman said...

"The Fed doesn't directly control the expansion of credit,"
True, and more insightful than most. btw, you do know that the expansion of credit is the expansion of money?

" but it encourages/discourages it through manipulation of the Fed Funds rate, using "open market operations".
But it confuses the encouragement and discouragement. Higher interest rates encourage lenders to lend. Lower interest rates discourage lenders from lending. Borrowers may shop for preferred rates, but there is never a shortage of borrowers, but only a shortage of bank compulsion to lend.
Arman: you're a fool.
Sorry, but either you're too stupid to understand what I've said, or you haven't even read what I said, but either way your condemnation reeks of narrow minded ignorance.


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