Charles, Hoppe also draws on Banfield’s book in his analysis of how democracy itself increases time preference, in his great article Time Preference, Government, and the Process of De-Civilization — From Monarchy to Democracy. He explains that democratic law-making—legislation—causes uncertainty, which increases time preference since future ends are less certain and thus less valuable; this increased time preference, in turn, leads to lower productivity and also increases crime, as we have seen in London. As Hoppe writes:
[T]he mere fact of legislation—of democratic law-making—increases the degree of uncertainty. Rather than being immutable and hence predictable, law becomes increasingly flexible and unpredictable. What is right and wrong today may not be so tomorrow. The future is thus rendered more haphazard. Consequently, all around time preferences degrees will rise, consumption and short-term orientation will be stimulated, and at the same time the respect for all laws will be systematically undermined and crime promoted (for if there is no immutable standard of ‘right’, then there is also no firm definition of ‘crime’).
… one must first work for a while before one gets paid. In contrast, specific criminal activities such as murder, assault, rape, robbery, theft, and burglary require no such discipline: the reward for the aggressor is tangible and immediate whereas the sacrifice — possible punishment — lies in the future and is uncertain.
Incidentally, Guido Hülsmann’s lecture on The Division of Labor and Social Order at the recent Mises University 2011 does a nice job of explaining the role of low time preference in extending the division of labor, savings and capital accumulation, and productivity and wealth.10:35 am on August 10, 2011 Email Stephan Kinsella