Jan 30, 2010
I REFER to Thursday's report, 'Special training for police unit fighting casino crime'.
I am puzzled as to why the Singapore Police Force is setting up a unit, funded by taxpayers, to investigate crimes and fraudulent gambling in the casinos in the integrated resorts. The police should preserve law and order, and enforce the property rights of common citizens. Taxpayers' money is used to fund the force because all citizens stand to benefit from law, order and property rights.
A police force in any country is funded by taxpayers' money because the public at large stands to gain more than any individual.
However, the only beneficiaries from the prevention of fraud in casinos are the casino operators, and there are no visible spillover benefits to general law enforcement from police officers being trained to detect fraudsters in casinos, because the casinos are a specialised setting.
If the police did not have a casino crime unit, the only losers would be the casinos themselves, and being profit-seeking organisations, they would naturally pay for detection of such fraud, such as by training their own investigators to detect fraudulent gambling.
In other words, enforcement of honest behaviour in casinos is not a public good, from an economic point of view, and the casinos can pay for it because they are the only ones who stand to gain from preventing fraud. Public funds are being used unfairly to pay for the protection of private interests of the profit-seeking casinos. This injustice is exacerbated by the fact that casinos typically earn outrageous profits, and it is only right that they pay to protect their own interests.
Tan Jiaqi
[Good argument, but short-sighted/narrow-minded. If the police did not develop the expertise, then they would be fully reliant on the casino operators' security team's expertise. Then it is entirely possible that organised crime can take over, and use the casino operations as a front to move money about and the police would be none the wiser.
But by developing their own expertise the police prevents (or hopes to prevent) organised fraud or money laundering schemes. Casinos are potential centres for illegal activities, and it is right that the police focus their attention there.
If not, Singapore may gain a bad reputation for being soft or unable to detect fraud. This tarnishes our overall image. And while the casinos make huge profits, Singapore gains from the huge tax on Casino takings. Therefore Singapore has a responsibility to ensure that this "whale" is properly cared for. The Casino is a resource and an asset and as such requires care and maintenance. Petroluem Refinery is also a commercial and profit oriented business, but the police would also be concerned with the safety and security of the business. The only difference is that the potential danger to the public is perhaps more obvious and physical in the case of oil refinery. BUT, one can easily argue that since these are all on offshore islands anyway, they do not pose a direct threat to citizens. But again, that would be a shortsighted, narrow-minded perspective.]
I REFER to Thursday's report, 'Special training for police unit fighting casino crime'.
I am puzzled as to why the Singapore Police Force is setting up a unit, funded by taxpayers, to investigate crimes and fraudulent gambling in the casinos in the integrated resorts. The police should preserve law and order, and enforce the property rights of common citizens. Taxpayers' money is used to fund the force because all citizens stand to benefit from law, order and property rights.
A police force in any country is funded by taxpayers' money because the public at large stands to gain more than any individual.
However, the only beneficiaries from the prevention of fraud in casinos are the casino operators, and there are no visible spillover benefits to general law enforcement from police officers being trained to detect fraudsters in casinos, because the casinos are a specialised setting.
If the police did not have a casino crime unit, the only losers would be the casinos themselves, and being profit-seeking organisations, they would naturally pay for detection of such fraud, such as by training their own investigators to detect fraudulent gambling.
In other words, enforcement of honest behaviour in casinos is not a public good, from an economic point of view, and the casinos can pay for it because they are the only ones who stand to gain from preventing fraud. Public funds are being used unfairly to pay for the protection of private interests of the profit-seeking casinos. This injustice is exacerbated by the fact that casinos typically earn outrageous profits, and it is only right that they pay to protect their own interests.
Tan Jiaqi
[Good argument, but short-sighted/narrow-minded. If the police did not develop the expertise, then they would be fully reliant on the casino operators' security team's expertise. Then it is entirely possible that organised crime can take over, and use the casino operations as a front to move money about and the police would be none the wiser.
But by developing their own expertise the police prevents (or hopes to prevent) organised fraud or money laundering schemes. Casinos are potential centres for illegal activities, and it is right that the police focus their attention there.
If not, Singapore may gain a bad reputation for being soft or unable to detect fraud. This tarnishes our overall image. And while the casinos make huge profits, Singapore gains from the huge tax on Casino takings. Therefore Singapore has a responsibility to ensure that this "whale" is properly cared for. The Casino is a resource and an asset and as such requires care and maintenance. Petroluem Refinery is also a commercial and profit oriented business, but the police would also be concerned with the safety and security of the business. The only difference is that the potential danger to the public is perhaps more obvious and physical in the case of oil refinery. BUT, one can easily argue that since these are all on offshore islands anyway, they do not pose a direct threat to citizens. But again, that would be a shortsighted, narrow-minded perspective.]
10 comments:
No, the point is that it is inefficient for the taxpayer to be paying for the prevention of cheating in casinos. The only loser in the case of casinos being cheated is the casinos themselves. There are no positive externalities, no additional benefits, that the public would enjoy, from having casino cheating prevented. Since the casinos are the only ones who will benefit from cheating being prevented, they should pay for it themselves. It's not fair for taxpayers to pay for $100,000 worth of Baccarat tables and other gaming equipment and training trips to Las Vegas that the Police incurred.
Let me note your points (with some re-ordering).
a) Casinos are the only loser in cheating cases.
b) No benefits to society at large
c) Since Casino the only beneficiary, they should pay for the costs of preventing cheating. not efficient or fair to taxpayers for police to take training trips to Vegas.
Does that sum it up?
Your house is robbed. You are the only loser. You should therefore pay for the anti-burglary measures yourself. Why bother the police and why should other taxpayers be burden with your bad fortune?
i) because you pay taxes too? Well, the Casino pays way more taxes than you.
ii) because crime affects society in other intangible ways? because security is also a social good? and the reputation of the country for being crime free is also an intangible social good? Then not letting casino cheats think they can get away because the Singapore police is lax on casino cheats is also good for our country.
iii) The revenue the govt will take from the casino will more than cover the costs of a few gaming tables and training trips for the police.
Like I commented initially, good argument. But short sighted and narrowly focused. Look beyond your direct interests and see the bigger picture.
Ok, let me analyze your counterargument.
In fact, you DO pay for antiburglary measures that protect your house, and only your house. That is why the government does not pay for house alarms for people's houses although it serves the same function as the police with respect to protecting your house from burglary. And as a matter of fact, the police serves a *much smaller* deterrent than a burglar alarm, because the police is not always watching over your house, whereas the burglar alarm is always watching over your house 24x7, so your comparison was not a fair one.
With regards to your second point, I was not and am not saying that the police should have zero presence in casinos, my letter said nothing about that. All I said was that the police should not be detecting cheaters, because it is specialized, so the skills the police gain from detecting cheats at casinos are not going to help their policing anywhere else. In fact, the correct way would be for the casinos to detect cheats, and then call the police in when they detect these cheats because it is the police who possess the powers to detain people. Then, the casino's experts can then go to court as expert witnesses for the prosecution.
It is not an issue of whether the tax revenues are ENOUGH to pay for the policing. It is a matter of whether it is fair to the public, and I contend that it isn't, on the very specific point that the only people who lose in the first instance when the cheating occurs is the casino. I am not referring to second order effects that you mentioned, like the general crime rate going up, and as far as my proposed way of dealing with this goes (casino detects cheats, gathers evidence, calls police in to arrest), this still punishes the cheaters, only the police should not be involved in the business of identifying the cheaters.
I agree that your argument is a good one: the question of fairness to the tax-payer.
But it is also a narrowly focused argument - that taxpayers are only people like you and me. And cheaters are not taxpayers.
The bigger picture is that the casino will probably pay more tax in one day than you and I pay in probably our entire working life (Maybe you are a CEO of some large corp and in which case you might pay more in your entire career than the casino pays in one day.)
That's a VERY big taxpayer.
That's a WHALE of a taxpayer.
What you are asking is that the police entrust the catching of casino cheats to the casino. In short, self-policing.
This is the same argument the Republicans in the US argued for deregulating banking in the US, for the Federal Reserve and other govt agencies to give financial institutions a free hand to decide how much risks they can manage and how much risks they can bear.
Until finally the authorities have no idea and no understanding of how the various financial instruments worked and the risks of each.
And then the financial crisis.
When the police do not understand how the cheating is carried out, they have to depend on the Casino security to tell them. Then it is the casino's word against the cheater.
So what if the casino didn't like you winning so much and arrested you and called the police and told the police that they caught you cheating and you said you didn't, and the police say, sorry, we have to trust the casino?
I dunno about you, but I trust our men in blue a lot more than I trust people hired by a casino.
It's interesting that you mention bank deregulation.
There's actually two huge opposing schools of thought, about whether the government should be involved in the provision of goods and services, and how far they should go in doing that. In this case, the argument boils down to whether the government should provide the service of protecting the casinos from cheaters, or at least, detecting cheaters (the law and the police powers of detaining people are also part of deterring cheaters, but those are necessary).
As far as bank regulation goes, the more conservative, less liberal school of thought, suggests that until banks learn to discipline themselves, no amount of regulation will prevent financial meltdowns, because banks, driven by their profit motive (greed is what makes the free-market system work, so you can't argue for altruism here), will find ways around the regulations. It's like a fish slipping away, the banks will always get creative and slip away, it's asymmetric warfare because the regulators can never keep up with all the creative financial instruments until an explosion occurs.
The financial crisis we see today is nothing new. It happened in the 1980s in the US Savings and Loans crisis when hundreds of banks closed down. And then in 1994 one of the biggest banks on the west coast of US failed as well, but that was relatively more contained. You can never keep up with the cheaters, like how the terrorists will always find new ways to bomb planes and beat the security checks.
So the best way to make something happen, is to make the person who hurts most, pay for it, and make it his responsibility. The only time the government should step in, is when people, behaving in their best interests, will not do the optimal thing for society. And that occurs when there are market externalities, i.e., in the particular action, it is more than the two people involved (buyer and seller, in the case of casino cheating, buyer = casino, seller = gambler selling his gambling dollers) who get affected (get some benefit or get some negative effect). For instance, in smoking, it is more than just the guy who is smoking, and the cigarette company who get affected--the cigarette company makes money, the smoker gets enjoyment from the smoke and health costs, but the innocent bystander also gets poorer health even if he didn't ask for it. That's why the government taxes smoking.
But in the case of cheating at the casino, there are no externalities in the first instance.
Look up "Externality" in Wikipedia. This is a very very old topic in Economics.
Length of comment/argument is no substitute for validity of argument.
You are still arguing theoretical constructs instead real-world practicalities.
You are more interested in showing me you know the definition of "externality" instead of understanding and applying it.
Refute my scenario where you get accused of cheating by the casino and the police has no expertise, to prove otherwise, except what the casino tells them.
You can see the cigarette argument because it has been spelt out for you, and even explain why the govt should rightly tax cigarettes.
Well the govt will be taxing the casino and the tax revenue will be higher than cigarettes'. Does that indicate some "externality" at work?
In your case, it becomes a matter for the court of law to decide. The police can accuse, they can arrest you with sufficient evidence, but you have the right to legal counsel, and if you cannot afford it, the government/Ministry of Law will provide you with one. And it then becomes the job of the judiciary to judge the expert evidence presented by the casino to decide if you cheated.
If you are saying that the accused is powerless, you are also implying that the judiciary is not impartial, and you are in contempt of the courts of Singapore, which is against the law as well.
I had already categorically illustrated why there are no externalities in this case of identifying casino cheats in my ST letter to begin with, that was published. I have been explaining what an externality is in completely non-technical terms because you have repeatedly refused to comprehend the term, which even a JC1 economics student understands.
You are just completely sidestepping the arguments and arguing for the sake of arguing, I do not see a need to explain myself nor the idea any further since you are just refusing to accept the facts.
Enjoy wallowing in your own world.
And by the way, there are many more reasons than externalities, for why the government imposes taxes. For goodness sake, go read an Economics textbook.
It is always nice to be threatened with legal action especially if I have somehow driven one to resort to putting words in my mouth in order to do so.
To quote you:
If you are saying that the accused is powerless, you are also implying that the judiciary is not impartial, and you are in contempt of the courts of Singapore, which is against the law as well.
Your logical leaps defy... logic? (or is this the strawman strategem?)
Yes. It sounds like you have just read a JC1 economics textbook. And eager to show off your understanding.
But it is not I who have failed to understand, but you who have failed to see.
You see only the Casino and the (alleged) Cheat in a clinical, theoretical setting where you define only a bilateral transactions devoid of social implications. You make no distinction between a gambler and a cheat in your theoretical setting. Or rather you freely treat the two as the same. Does this make a difference, you don't even wonder.
Until you are able to see that there are wider social (and pecuniary) implications at work here than your simple and simplistic theory & model, you will have a better chance of convincing parliament to repeal Section 377A of the Penal Code with the same theory. (Now THAT has no externalities!)
Summary of comments, commenter.
First, a little knowledge is a dangerous thing.
Second, if you have a hammer, everything looks like a nail.
Commenter has strong grasp of concept of "positive externalities" and applies concept (economic concept) to law enforcement without consideration of non-economic factors.
I made the innocuous error of referencing bank deregulation. This set off his attempt to impress me with his knowledge of the financial crisis and bank deregulation. Without addressing the point that entrusting law enforcement to the casino is a dangerous thing.
To my question of how would a legit winner falsely accused of cheating by a self-policing casino defend himself (since the police now has no expertise to dispute the casino), Commenter's solution was to show contempt of court. :-)
Then he stormed off in a tantrum.
Half-baked economists with a little knowledge can be so full of themselves.
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