Walter E. Williams

Dishonesty is costly. Delivery companies cannot leave packages when the customer is not home. The company must bear the costs of making return trips, or the customer has to bear the costs of going to pick up the package. If a supermarket places merchandise outside, it must bear the costs of hiring an attendant -- plus retrieve the merchandise at the close of business; that's if it can risk having merchandise outdoors in the first place.

Honesty affects stores such as supermarkets in another way. A supermarket manager's goal is to maximize the rate of merchandise turnover per square foot of leased space. When theft is relatively low, the manager can use all of the space he leases, including outdoor and entryway space, thereby raising his profit potential. That opportunity is denied to supermarkets in localities where there's less honesty. That in turn means a higher cost of doing business, which translates into higher prices, less profit and fewer customer amenities.

Crime, distrust and dishonesty impose huge losses that go beyond those suffered directly. Much of the cost of crime and dishonesty is borne by people who can least afford it -- poor people. It's poor people who have fewer choices and pay higher prices or must bear the transportation costs of going to suburban malls to shop. It's poor people in high-crime neighborhoods who are refused pizza delivery and taxi pickups. The fact that honesty and trust are so vital should make us rethink just how much tolerance we should have for criminals and dishonest people.


Walter E. Williams

Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of 'Race and Economics: How Much Can Be Blamed on Discrimination?' and 'Up from the Projects: An Autobiography.'
 
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