Mises Wire

Facebook icon
LinkedIn icon
Twitter icon
A
A
< | < | <

The App Store Renders Government Irrelevant

  • Do not call_0.jpg
0 Views

Tags Big GovernmentLegal SystemEntrepreneurship

Many Americans have received more telemarketing and scam calls than usual over the past few months, and they are wondering what their number is doing on the National Do Not Call Registry, maintained by the FTC.

Some of the calls are clearly only meant for the most gullible, like those from some generic “card services” who somehow represent Visa, Mastercard, and all of the major banks and want to increase credit limits.

Tom Woods may be having the same trouble. Two weeks ago, he received calls purportedly from the IRS about back taxes he owed, but would settle out of court with a $2,000 Target gift card, obviously. Woods eventually offered zoo animals as payment and the scammer realized the gig was up.

Where the government’s Do Not Call Registry has failed, a free phone app has come to the rescue. Mr. Number, made by Hiya, blocks potential scam calls based on user reports.

Mr. Number blocks calls when enough of the app users flag it as a scam. It’s a very simple and effective process.

It’s a great example of the use of decentralized knowledge, and with over 10,000,000 downloads, there’s plenty of knowledge to be shared.

Compare this method to the FTC’s. If you get an unwanted call on your phone, you can go to donotcall.gov and file a complaint, which involves filling out a large, three-page form, with your personal information and everything you know about the caller. The form is probably dumped into a large database never to be used or seen again. It’s a very complex and useless process.

They also keep people’s phone numbers on a list that legally prohibits telemarketing calls. However, similar to any sort of legal prohibition (guns, drugs, alcohol, etc.) that only stops the telemarketers who obey the law.

Even companies that try to follow all of the rules sometimes get in trouble, though. Sprint had a server failure that resulted in them losing data in their internal do-not-call list, which resulted in them having to pay a whopping $7.5 million fine.

Mr. Number is also a great example of the effectiveness of private enforcement of rules. If the government finds that people are not following its rules, and it’s a priority that those rules are enforced, it almost invariably responds by 1) increasing law enforcement resources dedicated to detecting and arresting people, and/or 2) increasing the severity of punishment through higher fines and longer prison sentences. If it’s not a priority, as the Do Not Call Registry appears to be, then the government does little to nothing.

It’s a common misperception that the state has a comparative advantage in rule enforcement because it holds a monopoly on the legitimate use of force. But when you think about it, a relatively small amount of the order we observe is due to the government’s use of force or threat to use force. Economists deserve part of the blame for this misperception. 

Gary Becker, a pioneer in the field of the economics of crime, modeled criminal behavior as a simple weighing of the benefits of criminal activity vs. the costs of punishment, specifically the probability of being arrested times the length of incarceration. 

However, we can all think of opportunities we have had, whether it be a package left on someone’s doorstep or observing valuable items in an unattended garage, where we chose not to commit crimes, even though we knew our probability of being caught was next to zero. In fact, the vast majority of crimes reported to police are unsolved. 

Taking Becker’s models literally, most of us should be committing many more crimes. But since we are not, it must be the case that factors other than the threat of government punishment influence us to respect property.

Most businesses don’t commit fraud not because they are afraid of government punishment, but because it’s a bad business strategy in the long run. Their reputation is far more valuable than any short run revenues obtained through fraud. 

This is another area where private efforts, especially mobile apps, have made use of decentralized knowledge to enforce rules in a far more effective way than brute enforcement ever could. Creative app designers have found innovative ways to solve problems, and have rendered a range of government services either irrelevant or obsolete. Apps like Yelp! probably have done more to ensure restaurant food quality than all government food safety inspectors combined. 

With the number of consumer information outlets and apps like Mr. Number, do we even need an FTC? What sort of app will replace our current law enforcement departments?

Jonathan Newman is a recent graduate of Auburn University and a Mises Institute Fellow. Contact: email

Tate Fegley is a Ph.D. student in economics at George Mason University. Contact: email.

Jonathan Newman is Assistant Professor of Economics and Finance at Bryan College. He earned his PhD at Auburn University and is a Mises Institute Fellow.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
Image source:
When commenting, please post a concise, civil, and informative comment. Full comment policy here.

Add Comment

Shield icon wire