Mackerel Economics

 Posted by on 21 October 2008 at 11:10 pm  Economics, Finance
Oct 212008

According to the October 2, 2008 Wall Street Journal, the unofficial prison currency in the US is no longer the cigarette, but rather the mackerel:

There’s been a mackerel economy in federal prisons since about 2004, former inmates and some prison consultants say. 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, according to the Federal Bureau of Prisons) 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.

…[T]he mack is a good stand-in for the greenback because each can (or pouch) costs about $1 and few — other than weight-lifters craving protein — want to eat it.

It’s interesting that these prisoners understand the need for a stable objective medium of economic exchange far better than the US government which is incarcerating them, even though few of those prisoners have studied articles such as, “Gold and Economic Freedom” in Capitalism: The Unknown Ideal which explain the importance of a gold standard.

In light of the recent Wall Street bailout inflicted on us by government officials based on bad economic theories, here are a couple of conclusions one might draw:

1) Perhaps it’s the US economy that is based “fishy” premises, not the prison economy.

2) Perhaps more US government officials need to spend some time in a federal penitentiary — they may learn an important lesson about sound money (as well as some well-deserved lessons on other subjects.)

(Via Marginal Revolution.)

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