The Al Capone Problem

Al Capone was a famous gangster in 1920s. For various reasons, the government struggled to imprison him for — you know — all the liquor-smuggling and gangland-killing.

Eventually, they came up with an alternative plan: he evidently had a lot of money, and he hadn't been paying taxes on it, so they put him away for 11 years for tax evasion.^[1]

Everyone at the time understood why the laws on tax evasion were applied so diligently to this guy in particular. He really did fail to pay taxes on his income, and he really did get imprisoned for tax evasion, but everyone knew he wasn't being imprisoned for tax evasion.

Still: someone living under a rock until May 1932 could theoretically open the newspaper and read the headline and think, damn, they're sure getting serious about tax crimes these days.

I think about this every time there's a news story about someone getting fired from a job for something that seems disproportionate.^[2] For example, one person got fired for using their expense account to buy dinner for them and their spouse, while claiming they had eaten all that food alone.

I'm sure this was technically against the organization's rules, and I guess it's possible that the organization was making an example pour encourager les autres, but I couldn't help doubting whether this firing was truly about improper use of per diems.

If an organization wanted to get rid of someone for diffuse (or unpalatable) reasons, they might just pick the first legible excuse that comes along. And it's important to realize that, in such a situation, the particular excuse they wind up with isn't meaningful: you'd be silly to analyze it based on any specifics about expensing if in fact the person could just have easily been fired for (let's say) blocking a fire escape.

Another example, though an awkward one to talk about, is the stories people sometimes tell about breakups: "can you believe that so-and-so broke up with me over such-and-such?"^[3] My answer is often: no, I can't believe that -- I think they probably had some other, amorphous problem that they weren't able to communicate with you, so they landed on this more-legible but seemingly trivial explanation instead.

A recurring theme of this newsletter is that if we try to understand the world by analyzing distorted public information, our conclusions will be wrong because the inputs are fake. The Al Capone Problem is another specific example of this broader trend: if you try to understand Capone's imprisonment based only on the court ruling that put him away, you don't understand Capone's imprisonment.