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how so?

We are not living in a society of saints. It is tempting for people to use their power position on they behalf if they can (no matter on a big politicans scale or a little street thug scale). There are always people who think they can not be caught, that they are clever more than the system, or simply not think at all, just act. They are de facto criminals (not always de jure). Let say it is 10 % of overall population.

Now, think of the majority of population. They don’t do crime, not because they are simply better, but because their neural networks are learned (completely fits with determinism!) that crime is not acceptable behavior. In forming their neural networks (brains) to think so, a big causal role has idea of punishment. Not only the idea, but experience: personal experience (growing up, upbringing, rising), or learning from other people bad punishment experience. The punishment institution has been built into them since childhood, so they internalize it in some ethical code. So they don’t think any more about it, they simply act well and play according to rules. That is why they don’t make crime.

Now, remove institution of punishment and you will get chaos. You’ll get all that neural networks left to learn to act ethically just on weak (what empathy? Intelectual contemplation on Good and Evil? Come on…That is bullshit). We are not living in a society of saints!

Actually most people do small crimes all the time. they simply don't get caught.

Also most people are religious so they believe in free will and some kind of eternal punishment.

Now, remove institution of punishment and you will get chaos.

Norway disagrees with you

Actually most people do small crimes all the time. they simply don't get caught.
Yes, that is because they learned they can do it on a small scale.
Also most people are religious so they believe in free will and some kind of eternal punishment
Of course, the idea of punishment can play a causal role even transcended.
Norway disagrees with you
How? Don't they have prisons? Don't they have punishment system? Your Norway argument would have a sense just in case there is no punishment system in Norway at all. By the way economy is so good there, that motivation for crime is much smaller, than, say, in Brasil

Their prisons are better than any of the apartments I ever lived. More like luxurious camping sites. The whole point is rehabilitation. not punishment.

It is still a punishment. This shit with pool is still a cage. By the way, try to implemet that system in Equador, Brasil, Columbia. It would be absurd.
Simple example, what if I want to kill you, and the only thing why actually I didn't kill you yet is my fear of punishment. Of being locked for 20 years. Of not actualizing my possibilities in a free world. Of wasting my life. If in Norway I can kill you + state reward me with rehab vacation, then, man, you better start running right now. If on the other hand, this Norway prison is still a cage, maybe beautiful cage, but a cage, then, you know, you still can feel safe, because I don't wanna sit in a cage no matter if it is golden.

Again, prisons never solved the problem of crime. anywhere in the world. if it was working we would be seeing less people inside prisons..not more.