Rather, the important thing is that people, to the extent that they correctly model the rest of society and its response to their crimes, get an "internal simulation" that outputs "they will inflict disutility on you even if it's expensive to do so, and even knowing that it failed to deter you".

Another thought-experiment to heighten the distinction: if the President went on TV and said that starting this year, refusing to pay taxes would no longer be a crime, then the deterrence effect of having put people in jail for tax evasion would evaporate overnight. Every punishment would still have happened, but they would no longer deter future acts of the same kind.