Limits of Market Forces: a never-ending saga

This is a post by Joseph.

I was reading this article and was struck by this passage:

Poole lamented in his blueprint that the country was still not ready in 1980, and he warned his policymaker readers to expect resistance at the local level if they tried to push through programs transferring the costs for criminal justice (and policing) from general taxpayers to “users.” But one thing that Poole and Reason are very proud of is how they brought ideas from the fringes to the mainstream — and Ferguson is a prime example of how Poole’s neoliberal blueprints on privatizing criminal justice were eventually adopted in cities across the country

In Ferguson’s offender-fee system, city revenues from traffic fines make up 21% of the city budget and continue soaring. Those revenues are squeezed mostly from black drivers — 86% of motorists stopped in Ferguson are African-American, well above their 63% portion of the town’s population.

There are two pieces that I think need to be very carefully thought about.  First, as a matter of history, making criminal charges a means of raising revenue has been associated with the worst excesses of tyranny.  Think of the issues of High Treason and attainder during the War of the Roses and Tudor era in England.  Does anybody think the ability to seize people's property made these excesses better but reducing taxes (for example)?  So this is not an inevitable property of these systems, but it is worth thinking about carefully when implementation is being considered.

Second, market forces work best when the costs are borne by those for whom the service is provided to.  Here we need to be very tricky -- policing and trials are not usually services that criminals want provided to them  -- instead it may be a cost of doing business to them.  Nor do they have much influence in setting costs or process.  Instead, the service is provided to all of the non-criminals, who are made safer by the policing. 

So if we fund the system by charging criminals, we inherently break a key feedback loop of market forces.  Criminals cannot, for example, pick their judge or arresting officer.  Nor due we seek to compensate "users" who are incarcerated by mistake, but in other venues billing errors are routinely addressed. 

Instead, I would argue a fair justice system has market value.  A predictable legal environment and a good set of laws makes it easier for business to function efficiently and to invest in the future.  That is a public good, as much as clean air or automobile capable roads are.