Police, Courts, and Prisons
Part 8 – The Subversion of Customary Law
I recommend reading Parts 1 through 7 before reading this essay
Laws are rules of conduct, and rules are established over time as customs gradually evolve. Behavioural changes are prompted by evolving societal conditions, which means customs are changing. New customs emerge. Old customs fade away. Notice these synonyms – customs, rules of conduct, laws. The three terms are interchangeable. This is customary law. We saw this in Parts 2, 4, and 6, and somewhat in Parts 3 and 7. Different cultures develop different customs, but under customary law, all customs tend to be grounded on the golden rule “do unto others as you would have them do unto you.” What does this mean in practice? It means that a law is not broken unless an individual causes direct physical harm to another person or the property of another person, including theft. Law-breakers are not protected by the golden rule, at least to the extent of their violation of the law – they must compensate their victims.
The golden rule is an ethic of reciprocity. This does not mean if I give you a gift today, you must reciprocate by giving me a gift tomorrow. It also does not mean that I can say “Help me because I am destitute and when I recover, I will reciprocate by helping others who are destitute.” The golden rule is not about giving something tangible to someone else. It is about how we treat each other i.e. you do not hurt me or steal my property because you would not want me to hurt you or steal your property. The golden rule is prominent among all the major religions of the world.
The strength of customary law is found in its adherence to the golden rule. Adherence is easy because it is intuitive. Everyone expects everyone else to behave in a certain way. Law enforcement becomes highly effective because all members of the community tend to enforce the laws which they themselves created. The prospect of restitution incentivizes victims to initiate the pursuit and prosecution of law-breakers. We saw this in Part 2 with medieval Anglo-Saxons. In medieval Iceland (Part 3), victims could sell their right to restitution to someone who was willing to engage in pursuit and prosecution, thus receiving their restitution indirectly – the difference between this ‘selling price’ and the restitution price is a cost borne by the victim, but this is fully or partially offset by the cost of ‘personal pursuit’ which the victim no longer incurs.
In contrast, authoritarian law is coercive law. Government legislated law is arbitrary law. ‘Arbitrary law creation’ will be much less gradual than ‘customary law creation’ because an authoritarian institutional structure does not rely on acceptance of the laws by all people affected by the laws i.e. most laws do not reflect evolving customs. Customs are ignored because arbitrary laws are intended to benefit one or more groups at the expense of one or more other groups. Therefore, the number of laws under an authoritarian system will increase exponentially. In the United States, forty thousand new federal, state, and local laws took effect in 2012.
Jesús Huerta de Soto, professor of economics at King Juan Carlos University, is Spain’s leading Austrian economist, and a Senior Fellow of the Mises Institute. He received his doctoral degree in Law in 1984. Huerta de Soto explains the distinction between customary law and authoritarian law:
The concept of law as a series of rules and institutions to which people constantly, perpetually and customarily adapt their behavior has been developed and refined through a repetitive, evolutionary process. .
Society’s market process is made possible by a set of customary rules of which it is also the source. These rules constitute the behavioral patterns embodied in criminal law and private contract law. No one has deliberately formulated them. Instead such rules are evolutionary institutions which emerge from practical information contributed by a huge number of actors over a very prolonged period of time. Substantive or material law, in this sense, comprises a series of general, abstract rules or laws.
They are general because they apply equally to all people, and they are abstract because they establish only a broad scope of action for individuals and do not point to any concrete result of the social process.
In contrast to this substantive conception of law, we find legislation, understood as a set of coercive, statutory, and ad hoc orders or commands which are the materialization of the illegitimate privileges and the systematic, institutional aggression with which the government attempts to dominate the processes of human interaction. This concept of legislation implies the abandonment of the traditional notion of the law (explained above), and the replacement of it with “spurious law” composed of a conglomeration of administrative orders, regulations and commands which dictate exactly how the supervised economic agent should behave.
Thus to the extent that privileges and institutional coercion spread and develop, traditional laws cease to act as standards of behavior for individuals, and the role of these laws is taken over by the coercive orders and commands of the regulatory agency . . . In this way the law gradually loses its scope of implementation, and as economic agents are robbed of the criteria of substantive law, they begin to unconsciously alter their personalities and even lose the custom of adapting to general, abstract rules.[1]
AUTHORITARIAN LAW – REVENUE COLLECTION AT THE EXPENSE OF CRIME PREVENTION
Every action triggers a reaction. As authoritarian law began subverting customary law, victims were denied restitution. As victims were denied restitution, they lost their incentive to pursue offenders. Why would they internalize the cost of pursuit if they could not also internalize the benefit? So they declined to pursue, which irritated the king because he wanted to internalize the benefits of prosecution, while externalizing the cost of pursuit onto the backs of the peasants. Money, not law enforcement per se, was the primary motivation for the kings’ subversive actions. Here is Bruce Benson (footnote mine):
Most offenses under the early Normans were still defined by Anglo-Saxon custom, but those offenses that were considered to be violations of the king’s peace were significantly expanded . .
. . . The Norman kings used law and law enforcement to generate revenues needed to finance their military operations, to enhance their own wealth, and to buy the support of powerful groups. In this regard, one of the earliest and most significant changes the Normans made in English law was replacing the old restitution-based system of bot, wer, and wite with a system of fines and confiscations along with corporal and capital punishment. . . .
. . . As the business of justice increasingly became the accumulation of royal revenues, voluntary participation in the justice process naturally declined. In this light, the Normans also instituted a local arrangement called the frankpledge. With similar functions to an Anglo-Saxon tithing[2], the members of a frankpledge were expected to pursue and capture thieves and perform court duties. Based on requirements of feudal obligation rather than reciprocities, the frankpledge was ordered to ensure the appearance of members in court. If a frankpledge failed, the group could be fined; similarly, if a frankpledge did not assist in pursuit the group was subject to a fine. There is evidence that entire communities were so fined.
. . . Many foundations of the modern English system of law were laid during the reign of Henry II, a man who was “hungry for political power, both abroad and at home.” . . .
Henry was also searching for revenues, and an important source was that component of the justice system that was concerned with violations of the king’s peace. It should be noted that “the king got his judicial profit whether the accused was found guilty or innocent.” If guilty, hanging or mutilation and exile, plus forfeitures of all goods were typical punishments; if the accused was found innocent, the plaintiff was heavily amerced for false accusation. Of course, this further reduced the incentives of crime victims and frankpledge groups to report crimes. Royal courts, sheriffs, and inquisitional juries were necessary innovations if the king was to collect his profits.
Henry and his judges defined an ever-growing number of actions as violating the king’s peace. These offenses came to be known as “crimes,” and the contrast between criminal and civil causes developed, with criminal causes referring to offenses that generated revenues for the king or the sheriffs rather than payment to the victim. There were clearly strong incentives for freemen to have an offense considered as civil, and “the dilemma ‘criminal or civil’ is offered to every plea.”[3]
Fines did not work. The king(s) could not force or persuade frankpledge groups to pursue criminals because he had removed their incentives for doing so. Thus we see the impetus to the development of Public Police, Courts, and Prisons, indispensible institutions to authoritarian law-makers seeking to profit from crime.
AUTHORITARIAN LAW – POOR CRIME RESOLUTION
As Benson told us, the king got his judicial profit whether the accused was found guilty or innocent. Dear reader, the kings would be envious of the many ways in which authoritarian law-makers have expanded on the schemes they launched a thousand years ago. Coercive taxation (is there any other kind?) has for many years provided ‘guaranteed profits’ for authorities, regardless the effectiveness of their law enforcement efforts. Here we have a theory a ten-year-old can understand: if your salary is guaranteed regardless of whether you do your job or not, it is likely you will not do your job, or you will not do it well. Do the facts support the theory?
Let’s examine the evidence to determine if the authorities are living up to their self-appointed responsibility for resolving offences against persons and property. Consider the data for Canada (2008/09) in the following table, which is extracted from a report compiled by the Fraser Institute.[4]
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| OFFENCES BY CATEGORY | % OF OFFENCES CLEARED BY CHARGE | % OF CHARGES TAKEN TO COURT | % OF COURT CASES WITH GUILTY VERDICT | % OF GUILTY PERSONS SENTENCED TO PRISON | AVERAGE SENTENCE (in days) | EXPECTED TIME TO SERVE (days) | EXPECTED TIME OFF THE STREET (days) |
| Homicide | 66 | 65 | 48 | 76 | 7,042 | 1,094.50 | 730 |
| Attempted murder | 68 | 28 | 22 | 81 | 7,042 | 235.1 | 157 |
| Robbery | 35 | 41 | 67 | 76 | 583 | 42.6 | 14.2 |
| Sexual assault | 44 | 47 | 44 | 54 | 224 | 10.9 | 3.63 |
| Other sexual offences | 48 | 24 | 70 | 62 | 296 | 14.6 | 4.86 |
| Major assault | 70 | 42 | 56 | 43 | 405 | 28.6 | 9.55 |
| Common assault | 48 | 41 | 52 | 15 | 23 | 0.3 | 0.11 |
| Uttering threats | 35 | 37 | 54 | 32 | 46 | 1 | 0.34 |
| Criminal harassment | 40 | 37 | 52 | 26 | 45 | 0.9 | 0.31 |
| Theft | 10 | 48 | 69 | 40 | 48 | 0.6 | 0.22 |
| Break and enter | 10 | 42 | 72 | 57 | 187 | 3.2 | 1.07 |
What does it mean to solve a crime? To facilitate our discussion, let’s define this as the capture and conviction of the perpetrator, regardless of sentence imposed. Using homicide as an example, the police and courts have a resolution rate of about 21%. For example, on average, across the country, if there were 1,000 homicides, authoritarian law enforcement solves only 206 of these cases. Calculation: 1,000 x 66% (column 2) x 65% (column 3) x 48% (column 4) = 206. Then, 206 divided by 1,000 = 20.6%. I am rounding it off to 21%. Thus, 21% of homicides are solved, and 79% are not solved.
Therefore, the performance record of authoritarian law enforcement in Canada is as follows:
79% of homicides are NOT solved
96% of attempted murders are NOT solved
90% of robberies are NOT solved
91% of sexual assaults are NOT solved
92% of other sexual offences are NOT solved
84% of major assaults are NOT solved
90% of common assaults are NOT solved
93% of uttering threats are NOT solved
92% of criminal harassments are NOT solved
97% of thefts are NOT solved
97% of break and enters are NOT solved
Note – these statistics reflect only those crimes which are known to the police.
This performance record justifies the public’s lack of confidence in the police and justice system (see Part 1). It also explains why the majority of crimes committed against person and property are not reported to the police, thus remaining unknown to them. Statistics Canada conducts a General Social Survey every 5 years, in which it seeks to determine the extent to which people are victimized by various types of offences. The total number of crimes reported in the 2009 survey are a multiple of those known to police. For example, only 5% of sexual assaults and 26% of robberies were reported to police.[5]
GOVERNMENT INTERNALIZES THE BENEFIT , BUT NOT THE COST !
The impetus to the Norman kings’ interference with customary law enforcement was to profit from crime. The same incentive exists today for police, court, and prison bureaucracies which are funded by billions of tax dollars annually. The tax money continues to flow, and grow, regardless of bureaucratic performance. In order to understand the poor performance of authoritarian law enforcement, we must focus on the incentives which authoritarian law creates for individuals ensconced in police, court, and prison bureaucracies.
These bureaucracies are able to externalize their costs onto the backs of taxpayers, while internalizing most of the benefits (tax-funded salaries, benefits, perks). The performance of these non-market, or anti-market institutions, can be clearly comprehended only by comparing their incentive structure with that of free market institutions. Individuals and firms operating on the free market are in violation of the law if they attempt to forcibly extract money from people – this privilege is restricted to the government. So much for equality under the law. Those conducting business on the free market must internalize the benefits and the costs in each interaction they have with the consumer – the consumer is doing likewise.
Exchanges in private markets are voluntary, which means exchanges occur only when both parties expect to benefit. If you later regret the exchange you made with the butcher (perhaps the meat was not tender), you are not obliged to repeat the purchase. You take your business to another butcher. In a competitive market, butchers must satisfy the paying customers. Those who do not will soon find themselves without customers. Private businesses cannot force you to give them your money. They must produce goods and services which you want in order to persuade you to part with your money – and they must do this continually because your last purchase does not guaranty your next purchase. In this way, private businesses have an incentive to always keep the consumer happy.
We must be absolutely clear on this point. The butcher internalizes the cost, which is equal to all of the various costs in running his business – he cannot force taxpayers to pay these costs. The butcher also internalizes the benefit, which is the money his customers willingly hand over in return for meat. If his benefits exceed his costs, he is profitable. The consumer also internalizes the cost (working to earn money to pay for the meat) and internalizes the benefit (the meat). Note that the butcher values consumers’ money more than he does the meat. The reverse is true for consumers. The exchange would not occur otherwise.
Butchers, and all other enterprises on the free market, compete on the basis of quality and price. Consumers decide to make purchases only when they believe the product or service exceeds the cost which they must bear. However, with government provision of services, consumers are not allowed to make these decisions. The government arbitrarily decides how much money it will take from consumers, then arbitrarily decides how much ‘service’ it will provide. In everything it does, the authoritarian government never internalizes the benefit and the cost. It always internalizes the benefit and externalizes the cost. This concept not only explains the poor performance of authoritarian law enforcement – it tells us to expect no other result, given the incentives created by authoritarian law. As such, the concept is equally applicable to every government bureaucracy.
PRIVATE SECURITY – ROSSMOOR
Consider the performance of private security, where costs cannot be externalized to taxpayers, but must be internalized by the profit-seeking-firm providing services to paying customers. Bruce Benson provides this example:
Rossmoor, a private development covering about seven square miles in Walnut Creek, California, started with about eighty-three hundred exclusively adult residents in 1979 . . . and is protected by private security. The twenty-two-officer security force maintains a guard post at the only entrance to the complex and responds to approximately nine hundred calls per month made to its own dispatchers . . .
The unarmed security force is approximately the same size as a city police force handling that number of calls, although the mix of calls appears to differ significantly . . . The vast majority of calls are not to report crimes; instead, they involve medical emergencies and crime prevention actions such as vacation checks and escorting visitors.
The security force has not been granted police powers by the government, so its personnel’s authority to arrest is the same as any private citizen’s, and they must call the public police when a criminal incident actually occurs, but deterrence is so effective that Walnut Creek public police respond to only about twenty-five such calls a year from Rossmoor.
Nonetheless, it is estimated that in 1980 if Rossmoor had terminated its private security arrangement, Walnut Creek would have created two additional twenty-four-hour patrol beats at a cost to city taxpayers of about $1.5 million per year. In comparison, the twenty-two-person private force and related security arrangements cost Rossmoor residents $555,000 in 1979. . . . for Rossmoor (and for Walnut Creek taxpayers), Rossmoor’s private security force appears to be very cost-effective.[6]
According to the October 7, 2009 edition of the Rossmoor News, Walnut Creek Police Chief Joel Bryden said “The number of violent crimes in 2008 in Rossmoor was zero . . . Although Rossmoor has 15 percent of the population of Walnut Creek, the community only accounts for .05 percent of crime.” When we recognize the incentives created by the internalization versus externalization of costs, the experience of Rossmoor is not surprising.
The lower crime rate in Rossmoor as compared to the rest of Walnut Creek is the result of the internalization of costs by Securitas (the private security firm) versus the externalization of costs by the Walnut Creek police department. If Rossmoor residents are unhappy with the performance of Securitas, they can refuse to renew the Securitas contract, and hire another private firm to do the job. Thus, Securitas is highly incentivized to prevent crime.
In contrast, the Walnut Creek police department is NOT incentivized to prevent crime, because they are legally permitted to externalize their costs to taxpayers on a continuing basis, regardless of performance. Politicians and police department bureaucrats tell taxpayers how much they must pay for protection, then they decide how much protection to provide.
The perverse nature of this authoritarian relationship is seen through the prices paid for protection. In this case, if public police had to replace Securitas, the cost would nearly triple ($1.5 million vs. $555,000); however, this does not account for the increased costs of crime which would surely materialize, as evidenced by crime rates elsewhere in Walnut Creek.
I must point out that this discussion of comparative performance in the public vs. private sectors is not based on the particular abilities of any of the individuals involved. Assume for the sake of argument that they are all good people who view crime as undesirable. The issue is not with their abilities per se, but rather the institutional structure within which their abilities can be realized to the fullest possible extent.
In the eyes of their customers, their bosses, the performance of Securitas is judged by its ability to prevent crime; thus they are so incentivized, and have proven themselves highly effective. In contrast, public police departments fear massive budget cuts if crime disappears. Therefore, they are incentivized to react to crime. Arrest statistics, not crime prevention, is their measurement of success.
As with all government bureaucracies, police departments are incentivized to maximize their profits (externalized costs i.e. taxes) and minimize actual service. These are the perverse incentives created by authoritarian law, and humans always respond to incentives. By changing the incentives, we change the results.
We live in a world of scarcity – the products and services we need to survive must be produced by someone. Securitas is the firm producing private security for Rossmoor residents. Private firms competing on the free market will be profitable only if they offer consumers a product or service they want at a price they are willing to pay, and if their costs are lower than their revenue. Prices are the indispensible mechanism to allocate scarce resources to their most valued uses.
Using 1979-80 prices, Rossmoor residents paid $555,000 for private security. If they were not prepared to pay more than, say, $50,000, it is unlikely they would have found a firm willing to provide a comparable level of service. In that event, the personnel and other resources of Securitas would have been deployed elsewhere in society, either in private security, or in a different field. Prices will determine where these resources are allocated in the marketplace, because prices reflect the demands of consumers.
Throughout society, peace and prosperity are reduced as a result of the perverse incentives inherent in any system of authoritarian law. The reduction of peace is seen through the high crime rate of Walnut Creek (other than Rossmoor). The reduction of prosperity is seen through the inefficiency of the Walnut Creek police department – these resources should be reallocated in the marketplace. Society is always more prosperous when consumer preferences are the driving force behind what gets produced. When scarce resources are wasted, we all lose. The tax savings realized through the elimination of the Walnut Creek police department would allow all Walnut Creek residents to hire private security firms, while retaining the greater portion of tax savings which they can each decide to save, spend, or invest, all of which makes them more prosperous.
The impetus to authoritarian law was, and is, to serve as a legal mechanism for the transfer of wealth. In this case, wealth has been transferred out of the pockets of Walnut Creek residents into the pockets of an ineffective Walnut Creek police department.
The wasting of scarce resources is not limited to police departments. If more extensively employed, private security firms would produce lower crime rates. Consequently, the emergence of a far more peaceful society would trigger a massive ripple effect throughout the entire authoritarian judicial system. This would pose a significant challenge to the authorities, who would be hard pressed to justify why their budgets should not be drastically cut. Reallocation of many of these scarce resources, not within the government, but into the free market, would further increase overall prosperity.
PRIVATE SECURITY – ST. LOUIS NEIGHBOURHOOD
Private security is ubiquitous. We just don’t hear much about it. Here is Benson with another example:
As Oscar Newman noted,
the decline of St. Louis, Missouri, has come to epitomize the impotence of federal, state, and local resources in coping with the consequences of large scale population change. Yet buried within those very areas of St. Louis which have been experiencing the most radical turnover of population are a series of streets where residents have adopted a program to stabilize their communities to deter crime, and to guarantee the necessities of a middle-class life-style. These residents have been able to create and maintain for themselves what their city was no longer able to provide: low crime rates, stable property values and a sense of community. . . . The distinguishing characteristic of these streets is that they have been deeded back from the city to the residents and are now legally owned and maintained by the residents themselves.
The city complied with the requests for privatization in return for the residents’ assumption of responsibility for street, sewer, and streetlight maintenance, garbage pickup, and any security services above normal fire and police response. The titles to the streets are vested in an incorporated street association to which all property owners must belong and pay dues.
The street associations, most of which own one or two blocks, have the right to close the street to traffic, so the only cars on the street belong to residents and their visitors. “It is their street and that ownership gives the neighborhood a high degree of cohesiveness.”
Indeed, a large study of St. Louis and University City private streets found that residents “needed assurance that neighboring homeowners shared both their values and financial capacity to maintain the standards of homeownership . . . concern for security of their investment was a critical factor which led urban oriented residents to the selection of a house on a private street.” . . .
A comparison of crime rates on private streets and adjacent public streets found significantly lower crime on private streets in virtually every category. . . . Newman concluded: “The ultimate effect of this symbolic definition of the street is that residents come to think of the street as their neighborhood.”
Privatization creates a bond that allows for reciprocal cooperation in crime prevention that is reminiscent of the Anglo-Saxon neighborhood tithing system.
Some observers have argued that the lower crime rates on these streets are the result of limiting access, not privatization. Certainly limited access might be expected to have been a major factor, but closures of public streets have been tried elsewhere with little success. A Department of Justice experiment in Hartford, Connecticut, for example, closed streets and assigned police teams to the neighborhood. But “to the disappointment of the project directors, police statistics did not show any dramatic drop in crime.”
Private streets have two advantages that simple street closures and even neighborhood associations do not. First, “ownership gives the neighborhood a high degree of cohesiveness.” Second, all residents sign a contract agreeing to property use and maintenance. The resulting incentives for cooperative crime control are apparently very strong.[7]
In other words, ownership means you have skin in the game.
PRIVATE SECURITY – STARRETT CITY
Another example from Benson (emphasis added):
Donovan and Walsh (1986) provide what may be the closest thing to a full-scale evaluation of a large private security system with their examination of the effectiveness of private security for Starrett City, a 153-acre apartment complex in a high-crime area of the East New York section of Brooklyn, with fifty-six residential buildings containing 5,881 apartment units and about twenty thousand racially and ethnically diverse but largely middle-income residents . . .
Starrett City also has eight parking garages and one outdoor parking lot, a shopping center with twenty-five businesses, an elementary school, an intermediate school, two nursery schools, a recreation complex (facilities for swimming, basketball, tennis, meetings, etc.), and various open spaces and parks.
. . . the report concludes that “statistically, Starrett City must be considered one of the safest communities in the United States” (there are many other private developments all over the country that probably have comparable safety; they simply have not been studied)
Starrett City had far fewer reported felonies than any of the other reporting categories. [the other three categories: (a) United States (b) New York State (c) the Seventy-Fifth Police Precinct in which Starrett City is located] This difference does not appear to reflect a tendency for non-reporting by residents either: they were apparently much more likely to report crimes than other residents of the Seventy-Fifth Precinct, as evidenced by the fact that they reported many more incidents of criminal mischief, trespass, petit larceny, reckless behavior, and disorderly conduct than were reported to public police. This probably reflects recognition that the public police and courts will do very little if anything in response to such reports, whereas private security will respond . . . Thus, 77.5 percent of the residents in the survey said they would report an assault to their private security force; only 12.6 percent would call the New York City Police Department.
Similarly, 97.1 percent of the thirty-five retail businesses within Starrett City would call the private security force if they had a problem, and only 2.9 percent (the manager of thirty stores in a chain, only one of which is in Starrett City) would call the New York police. The “concern shown by security personnel for care of property and prevention of disorder as well as the safety of residents and visitors” is what explains the high level of reporting in Starrett City. A large majority of residents (89.1 percent) clearly recognize that the reason for the relative safety of their community is its security force; in fact, a majority suggest that they would move out if the security force was not there.
Donovan and Walsh estimate that the added cost for public police in the absence of the Starrett City security force would have been a minimum of about $750,000 per year because of the additional officers who would have been needed. The fact is, however, that economically it would be “practically impossible to replace the Starrett City security department on a person-for-person basis.”
The police in the Seventy-Fifth Precinct actually responded to only 30.6 percent of their calls for service, compared to the 94.44 response rate for Starrett City’s security force; Donovan and Walsh recognize that fewer officers would have been employed to serve these residents. The $750,000 estimate essentially assumes that four additional police officers would have been assigned to the area in order to replace the fifty-four-person security force, resulting in a lower level of protection and much higher crime rates.
The greater propensity to report crimes in Starrett City, noted above, suggests that only a portion of the calls would have been made to the public police in the absence of private security; but the reduced security presence and the reduced probability of reporting mean that crime would have been much higher in the area without the private security presence, so crime-related calls could actually increase. Clearly the public police are unable or unwilling to duplicate the level of localized deterrence that people want and are willing to buy from private security.[8]
Benson said “there are many other private developments all over the country that probably have comparable safety; they simply have not been studied.” Indeed, many successful private security arrangements remain unknown to the general public, while the inefficiency of public policing is well known.
CONCLUSION
Critics of private security (or private policing) say that free-market firms will always be trying to cut costs, and therefore service, because their only goal is profitability; as a result, citizens will suffer the effects of crime. In contrast, they say, public policing is more effective at controlling crime because they can focus on this singular task without being distracted by the pursuit of profits; in other words, the priority of public police is protection, not profits. Other critics scream about the immorality of a society where profitability determines who gets protection and who does not.
Superficially, these objections may sound plausible, but we have seen that such arguments are fallacious. The whole point of authoritarian law is to profit from crime, political propaganda notwithstanding. The crucial difference between the public and private spheres is this: authoritarian bureaucracies seek to profit from crime, whereas private security firms seek to profit from crime prevention.
It is true that private firms are always striving to cut costs and maximize revenues. They must take this approach in order to be profitable, but if they attempt to do so at the expense of their customers, they will fail. Such is the discipline imposed in the marketplace, where competition is fierce. The freedom to compete is what produces superior results on the free market. Knowledge, talent, leadership, ingenuity, creativity, and hard work – these are the personal traits which get rewarded on the free market. Eighty percent of new businesses fail within five years. Why? Because their competitors were better. Anyone trying to profit at the expense of their customers will be quickly replaced by someone who knows how to profit through the satisfaction of their customers.
[1] Jesus Huerta de Soto Money, Bank Credit, and Economic Cycles (Third English edition, Ludwig von Mises Institute, 2012) pp 20 – 21, 671 – 72
[2] See Part 2 for a discussion of the Anglo-Saxon Hundred. For tithing: see Bruce L. Benson The Enterprise of Law (The Independent Institute, 2011) p 23: “One member of the hundred, the hundredsmann, was recognized as a chief official who was informed when a theft occurred and who informed the men of the several “tithings” that made up the hundred and had a reciprocal duty to pursue the thief.”
[3] Bruce L. Benson The Enterprise of Law (The Independent Institute, 2011) pp 47, 49-51, 53 [other sources provided by Benson: Lyon, A Constitutional and Legal History of Medieval England, pp 163, 196, 295; Pollock and Maitland, History of English Law, vol. 1, pp 53, 455. See also Richard E. Laster, “Criminal Restitution: A Survey of Its Past History and an Analysis of Its Present Usefulness,” University of Richmond Law Review 5 (Fall 1970): p 75; Harold J. Berman, Law and Revolution: The Formation of the Western Legal Tradition (Cambridge, Mass.: Harvard University Press, 1983) p 439; Pollock and Maitland History of English Law, vol. 2, p 165
[4] Stephen Easton, Hilary Furness, & Paul Brantingham The Cost of Crime in Canada: 2014 Report (Fraser Institute, 2014) p 84. As per the authors of this report, the figure in column 7 represents “the days of the imposed sentence multiplied by the probability that he will actually face that sentence since even facing the judge is anything but a certainty. . . . Column [7] is the product of percent cleared by charge, percent of charges becoming court cases, the percent guilty, the percent of guilty sentenced to incarceration, and number of days of the sentence.” Column 8 “reflects the duration of the sentence for the crime, the probability that he will be captured, charged, convicted, sentenced to incarceration, and the reality that he is eligible for parole after only a fraction of his sentence is served. . . . Column [8] equals expected time to serve multiplied by the fraction of sentence before eligibility for parole.” See pp 84 – 85
[5] Ibid., p 101
[6] Bruce L. Benson To Serve and Protect, Privatization and Community in Criminal Justice (New York University Press, 1998) p 157 [source provided by Benson: Dart, Roland C., III. 1992. “Police Privatization Venture as Strategies to Maintain and Enhance Public Safety.” In Privatizing the United States Justice System: Police, Adjudication, and Corrections Services from the Private Sector, ed. Gary W. Bowman, Simon Hakim, and Paul Seidenstat, 107-30. Jefferson, NC: McFarland, pp 118-20]
[7] Bruce L. Benson The Enterprise of Law (The Independent Institute, 2011) pp 209-11, 243-4 [additional sources provided by Benson: Oscar Newman, Community of Interest (Garden City, N.Y.: Anchor Press, 1980) pp 124, 131, 133; Theodore J. Gage, “Getting Street-Wise in St. Louis,” Reason, August 1981, pp 19-20
[8] Bruce L. Benson To Serve and Protect, Privatization and Community in Criminal Justice (New York University Press, 1998) pp 153-6 [additional source provided by Benson: Donovan, Edwin J., and William F. Walsh. 1986. An Evaluation of Starrett City Security Services. University Park, PA: Pennsylvania State University, pp 31, 36, 49, 61, 75, 81]
