Policing in America has been a contentious issue, especially since the shooting of Michael Brown in Ferguson, Missouri, in 2014. Many different explanations have been extended as to why confrontations between the police and citizens so often become lethal: racism, poor training, availability of firearms to civilians, etc. As such, “solutions” to the problem target these issues. However, the ideas of Ludwig von Mises regarding economic calculation, despite being developed almost a century ago, offer far more interesting, and potentially more fruitful, insight into the matter of policing in a free society.
Mises’s argument was that without private property in the means of production, there can be no market prices for capital goods and therefore no way of calculating the opportunity costs of using capital goods to produce certain goods instead of others. The decisions of central planners of what to produce and by what means would be arbitrary and chaotic.
Because government policing is provided bureaucratically, without market prices and profit and loss, there is no way for police to know whether they have allocated resources to their most highly valued uses. Instead of consumers determining what problems police focus on, bureaucrats and politicians decide.
Three days prior to the death of Eric Garner, who died shortly after his arrest for selling untaxed cigarettes, New York governor Cuomo’s website bragged about how much revenue his Cigarette Strike Force had generated. It is highly doubtful that the citizens of New York demanded that the NYPD allocate resources to tobacco tax enforcement.
Just like everyone else, police respond to incentives. According to economist Bruce Benson, the War on Drugs did not really start to escalate into what we know it as today until Congress passed the 1984 Crime Control Act, allowing police to take a cut of the revenue from drug crime through civil asset forfeiture. Benson found in Florida, as did many others replicating his study elsewhere, that when police allocate more resources to drug enforcement, they use fewer resources to defend property, and property crime goes up.
This is not to argue that government police allocate resources solely based on financial considerations, but that when economic calculation is impossible, allocation decisions must be made by some other means, and that means will typically reflect the desires of the bureaucrat, as far as his autonomy allows. But even if we assume the best of intentions on the part of the police and bureaucrats, the calculation problem remains. They are unable to weigh the value of patrolling the roads against dispersing aggressive panhandlers or investigating a burglary. Because they earn no revenue on the market, they are unable to calculate whether the value of the services they provide is greater than the resources expended in producing them.
Contrast this with security in the private sector, where entrepreneurs can calculate the return of an additional unit of security personnel (such as by the reduction in theft compared to what it was before he was hired) against its cost. Entrepreneurs in the market are much more able to calculate the optimal amount of security. Additionally, they more efficiently allocate heterogeneous, non-specific inputs, such as labor, to more highly valued uses than do government police departments. For example, although the “rent-a-cop” is derided as a low-wage, unintimidating farce, the fact that they pass the market test demonstrates that they provide greater benefit than their cost. Differentiation in skills is underutilized by police departments, who use expensive sworn officers to perform low-skilled duties, such as coordinating traffic at intersections.
Moreover, issues of police aggression and its desirability can be thought of as calculation problems. Some will argue that police need qualified immunity, which protects them from civil liability, so that they will not be hesitant to use force when necessary. Others respond that this encourages police to use more force than is actually needed. Not being able to calculate the value of more aggressive policing, government police are in the dark. However, entrepreneurs providing security in the market, being civilly liable for damages their employees cause, will strive to find the balance between aggressive policing and minimizing civil liability that consumers desire. To a degree far greater than government police, private companies face real consequences from consumers when they use force unnecessarily, as United Airlines is coming to realize.
Thus, to fully understand the issues in contemporary American policing, the economic calculation problems facing it must be appreciated. When consumers are not sovereign in deciding where resources are allocated, government bureaucrats are. Since police do not have to satisfy consumer preferences in order to stay in business, we should not be surprised that they treat us like subordinates rather than the other way around.
