 This is Mises Weekends with your host, Jeff Dice. Ladies and gentlemen, welcome back once again to Mises Weekends. As you can see, our guest is someone who I'm sure is familiar to many of you, Dr. Edward Stringham. He is a professor at Trinity College in Connecticut. He is also the new president of the American Institute for Economic Research, which is at a pretty venerable organization. I think it's been around since the 30s. That's right. So congratulations on that. Thank you so much. I'm very honored to be in this position. Well, that's a beautiful background there at Trinity. It looks like a gorgeous school. I've never visited it. But what I was hoping we could talk about today is timely. It's in the news. There was another police shooting recently, and the officer involved in the shooting was acquitted. His name, the victim's name, was Philando Castile. I hope I'm pronouncing that correctly. So I thought because you were the author of this book, we've talked about it in the past, private governance, that we might have a discussion or a conversation about how policing and crime prevention and deterrence of crime might look like in a more libertarian society, not a utopian or perfectly libertarian society. So let me start with this overarching question. When you look at the incentives of people in the criminal justice system, I mean, there are cops. There are lawyers. There's prison builders. There's prosecutors and judges and defense attorneys and drug counselors. And these are all good people. This isn't a conspiracy, but a lot of them make their living off having new warm bodies kind of fed into the maw each and every day. And it doesn't seem to me like it's working. That's right. So the standard assumption is law enforcement is a public good to create a law and order in society, but it ignores a lot of the incentives in the system. So if you give a course of unionized monopoly, labor force authority to do basically in many cases, whatever they want with little oversight, then in certain cases, they're gonna overstep their bounds. I'm not saying that always they will, but in many cases they will. And they're not treated the same way that regular citizens are in court and in the sentencing process. And so the result is we've got a very high kill rate against citizens by police, much higher than the kill rate of the regular population. Well, how do we change the incentives though? When we've got a state system of criminal justice, it's a monopoly, when the police come out and announce a spate, an increase in crime in your town, nobody says, well, you're all fired, that on the contrary, they please say, we need more manpower, more money, more resources. That's right. So it's not a customer driven system where the paying customer is looking for good service and then they receive that service. Instead, it's a politically driven system where the police have an incentive to maximize their budgets. In many cases maximize their retirement income. So there's a whole disconnect between serving the customer and actually serving the police. One of my favorite books on this topic is Norm Stamper who is a former police chief from Seattle. And he said he actually got into the job to help people. And within a few weeks of starting out his first beats as a young police officer, he realized it was not about the people. They didn't care about the people. They were given arrest quotas, ticket quotas, stop quotas. And it was about maximizing the numbers for the government officials and really disregard for the wellbeing of the public. And that's really the main difference between markets and a coercive government monopoly is markets don't allow the customer to be mistreated where a coercive government monopoly does. Well, it's interesting to me that police departments tend to grow as crime increases. So clearly the incentives are on. Let's talk for a moment about a more an insurance model for crime prevention, especially in the area of property crimes. I know Hopper talks about this Rothbard certainly talked about it. In insurance model, you're insurer, the insurer and the insured have the same incentive. They both want to avoid getting robbed or paying a claim. How could insurance work to help us prevent crime? In other words, insurance companies would try to make the people they insure less susceptible to crime. Well, there's many ways that the private sector works to reduce crime, but the main thing that we see in the private sector is prevention, okay? So risk mitigation. If you look at any corporate office, at any office building, it's all about mitigation of problems, reduction of problems. So you'll see a staff at the front desk seeing who can come in, making sure the person has the right credentials, protecting valuable information. They don't wanna let that information get stolen from them and then try and deal with it after the fact. In the private sector, it's almost always a mitigation problem. It's a risk management problem. And so to assume the way we do with government that something bad happens to you, you call the cops, the cops run to the scene, they arrest somebody or they start collecting evidence, return the property to the owner. That's just actually not the way that people deal with reducing problems in society. Police, it's a reactive approach. It's not a proactive preventative approach. And despite what you might see in the television shows, police don't, for the most part, recover people's property. It's for the most part gone. If you have something stolen from you, the police are not in the business of restoring the property to the victim. It's all about going after whoever they seem bad, whoever they think is bad. In many cases, it's easier to go after the nonviolent defenders or a drug seller or somebody like that. And it's a totally different model from thinking about the customer at the center, the citizen at the center of protecting people. It's all about making the police officer, having a good situation in certain cases, they're able to seize assets, keep a percentage of those assets for their department. So the incentives are totally different in the government sector compared to private sectors, lots of different ways. I do think the insurance model that you mentioned is very interesting. And I'd love to see that tried. But right now we've got plenty of private solutions that don't rely on this, oh, let's go get them type of mentality. Well, and there are some examples that I'd like to touch on of private governance and even private policing. One in the digital world in a community like eBay and one in the physical world in a place like Disneyland. Talk a little bit about eBay. My wife's a big eBay-er. There is a form of social opprobrium if somebody performs poorly as a seller or a buyer. There is self-interest in maintaining a high rating on eBay and also, according to my wife anyway, an astonishing number of transactions on eBay go through without any problem. That's right. So a lot of what we think about as public goods can be thought about as private club goods. So eBay is a club. They're maximizing the wellbeing of the buyers and the sellers. We don't have good service on eBay. We can trade on another venue. And so eBay has an incentive to create rules and to make order within their market. A lot of it's informal. We've got the reputation mechanisms which are common throughout history in markets. You and I know each other. We trade with each other. In addition, we can tell other people whether the other parties rely. Well, and that's how eBay works for the most part. You've got the star rating next to your name. In addition, they have more formal private enforcement mechanism. So in the case when something goes wrong, you can actually call up eBay or digitally message eBay. And it turns out, I just recently found this out, a lot of their cases are adjudicated by an algorithm. So in a particular case with me, the seller sent the wrong item. I was asking for the item to be returned. Seller didn't respond. And so eBay instantly put the money back in my account. And so I think they could have had a person looking up that case that said, look, the guy didn't even respond. Or they could have had an algorithm that says, okay, did the buyer contact the seller? Yes. Did the seller contact the buyer? No. Well, in that case, the seller's not acting in good faith. And so you can have those mechanisms built into the system. That is a completely private system of adjudication. You've got the ability to have more people involved if it's necessary. But we have all types of markets like this in the world today, private arbitration systems built into an existing market. You don't wanna do business in a market which is unreliable. And so you got a club such as eBay supplying what otherwise could be considered public goods. Now, I'll happy to talk about that in real space as well. If I may, or did you wanna jump in, Jeff? Now you don't want me to talk for 20 hours. No, I think Disneyland's a great example. They have a private security force. Now granted, our friends on the left are not gonna like the idea of a private community. And eBay has a pretty steep entrance fee. But once, I'm sorry, Disneyland has a pretty steep entrance fee. But once you're inside, the folks at Disney have a strong incentive to not have scenes, to not have fights, drunkenness. If someone shoplifts, they have cameras, but they remove them in a very pleasant and unobtrusive way. They don't wanna pull out batons and beat the hell out of some guy and cause a scene. It's not in their interest. Exactly, so just like a club like eBay is maximizing the wellbeing of the buyers and the sellers, a club like Disney is maximizing the wellbeing of people in that park. So you go there to have a good time. You don't want to be beat up. There's a story I heard on the radio as a kid. It's probably a fake one, but this guy was on the radio, said he was sneaking in drugs to Disney and smoking drugs. And some security guards dressed as mice came up to him. And he says, Mickey Mouse doesn't do drugs, neither should you. So they did it in a way to kind of make the park an atmosphere which is friendly towards customers and do it in a very friendly way. So you don't see police brutality at Disney. You don't see shootings at Disney. You know why? Because of consumer demand. They care about the customer unlike government officials who are not paid by how well they treat the customer. Market providers of security do get paid by that. And you see that in lots of areas in shopping malls. That's open to the public. There's not an entrance fee, but they'll provide security, make sure that it's an orderly place. And it's often almost always the case that those places are safer than government streets where the police just don't care. They sit in their patrol vehicles. It's much more of a distance policing system whereas this is actually like foot patrols. You don't need an armed guard or a tank from the government to be patrolling the streets at all times. And there's just a lot of great alternatives like that that we do see in these private communities. Well, I know you've studied the concept of private governance throughout history. You write about some examples in your book. Here's what's so daunting for the US system in particular is that we talk about deterrence. We talk about rehabilitation. We even talk about retribution in the form of the death penalty or something like this. But we never talk about restitution. In the state of California, in the state prison system, they spend something like $60,000 to $70,000 per year housing inmates. But if one individual murders another and then taxpayers pay $70,000 to put the killer in prison all year, that doesn't do anything for the family of the person who was murdered. So why don't we approach it more as we do in the civil arena where we, even though it's not perfect, we try to apply monetary compensation to crimes? Yeah, the criminal justice system, there's a huge over-incarceration problem. I just reviewed a book for the Wall Street Journal called Locked Up. And it shows how incarceration rates have been skyrocketing in the United States in the past few decades. It's a huge problem. Most of the people are not the murderer that you're talking about, but just simple petty criminals. And the idea that we just add, put them in jail for 40 years, that's gonna act as a deterrence. That's a very kind of controversial statement which people make as an assumption which law and economics scholars actually debate and say adding the 31st year on a 30 year sentence for some small crime is not gonna act as deterrence. Now, instead of punishing people, which really doesn't, you know, it costs taxpayers money, doesn't help the victim, there's an alternative which is restitution. So I lived in California and my car got stolen. I actually got it back in some perfect shape by just by chance. And then later the police were like contacting me like trying to get the guy thrown in jail. And in my own case, I would have just rather had $100 that I had to pay for the rental car while my car was gone. So the idea that I'm now gonna have to finance, you know, money to put this guy in jail just doesn't make sense to me. So I think a system, and this is the way it used to work 1,000 years ago in England, it was restitution based. So what did somebody lose? How can we try and help that person, maybe make them whole in an ideal sense? That's not always possible. But it was a victim centered system where we cared about the person who was armed, not like, ah, we're gonna slap the wrist of the perpetrator. That's not clear that that's benefiting anybody. Well, let me ask you a loaded question, sort of a Walter Block question. Do you think in a private system in a more libertarian legal system could there ever be a case for a private death penalty? In other words, we talk a lot about proportionality, but in the instance when someone was seemed irredeemable, when they were a mass murder or a serial killer, someone who's been violent, perhaps their entire lives. I know it's sort of an academic question, but, you know, it would, I don't believe in the death penalty as administered by states. But could it ever, could it ever be justified? I'm strongly of that position. I think there's a lot more humane ways to deal with people than killing people. And so generally, I think that that's my normative ideal of that's what we should be looking for. And the good part about markets is that approximates pacifism. I'm not saying pacifism necessarily should always be the right thing under all circumstances. So I'm not answering your question, Jeff. I apologize. So I'll dodge the difficult question for discussion between you and Walter. But I do think just as a practical and moral matter, markets do approximate pacifism and that's good. And we should be holding that up as an ideal. Right, and again, the goal here is better, not perfect. Libertarian shouldn't fall into this trap, but we have to have a utopian answer for every human problem. Let me finish with another tough question. And it goes to this idea that Bob Murphy's talking about, about warlords and corporations becoming governments. There was supposedly a famous conversation between Ayn Rand and Nathaniel Brandon and Murray Rothbard where Rand and Brandon were quizzing him and saying, how would police services work in your anarchist society? And Rothbard answers private competing defense agencies. And they're both a gas and they say, you mean civil war. So devil's advocate, how might we deal with different private systems sort of rubbing up against other as they do now at borders with state systems? Yeah, I mean, that's an important point the last one that we don't have one monopoly in the entire world. You and I are able to go to different jurisdictions within the United States. We're outside of our local police jurisdiction or we're able to go to different jurisdictions around the world which have completely different legal systems in certain cases. And for the most part, things go well. So the idea that you only can deal with one legal system that's just factually not the case. When you're doing business, especially on the internet these days, you're in many cases doing business with people all over the world. In many cases, you don't even know who these people are and we don't need everybody to be operating under one law enforcement system. Now, in a shopping mall, I could imagine it looking exactly as it is right now. You have one private security force at the Wynn Hotel in Las Vegas and we don't need to have a million competing warring competing security forces within the Wynn Hotel. So I can totally imagine different proprietary communities having their own security forces. Another kind of hybrid system in San Francisco is kind of fascinating. They have a system of private policing called the Patrol Special Police. And there you have government police but you're also allowed to hire these private police and they have, it's not a pure free market but they have designated beats. And so if you're in a particular neighborhood you find out what private police agency has that beat. And so you can rely on government courts, you can rely on this Patrol Special Service police or you can hire a stationary unarmed security guard. So there there's three types of people that you can hire and it works quite well. In North Carolina, statewide you can hire private police and they have jurisdiction on the property of the owner. So I think we really kind of need to be getting out of the box of like, okay, the world is this big circle and all of the people in it must follow the same security agency. That's just not the way it works right now. And so for people to hold up that standard and say to libertarians say, well, you know, how can you solve this problem which is already being solved in the world today or they can't solve in their system either. I think it's just a very kind of an abstract question which we can really answer with a lot of practical examples. Well, I hope these recent police shootings don't lead to a greater federalization of what ought to be local police services but ladies and gentlemen, I recommend Ed's book to you it's called Private Governance, Creating Order in Economic and Social Life. Absolutely fascinating book. Pretty quick read of just a few hundred pages. Also a beautiful book published by Oxford University Press and Ed, we congratulate you on your new position. We thank you very much for your time. Ladies and gentlemen, have a great weekend. Subscribe to Mises Weekends via iTunes U, Stitcher and SoundCloud or listen on Mises.org and YouTube.