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Source link: http://archive.mises.org/2177/the-microeconomics-of-security-services-lecture-20-of-32/

The Microeconomics of Security Services (lecture 20 of 32)

June 27, 2004 by


These notes are from the lecture The Microeconomics of Security Services (lecture 20 of 32), given at the Mises University. Any errors are mine, feel free to point them out so that I can correct them. This lecture was given by Prof. Murphy.



Sources





General Arbitration


  1. A steals a cow from B.


  2. B challenges A to go to arbitrator X.


  3. If A doesn’t go, it’s suspicious and is used as evidence against him.


  4. A can also take the matter to his own arbitrator.


  5. The quality of arbitrations is judged by the free market.


  6. Police protection agency would be separate from private courts.




Personal Protection


  • Day-to-day security measures are personal.


  • Locks.


  • Guns.


  • Selective apartments.




What Would it be Like in an Anarchist World?


  • Competing services for private defense/security.


  • Firms specialize in producing personell for security:


    • Body armor.
    • Politeness.
    • Much more humne/courteous behaviour, because it is good for business.
    • Contrarily, rude inhuman treatment is bad for business.


  • Monopoly services create a situation where there’s no reason for the cops to maximize services while minimizing costs.




Monopoly State Protection vs. Anarcho-Capitalistic Protection


  • Monopoly doesn’t go out of busines because of bad security and high costs.


  • People don’t riot because they see the choice as between brutal police and chaos.


  • High speed police chases — in an anarcho-capitalistic world, these wouldn’t happen as they endanger lives. There would be helicopters, more coordination, and more cops deployed.


  • Response-time — very slow for police today; they have no incentive to be quick for most people, especially in the ghetto, due to risk.


  • Prisons:


    • So-called “private” prisons.
    • Government strapped for cash, so goes to private prisons.
    • A lot of scandals. Socialists say that it’s because the evil firms are only watching the bottom line.
    • But, the customer is still the State:
      • So, no rational contrac.t
      • State doesn’t have clauses like “penalty for riot or rape”.
      • So, naturally, firms have no incentive to prevent these things.
      • “Private prisons” are really just outsourcing, an appendage of the State.

    • Anarcho-capitalistic prisons would be better because of competition.
    • Also, there is the problem of the criminal’s sitting around doing nothing.
      • Their potential labor is wasted.
      • Should allocate labor to most comparative advantage.


  • Parole:


    • Under the State, we let out people who ought to be kept in prison.
    • This would not happen under anarcho-capitalism.
    • In a highly developed urban area, you’d need to have some groupo vouch for you to get into a mall, to get a credit card, etc.
    • Voucher association would be like an insurance agency, and you’d be charged voucher services.
    • In prisons, prison companies would compete with eachother for the prisoner’s business (where he stays). (the prisoner wouldn’t
      necessarily be the one deciding).
    • Parole would be based on a voucher-system, where if you let out a prison, he has to pay you dues and he goes out.


  • Police-protection?


    • It is not in the police’s interest to eliminate crime, because they would lose budget.
    • Wouldn’t want to eliminate homocide, but catch many killers.


  • Calculation problem:


    • Even if the State’s police really want to do good, they don’t know how to allocate resources.
    • People are taxed, and money goes to the police in aggregates, and is spent based on politics.
    • The link between payment and performance is severed.
    • Under the market, the profit-loss test tells the private police agency what to do.

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