Don’t Defund Police, Make them Part of the Market

By Peter C. Earle

A few years back I took my kids to an amusement park on Coney Island. Under the early afternoon July sun, already sticky with sweat, I turned upon hearing a shouting match near the ticket booths. After a brief but coarse exchange — I’m glad my kids were on the ride and didn’t hear some of the choicer expletives — two security guards walked over and stood silently nearby. They were a man and woman, both middle-aged, armed only with radios; one held the radio poised at her lips, ready to request assistance if tensions escalated.

“Sir, it’s time to leave,” said the other security guard, and with unspoken consent, the agitated man turned and walked off (almost) wordlessly. The brief furor quickly forgotten, I leaned over to a woman who was waiting for her kid on the same ride mine were on, and asked what the situation was. “He was trying to get in with expired coupons,” she explained.

Expired coupons in a Brooklyn amusement park and an alleged $20 forgery/counterfeit in a Minneapolis corner market; a similar set of circumstances with two vastly different outcomes. It shouldn’t and needn’t be so. The security guards were private; the cops who kill for the same thing are part of public-sector unions, enjoy qualified immunity, and increasingly seem immune to even middling consequences for wrongdoing.

Addressing Police Abuses

There is no doubt that the police have a difficult job. Even in staid communities the requirement that one deal all day with disparate personalities, often seeing people at their worst, undoubtedly grinds away at a person. Nevertheless, an ever growing list of documented misconduct, some of which was captured on film and culminated in the horrendous mistreatment and ultimate death of George Floyd make it clear that something is fundamentally broken in the provision of law and order all over America.

The following means, and perhaps combinations among them, would undoubtedly serve to both increase the safety of interactions with law enforcement and improve policing effectiveness. All involve introducing more market forces, but none of these solutions are perfect, and none will work overnight.

End Qualified Immunity

One approach, mentioned frequently of late, is ending qualified immunity: the legal doctrine by which government officials are protected from personal liability owing to discretionary action unless clearly abrogating established federal law or constitutional rights. Without duplicating the efforts of other AIER writers, the observation that police officers are often seen to conduct themselves as if they are above the law is because by some measure, they are.

As USA Today reported less than two weeks ago, in 2020 the doctrine of qualified immunity had been extended to, among others,

• Officers who stole $225,000.
• A cop who shot a 10-year-old while trying to shoot a nonthreatening family dog.
• Prison officials who locked an inmate in a sewage-flooded cell for days.
• SWAT team members who fired gas grenades into an innocent woman’s empty home.
• Medical board officials who rifled through a doctor’s client files without a warrant.
• County officials who held a 14-year-old in pretrial solitary confinement for over a month.
• A cop who body-slammed a 5-foot-tall woman for walking away from him.
• Police who picked up a mentally infirmed man, drove him to the county line and dropped him off at dusk along the highway, where he was later struck and killed by a motorist.

Qualified immunity is wholly inconsistent with any of the underpinnings of a free society, and provides far too much insulation from direct accountability for conduct. It should at the very least be severely bounded, if not completely done away with.

Dismantle or Constrain Police Unions

Among the ironies overlooked in this terrible episode, few stand out more than that many of the same “progressives”/leftists who have for decades endorsed the unionization of all industries are the most perplexed by the seeming willingness of police officers to brutalize and kill citizens, and the frequency with which there are slight or no consequences for doing so.

Collective bargaining agreements have regularly been cited as not so much a hindrance as a barrier to greater law enforcement accountability. If unionization is to be permitted in the nominally public sector — a dubious proposition if only for the increasing financial burdens conferred upon counties and states — it should be strictly limited to issues concerning compensation and benefits. Misconduct and crimes among law officers should face the full scope of legal and criminal ramifications.

Mandate Personal or Joint Indemnification Insurance

Requiring police officers to carry personal indemnification insurance, or police departments to carry joint indemnity insurance (in the latter case tying the actions of police together, increasing inducements for self-policing) is an important step toward improving law enforcement behaviors. The most basic, direct implementation would involve the basic indemnity insurance premium (likely on a monthly basis) being paid by the municipality, with increases due to infractions borne by the officer personally.

Failure to make a payment, or the officer becoming effectively uninsurable by the insurer (like a driver with a history of serious accidents and moving violations), would be grounds for discharge.

The applicability of indemnity insurance here can best be depicted by analogy: the connection between a Wall Street now willing to take tremendous, outsize risks and one a few generations back which was far more circumscribed in its undertakings. While the trend toward higher risk tolerance has been attributed to the increasing willingness of governments and central bankers to bail them out (and is, to be sure, part of the story), a regularly overlooked element is that between the 1970s and the 1980s, many large investment banks converted from partnerships to publicly-traded corporations.

The difference between the two is more than a subtlety. When large financial firms were owned by partners, investment banking partners had to approve large block trades, and senior traders had to approve underwriting and advisory assignments. With every partner’s capital at risk, each partner watched one another.

The conversion of financial partnerships to publicly-traded companies saw not only the end of personal (often unlimited) liability, but the transfer of risk to shareholders and taxpayers and ultimately a financial power elite more closely tied to the government and regulators than partners of firms two generations ago could have imagined.

The same dynamics apply here. Whether applied on an individual basis, as a group, or both: liability insurers can, apolitically and with feedback — managers of risk pools, after all, learn and specialize over time — provide market-based incentives for better training, improved policies, and the quick dismissal or conviction of police who engage in severe, or serial, wrongdoing.

Local Police Officer Elections

Democracy is a tremendously and possibly fatally flawed form of government (and no, in my view, not “except for everything else…”), but it may have some redemptive qualities applied locally to select law enforcement officers.

If states and counties required city, municipal, or even neighborhood police officers to be elected from among local citizens amid a regular election cycle, many adverse and sometimes antagonistic dynamics between law enforcement and communities would dissipate.

Communities would either already know (or quickly become familiar with) the police candidates before their first day wearing a badge. As with a run for political office, residents could pose questions and express concerns regarding future law enforcement policy. Simultaneously, individuals seeking election as police officers would, rather than coming in from miles away with vastly different backgrounds and experiences, already know people within the locality and begin their term familiar with local personalities, culture, and habits.

A frequently heard challenge to this idea is: “Why, in some communities, wouldn’t people just elect the laziest or most unethical candidate they could, thereby fostering a ‘Wild West’ atmosphere?”

First, because most people don’t want to live in (what they believe to be) the ‘Wild West.’ Second, elected police officers would by stipulation live within the community they oversee, to some extent or another making them bear the cost of their vigilance or the lack thereof. Third, it may be that what constitutes adequate or desirable levels of ‘law and order’ varies from one community to the next. Fourth, because after a term of one or two years — my arbitrary recommendation — they would have to run for re-election in what would amount to an immediate, information-dense referendum on their performance.

Broader Civil Service Career Paths

Many police officers and other law enforcement officials report that the stress of their jobs is tremendous. That seems likely. Perhaps being a police officer is a job best, for both the officer and the community they serve, undertaken for decidedly less than 20 or 25 years. Envision a broad civil service career path whereby being a police officer is one among several “tracks” in a multifaceted municipal service career which would ultimately see an individual spend several years as a cop and in several other positions ultimately adding up to a 20 or 25-year retirement.

Markets and Competition

As in many other areas, government policing is a de facto monopoly with all of the adverse effects that follow. Markets can, and should, be brought to bear on maintaining local order. The presence of private, for-profit security firms alongside municipal police departments would permit citizens to gauge their respective performance, allow community leaders to assess their cost effectiveness, and give rise to positive competitive dynamics: on the government police to treat citizens more like customers, and reciprocally on private firms to replicate certain services extended by municipal cops.

Filling the Gap

How will we know when policing has become a vastly more accountable, incentive-responsive institution? A half-sardonic answer would be: when far less people are willing to do the job. A more accurate reply would be: when incentives are sufficiently aligned between the police and the ‘policed’ such that egregious outcomes are virtually unheard of.

There is an argument regularly doled out by police unions which states that without the wide swath of protections that police officers possess, they would be more reluctant to investigate, pursue, and apprehend wrongdoers. That may indeed be the case. But I remain wholly unconvinced that the difference between handing George Floyd a citation and the brutality he actually faced makes me, my family, and my community one bit safer.

If that is true — and it may be — any gap in maintaining law and order which arises from stricter accountability among police officers can and should be filled by vigilant, insured, trained and armed citizens.

Source: AIER.org

Peter C. Earle is an economist and writer who joined AIER in 2018 and prior to that spent over 20 years as a trader and analyst in global financial markets on Wall Street. His research focuses on financial markets, monetary issues, and economic history. He has been quoted in the Wall Street Journal, Reuters, NPR, and in numerous other publications. Pete holds an MA in Applied Economics from American University, an MBA (Finance), and a BS in Engineering from the United States Military Academy at West Point. Follow him on Twitter.