Are the Police a Scarce Resource? The Keynesian Police State

This second post (see first post) in my series on the privatization of police, protection, and rights enforcement focuses on an Austrian economic analysis of state monopolized police and the economic calculation. The next posts will be a libertarian political theory analysis of  Do the Police Work for Us?, Won’t the Gangs take Over?,  and another economic piece on What About the Poor?


Certainly all agree that police and law enforcement provide a service, but are they a scarce resource that must follow the laws of economic calculation? Do police services suffer the ill effects of a State monopoly? Or does their sheer benevolence to “protect and serve” guard them? Does their lack of drive for efficiency and increased profit margins actually enhance their innate goodness? Security and rights enforcement is in fact a scarce resources.

The question can be stated thus: do police departments make allocational calculations of labor and capital? Why of course each day is an economic calculation of how best to dispense available policemen at a given time (labor), as well what resources they need in the way of weapons, transportation, and equipment (capital), based against the given amount of land they can reasonably protect/enforce over (a sort of demand though different from market demand).

People, and conservatives in particular, talk of “‘police protection,’ as if police protection were a single, absolute entity, a fixed quantity of something which the government supplies to all equally (or further that all laws are themselves enforced equally). But in actual fact there is no absolute commodity called ‘police protection’ any more than there is an absolute single commodity called ‘food’ or ‘shelter,’”(For a New Liberty, 267). And certainly we would not put the State in charge of those. Implicit is that security must be provided in the same quantity and quality to all. While the reformed libertarian is zealous that the law (God’s law) be applied to all equally there is no reason that security must be provided in an egalitarian manner. Surely the rancher in Montana, miles perhaps from his nearest neighbor, has vastly different needs for security than the Chicagoan urbanite.

Security and law enforcement could take a nearly infinite number of shapes and forms depending on services demanded by consumers and market outcomes. However without competition and consumer response of demand to indicate price level there is no way to settle what value should be placed on different types of services. Though the police’s stated motto is to “protect and serve” the “public”, yet they have no idea which services the “public” values in  order to determine how to use its limited resources of officer, equipment, and investment capital. Some may want constant and intense security patrols or even bodyguards. Others may simply have an occasional patrol car go by at night. Perhaps a husband feels confident in his ability to defend his family and property and only desires security services for his family while he is at work. Apartment complex’s and Homeowners Associations may feel that they can provide more efficient and cheaper services of protection for a whole development by including a security fee in their monthly dues. Investments may take place into more electronics, alarms, or security systems to reduce the amount of officers and labor cost. The police, as much as any other socialist system, suffers from Mises’s economic calculation problem. Since they are a monopoly, they have no access to prices for the means of production. Since they earn their income through involuntary taxation they have no ability to assemble any type of sales receipts from which to subtract input costs. Without the ability to assess input they lose the ability to calculate profits and losses. There is no ability to know whether operations are going poorly or which particular operations are not valued and all becomes one conglomerated indifferential “police protection”. Further their revenue is increasingly gathered from fees and fines they inflict on the very people that “hired” them to “protect” their property.  The police do their calculations in the dark and are unable to assess what areas need what type of security (see The State and the Market).

Police not only face a question of resource allocation but must always decide which laws to actually enforce. This may be a near blasphemous accusation in conservative’s mind, which smacks of corruption to their pious cry “the whole law for the whole of society!” Yet limited officers and a seemingly unlimited expanding law make this impossible. The monopolized State has not brought a uniform and well known common enforceable law but vast unsearchable database of arbitrary, contradictory, and impractical “legislation”. Politicians have a natural incentive to pass more and more laws, and so the sheer number of these laws and the size of laws passed makes it impossible for anyone to possibly have full knowledge of our legal system! Imagine trying to read every active law in congress, each and every regulatory system, state, county and municipality legal code. Even if one limited himself to the laws and regulations put forth in the past year he would not be able to read through them without quitting his job, besides many of which are so arbitrary they may be changed by the time he is done reading them! Harvey Silvergate has written a book entitled Three Felonies a Day in which he showed that the legal and regulatory codes have become so cumbersome, vague, and arbitrary that  the average working American likely commits up to three felonies unknowingly before they go to bed on a given day. Even with ever expanding budgets police and federal agencies must of necessity prioritize and choose which laws to enforce. Which laws they focus upon, and who they benefit, become clear as one peels back the layers of propaganda used to enshrine the police.

Police services do not exist in the form they do now because years of service and feedback have shaped it to the citizens desire for protection balanced by how much he willing to pay. Instead the “fee” for their service is extracted through coercive taxation and the service is rendered however the vast network of bureaucrats and the police unions see fit. The “funds are then subject to the full play of politics, boondoggling, and bureaucratic inefficiency, with no indication at all as to whether the police department is serving the consumers in a way responsive to their desires or whether it is doing so efficiently…Furthermore, there are many other decisions the police must make, the complexity of which becomes evident as soon as we look beneath the veil of the myth of absolute ‘protection’,” (For a New Liberty, 268). Praxeology still applies, and people still make rational decisions based on value, incentives, and time preferences; but now in the socialist provided security system it is not the value the customer places on protection or the incentive of profit, reputation, and competition for the firm, but the value and incentive of the bureaucratic State politicians and police unions.

The Keynesian Demand Side Police State

How then are the efforts and resources of police and federal agencies calculated and allocated, and to enforce what laws? In the market what would be enforced is whatever the customers are willing to pay for. For those still under the delusion that police exist to “protect and serve” the public, to make their persons secure and recover property, the customer of the police is the taxpayer. In reality however it is the vast networks and incentive structures of bureaucratic federal agencies, law enforce support organizations (LESO), federal and state grant programs, union influence, and political pressure that direct their decisions to the benefit of the State apparatus. Many now know because of the Occupy movements and Ferguson of things like the 1033 program through which local police acquire military equipment. Most don’t know that such programs (there is much more than just one) have been around since the 1970’s and originated with the drug war. Federal grant programs reward money to municipalities for SWAT raids for drug related offenses, Civil Asset Forfeiture allows agencies and police to confiscate cash and property that may have been involved in the drug trade, while the owner must prove that their property was not illicit and in drug trafficking, the military cooperation with law enforcement act (1981) gave local cops training, weapons, and intelligence. The 1033 program (1987) allows local departments and agencies acquire military equipment while only paying for shipping, and many other cash rewards that came through the stimulus packages of the late 2000’s. A recent VICE video shows one such department in a lowly populated rich  New Jersey suburb in which one of the Sergeants readily admits “we apply for every possible grant that we can,” and will focus on whatever they need to in order to get these grants. While many have consider how such equipment has lead to an over militarized police few have analyzed how has created a sort of Keynesianism demand-side police state economy (with the exception of Tom Woods).


As with the Federal Reserve’s manipulation of interests rates and inflation artificially moving resources to create bubbles in various areas (housing, financial, derivatives, etc.), so federal grants and subsidies act as a sort of demand side stimulus package to create distortions in the “security market” diverting resources from more valued areas to wherever the government cheap money is, creating a type of bubble. A demand side crime economy for drugs and terrorism has been created resulting in bursting prison populations of non-violent criminals, no-knock raids (up to 160x a day), asset forfeitures, clogged courtrooms, sting setups, and myriads of entrapment cases. In addition the parasitically lucrative nature of these strategies actually serve as PR stunts for the State. Headlines about guns and drugs recovered by the ATF soothe and the assure the public, while neglecting that it was the ATF and FBI who doctored the deal through false start up operations. Imagine being able to create your own demand for your services! Your tax dollars for instance set up a fake store front where ATF agents lured a mentally retarded man into facilitating drug and gun deals, and convincing another (with tax dollars) to get a tattoo of a giant squid smoking a joint. The resources are diverted from protecting the persons and property of the taxpayer to pursuing a perversely constructed incentive structure with invented crimes.  However, since payment is taken through forced taxation the bubble never pops since at no point can it be realize how little value these assets actually have. The assets are truly frozen and remain continually as a slow parasitic drain on the productive portion of the country.

These stimulus programs and grant essentially work as a subsidy for whatever task they go to. As more military equipment is allocated to police agencies and they are financially rewarded for SWAT raids on drug related offenses, the number SWAT (magically) increases dramatically. SWAT raids to arrest your wife’s murderer or the culprit who burglarized your house earns no money, but the drug war can turn their department expense into a revenue generator. A task otherwise reserved for extreme situations such as active shooters and fugitives, because of its expensive and labor intensive nature which pulls officers away from task much more needed by society, is used to serve average warrants and drug searches of people with no violent record, upwards of 40% of which find no contraband. What used to happen 8x a day now happens as much as 160x a day and only 7% are for active shooters scenarios. Police SWAT teams have been used to break up poker games, unlicensed barber shops, raw milk/organic food co-ops, and licensed marijuana dispensaries in states that have legalized marijuana. Scarce resources are diverted and re-routed from protection of your person and property to non-violent drug offenses and minor regulatory offenses at your expense.


Civil Asset Forfeiture has been in the news a bit lately. CAF is the legal process whereby, unlike criminal forfeiture, you do not need to be convicted of crime but it must simply be “likely” that your property was in some way implicit in a crime, you must prove that your property is innocent. This further lead to “equitable sharing” in which the Federal government could take a portion of the seized property while giving the rest to the local municipality in which it was seized encouraging further and further emphasis on cooperative seizures. Here again a perverse incentive structure distorts and pushes law enforcement to federal drug crimes as opposed to “petty” property violations. Further multiple agencies and police departments have been detailed going after drugs only after they been sold. While parading under the auspices of keeping drugs away from us, the “public,” asset forfeiture incentivises these agencies to wait until the drugs have become cash. Similarly, rather than heavily patrolling and stopping cars coming into metropolitan areas with possible contraband, they are far more likely to enforce this on cars coming out of the city, not with the dangerous drugs but now with cash. In 1996 338 millions dollars worth of property and cash was seized. By 2008 over 1.3 billion had been seized.Oddly enough asset forfeitures have been found to spike during economic crises (2002, 2008).



The police certainly make economic calculations and it should be plain how they make their decision when it comes to what and how to enforce it. These strategies, grants, and subsidies combined with fees and fines have reversed the incentive structure from profit/loss reflecting how well one serves the public into how well one harasses, extorts, and confiscates the very thing the public expects the police to protect. Is this though just a matter of a couple policy reforms? Or Do the police need to just be reminded that “they work us”? As Robert Higgs says “this statement expresses an utterly naive and untutored idea. The police don’t work for us, if by “us” we mean you, me, and at least 95 percent of the rest of the population. On the contrary: we work for them, literally; we work to earn money and acquire wealth that they take forcibly from us for their own support, either by taxation or by outright confiscation (civil forfeiture). The cops don’t work for us; they never worked for us. They work now, as they have always worked, for the State.” So long as the police are an aggressively enforced monopoly dependant on taxation they will continue to be not the protectors of the public the preservers of the State.


In my next my post I will more deeply consider Do the Police Work for Us?

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