Category: Law

Yes Virginia, I do believe in the Commerce Clause

Fafnir does constitutional law.

"Insolent pot!" says Giblets. "Be more vendible!"
"Giblets why are you yellin at that pot plant?" says me.
is trying to turn it into commerce," says Giblets. "But buying and
selling it is too much work. He wants it to be commerce NOOOOOWWW!"

Giblets, everything is commerce!" says me. "Let’s step into this
maaaagical schoolbus and we will learn all about Our World Of Commerce!"…

This snowman is not commerce. But we can make him commerce with this ol top hat we found… and if we just believe!
Now all the children of the world clap your hands an say together now:
"I do believe in an expanded Commerce Clause, I do believe in an
expanded Commerce Clause!"

Hooray, now our snowman is
commercial an alive an singin an dancin around! "Happy birthday!" says
the snowman. He is quickly arrested and detained. Commercial snowmen
are strictly controlled by the Department of Snowman Security.

Private Prisons and Prison Growth

The fireworks were flying at the conference on prisons.  The audience, not to mention the opposing panel, were vehemently opposed to all prisons.  I’m in favor of ending the war on drugs and emptying the prisons of non-violent offenders but one speaker argued that 80 percent of the people in prison ought to be released – sure, if we bring back the penal colony.

Later I was chastised for referring to inmates – don’t you understand, I was told, they are people.

All very fine and well but I’d had enough when one speaker blamed the massive increase in prisons over the past twenty five years on private prisons.  This is a hard square to circle because private prisons today house less than 7 percent of the prison population.  Obviously, the increase in prisons has been almost entirely in the public sector and has been driven primarily not by nefarious profiteers or even by prison bureaucracies but by crime and the public’s demand for crime control.

A more sophisticated version of the argument can be found in the comments section of my last post.  It is true that a private prison could lobby for tougher sentences in order to boost demand for its product.  It’s hard to take this too seriously, however.  Do we think that contracting out garbage pickup is a bad idea because the garbage men will lobby for wasteful packaging?  Moreover, the problem becomes less serious the more private prison firms there are because with more companies each will gain less from lobbying for say tougher sentences in general

Finally, we have to compare with the current situation.  The prison guard unions typically have monopolies and do lobby for tougher sentences.  The California Correctional Peace Officers Association, for example, has spent millions shamelessly creating a front of victim’s rights groups who campaign against drug rehabilitation programs instead of jail, revising the three strikes law, and reducing sentences.   

Despite the fireworks, or maybe because I woke a few people up, I am invited back today to speak on three strikes.

Private Prisons and Government Contracting

Today, I will be debating the value of private prisons at the National Debate on Prisons and Punishment.  I intend to say the following:

1) Many studies (see also Changing the Guard) find that private prisons are cheaper than comparable public prisons.  Operating costs savings are a modest but not insubstantial, about 10-15 percent per year.

2) We should not be surprised that private prisons are
cheaper.  Mueller (2003), for example, looks at 71 studies
comparing public and private firms from Australian airlines, to German mail
delivery, to Indian manufacturers. In
only 5 of 71 studies were public firms found to be more efficient. In 56 studies private firms were
more efficient (the remaining studies found no difference).  Tellingly, the private firms were most efficient in the least regulated industries.

3)  Having said that, there are still potential problems with prison privatization and a puzzle that needs to be faced.  Prison privatization is really a misnomer.  What is really going on is contracting out and there at least two problems with contracting out.

a)  You get what you contract for. If the contract says cheaper prisons and nothing else – you will get cheaper prisons and nothing else. Contracts must cover quality as well as quantity.

Quality is not always easy to measure so contracting
out must be accompanied by investments in technology for contract monitoring
and output measuring. 

b)  In part as a reaction to the above problem there is the problem of governmentalization of the private sector.  Governmentalization occurs when the contract is written so that the private firm is restricted to duplicate the public firm, thus precluding innovation.  Some private prison contracts have gone so far as to detail the type of toilet paper to be used in the prison!

4) I think these problems can be addressed. For example, we should be contracting over outputs not inputs i.e. over the number of inmates who learn to read rather than the
provision of "reading programs."  (The British and Australians do this better than the U.S.)

Contracting out also requires an investment in technology for measuring outputs carefully. E.g.
recidivism rates.

With good contracting much more is possible from prison
privatization than lower costs including more innovation in prison management, better training
programs, reduced recidivism etc.

5)  But here is the puzzle.  If the reason for contracting out is that public prisons are run poorly, why should we expect government to do a better job at writing contracts?

I have some ideas on this but comments are open.

Clarence Thomas, alone but correct

Justice Thomas, dissenting:

Respondents Diane Monson and Angel Raich use marijuana that has never been
bought or sold, that has never crossed state lines, and that has had no
demonstrable effect on the national market for marijuana. If Congress can
regulate this under the Commerce Clause, then it can regulate virtually
anything–and the Federal Government is no longer one of limited and enumerated

See my colleague David Bernstein’s post at Volokh for more.

Grumpy makes me Happy (and probably a little Dopey too)

As I walked into the hotel I couldn’t help but notice a strikingly attractive woman who was also checking in.  I was just outside of Nashville to talk about my work on bounty hunters to the Tennessee Association of Professional Bail Agents.  Imagine my surprise (and delight!) when the next day at the lecture there she was front and center!  Leah Hulan a former Miss Tennessee and first lieutenant in the United States Army Military Intelligence is the owner and president of Grumpy’s Bail Bonds.

If you commit a crime in TN, now you know who to call.

Markets in Everything: Rent a Son

RentMySon provides safe and trustworthy child-rental services in multiple
metropolitan areas. Our service area is growing every year and we are on target
to provide services in 50 cities by the end of 2006.

Here is Zach, age 9.

About Me: Zach enjoys playing in the park. He has gone on several
afternoons with single men trying to attract women by looking like the "father
type". He also has fun at birthday parties.

Specializes in: Father-Son Events, Playing in the

And yes, you can also rent a daughter for take your daughter to work days. 

On the day my son was born I taught a law and economics class on the economics of baby-selling.  I’ve always been rather proud of this but I don’t think I’m ready to rent my kids.  On the other hand, I never refuse an offer before hearing the price.

Thanks to J-Walk Blog.

Addendum: Probably a hoax.  Thanks to Stephen Ayer of disinterested party for the investigation.  KipEsquire adds, Tabarrok got punked!

The public choice economics of Star Wars: A Straussian reading

The only spoilers in this post concern the non-current Star Wars movies.  Stop reading now if you wish those to remain a surprise.

The core point is that the Jedi are not to be trusted:

1. The Jedi and Jedi-in-training sell out like crazy.  Even the evil Count Dooku was once a Jedi knight.

2. What do the Jedi Council want anyway?  The Anakin critique of the Jedi Council rings somewhat true (this is from the new movie, alas I cannot say more, but the argument could be strengthened by citing the relevant detail).  Aren’t they a kind of out-of-control Supreme Court, not even requiring Senate approval (with or without filibuster), and heavily armed at that?  As I understand it, they vote each other into the office, have license to kill, and seek to control galactic affairs.  Talk about unaccountable power used toward secret and mysterious ends.

3. Obi-Wan told Luke scores of lies, including the big whopper that his dad was dead.

4. The Jedi can’t even keep us safe.

5. The bad guys have sex and do all the procreating.  The Jedi are not supposed to marry, or presumably have children.  Not ESS, if you ask me.  Anakin gets Natalie Portman; Luke spends two episodes with a perverse and distant crush on his sister Leia, leading only to one chaste kiss.

6. The prophecy was that Anakin (Darth) will restore order and balance to the force.  How true this turns out to be.  But none of the Jedi can begin to understand what this means.  Yes, you have to get rid of the bad guys.  But you also have to get rid of the Jedi.  The Jedi are, after all, the primary supply source and training ground for the bad guys.  Anakin/Darth manages to get rid of both, so he really is the hero of the story.  (It is also interesting which group of “Jedi” Darth kills first, but that would be telling.)

7. At the happy ending of “Return of the Jedi”, the Jedi no longer control the galaxy.  The Jedi Council is not reestablished.  Luke, the closest thing to a Jedi representative left, never becomes a formal Jedi.  He shows no desire to train other Jedi, and probably expects to spend the rest of his life doing voices for children’s cartoons.

8. The core message is that power corrupts, but also that good guys have power too.  Our possible safety lies in our humanity, not in our desires to transcend it or wield strange forces to our advantage.

What did Padme say?: “So this is how liberty dies, to thunderous applause.”

Addendum: By the way, did I mention that the Jedi are genetically superior supermen with “enhanced blood”?  That the rebels’ victory party in Episode IV borrows liberally from Leni Riefenstahl’s “Triumph of the Will”?  And that the much-maligned ewoks make perfect sense as an antidote to Jedi fascism?

Let’s toast the commerce clause

In the twentieth century, the constitution’s commerce clause was twisted to the point of absurdity in the quest to expand government.  It’s rather heartening, therefore, to read that the commerce clause has actually been used appropriately to prevent states from discriminating against in-state and out-of-state shippers of wine.

Professor Bainbridge, of course!, has more.

Terror Alerts, Police and Crime

If you look at a simple correlation between crime per capita and police per capita you get this:

Police cause crime!  Some of the Foucault-inspired may buy into that conclusion but it’s really no surprise that places with a lot of crime have a lot of police.  Estimating the true effect of police and crime from observational data is difficult because police and crime are determined jointly.

Ideally, to estimate the true causal effect of police on crime, we would run an experiment, randomly picking weeks in which we increased police presence and observing the effect on crime.  Experiments like this, however, are expensive and some might say unethical.  If we look carefully, however, we might find natural experiments – times when police presence increased for reasons that are random with respect to crime. 

Jon Klick and I look at just such a natural experiment in a paper published in the most recent JLE, Using Terror Alert Levels to Estimate the Effect of Police on Crime (subs. required, free version).  When the terror alert system kicks up a notch the police in Washington, DC put more police on the streets.  We find that crime in DC drops significiantly during these high-alert periods, especially in the National Mall area where most of the prime terror-targets are located.  Street crimes like auto theft and theft from automobiles show especially large decreases when more police hit the street.  We find no evidence that tourism or other demand side factors account for the decline in crime.

Revolutions (Again)

Jeffrey Rosen’s NYT Magazine piece on possible libertarian Supreme Court Justices was surprisingly reasonable (the photographer, however, must have been a real statist).  It’s funny, however, how frightened the center is of Epstein, Barnett, Greve et al.  Consider this:

…Epstein was promoting a legal philosophy far more radical in its
implications than anything entertained by Antonin Scalia, then, as now,
the court’s most irascible conservative. As Epstein sees it, all
individuals have certain inherent rights and liberties, including
”economic” liberties, like the right to property and, more crucially,
the right to part with it only voluntarily. These rights are violated
any time an individual is deprived of his property without compensation
— when it is stolen, for example, but also when it is subjected to
governmental regulation that reduces its value or when a government
fails to provide greater security in exchange for the property it

Can’t you just hear the fear?  ‘Sir, all this talk of "economic" liberties, that is wild, crazy talk.  Irresponsible, I say.  Serious people shouldn’t go around promoting this kind of thing – it’s liable to stir up the population.  Why sir, your views, they reek of revolution.’ 

Let the Dog(s) Out

Operation Falcon, a dragnet put together by the U.S. Marshals and local police agencies, netted 10,000 fugitives last week.  Cool.  But note that that there are millions of unserved arrest warrants.  The Washington Post was one of the few newspapers to get the story right:

Criminal-justice experts said that by apprehending
thousands of fugitives in a matter of days, the operation underscored
the low priority that law enforcement agencies often give to locating
people who have jumped bail, violated parole or otherwise evaded state
and federal courts.

"The dirty little secret is that there usually is not
enough effort and manpower put into apprehension of fugitives," said
David A. Harris, a law professor at the University of Toledo who
studies criminal-justice issues. "Most fugitives are aware of this, and
it makes the system a joke. . . . It’s never been a top priority."

I would add only that the commercial bail system, backed by bounty hunters, does a much better job than the public system in ensuring court appearances and capturing fugitives.  The long arm of the law belongs to the bounty hunter.   

Arrow, Becker, and Levitt on Grokster

How is that for heavyweights?  You can add William Landes, Kevin Murphy, and Steve Shavell — among others — to the list.

Here is their Amicus brief on the Grokster case coming before the Supreme Court.  (Here is a more general list of amicus briefs on the case.)  Their bottom line, however, is general rather than concrete:

They argue that indirect liability often makes economic sense.  If a file-sharing service can distinguish and police illegal files at low cost, that service should not be able to hide behind the 1984 Sony Betamax decision (i.e., the mere existence of non-infringing uses for a technology implies no liability).  Furthermore we should consider whether P2P services offer real benefits above and beyond fully legal alternatives, such as iTunes.  They stress that previous courts have failed to ask these key questions.

I’ve argued similar points myself, but my doubts grow.  I worry we cannot find a standard of indirect liability with clear lines.  Just how easy must it be to monitor illegal behavior and how hard must Grokster try?  Most likely all the variables lie along a relatively smooth continuum.

And who else can be indirectly liable?  File-sharing through iPods, email, blogs, and instant messaging is larger than you think.  36 million Americans admit to having shared files in this manner. 

"All these internet technologies share this common mass-copying capability: e-mail, web servers, web browsers, basic hard drives," said Jason Schultz, an attorney with the Electronic Frontier Foundation, which represents StreamCast Networks. "There’s no principal distinction between (P2P) and other internet technologies in the way it’s designed.

Read more here

Is the question which level of technology can police illegal file sharing and copying most easily?  This might not be Grokster at all, since they have only an indirect link to the downloaded files.  Such a "least cost" approach might result in a monitoring chip put into all hard drives.  Yikes. 

Does Grokster supply any economically useful product that the legitimate services don’t?  Well, how about free files for those who wouldn’t otherwise pay for them?  If we approach the problem in a utilitarian manner, we can’t flinch from this conclusion.

My current best guess is that an economic approach — however correct in general terms — won’t come up with any new solutions we can live with.  We may be stuck with the Sony case after all.

The War on Drugs

Becker and Posner both argue against the War on Drugs.  Becker writes:

After totaling all spending, a study by Kevin Murphy, Steve Cicala, and
myself estimates that the war on drugs is costing the US one way or
another well over $100 billion per year. These estimates do not include
important intangible costs, such as the destructive effects on many
inner city neighborhoods, the use of the American military to fight
drug lords and farmers in Colombia and other nations, or the corrupting
influence of drugs on many governments.

The best economics piece on this issue is Drug War Crimes a short book by Jeffrey Miron published by Independent Institute where I am the director of research.  Miron demonstrates that the war on drugs greatly increases the violent crime rate (just as it rose during alcohol prohibition) and that the policy is not very effective in reducing consumption.

One interesting reason why the drug war reduces consumption less than people imagine is that prohibition reduces some costs.  Drug sellers, for example, do not pay social security taxes for their employees, they do not follow minimum wage laws and they do not obey costly FDA regulations.  On net prices are still pushed up by the threat of prosecution but the lack of taxes and regulations is a countervailing factor.