Crime control through private enterprise.

AuthorBenson, Bruce L.

Israel Kirzner (1997, 62) explains that entrepreneurial discovery of opportunities gradually and systematically pushes back the boundaries of ignorance, thereby driving down costs and prices while increasing both the quantity and the quality of output. In the public-sector production of crime control, ignorance abounds, costs are high and rising, and both the quality and the quantity of the effective output of the criminal justice system dearly have room for improvement. A 1976 National Advisory Commission on Criminal Justice Standards and Goals report notes that

this country has become the unwilling victim of a crime epidemic. The

present seriousness of the disease has outstripped even the most pessimistic

prognosis. Coupled with a steadily rising numerical frequency of crimes is a

savage viciousness that has tendered the American public almost immune from

further shock....

In a valiant but vain attempt to stem this massive tide of criminality,

government officials, scholars, politicians, and a vast array of other

professionals have responded with plans, programs, and projects all designed

to reduce crime.... [A]lthough many of these programs were improvements over

outdated practices, crime, the cost of crime, the damages from crime, and

the fear of crime continued to increase.

In such circumstances, turning the entrepreneurial discovery process loose on crime control may have real advantages.

Others have also recognized that private-sector entrepreneurs can discover better ways to control crime. Perhaps surprisingly, the preceding quote from the 1976 report anticipates the suggestion made here, concluding that

One massive resource... has not been tapped by governments in the fight

against criminality. The private security industry.. offers a potential for

coping with crime that can not be equaled by any other remedy ... [T]he

private security professional may be the only person in this society who

has the knowledge to effectively prevent crime.

This conclusion had no noticeable impact on public policy toward crime. A 1985 National Institute of Justice (NIJ) report (Cunningham and Taylor 1985, 1-3) explains that despite continual increases in taxpayer dollars spent on the criminal justice system, "neither local, State, nor Federal resources had seriously affected the problem of crime" and that yet still "conspicuously absent from... crime prevention programs... is the input of the private security industry."

This statement is not completely accurate. Although recommendations and resources from the private security industry remain absent from most public policy programs, private citizens' own programs are relying on entrepreneurs in ever-increasing numbers in order to obtain new and innovative crime-control services (Benson 1990, 1996b). Indeed, as Lawrence Sherman (1983, 145-149) observes, "Few developments are more indicative of public concern about crime--and declining faith in the ability of public institutions to cope with it--than the burgeoning growth in private policing.... Rather than approving funds for more police, the voters have turned to volunteer and paid private watchers."

A typical policymaker's question is "What can government do to reduce crime?" but a better question is "What is the most cost-effective way to reduce crime?" I maintain that the answer must include a significant increase in private market provision of the four Ps of crime control: prevention, pursuit, prosecution, and punishment. To frame this argument I shall discuss examples of current markets for the four Ps, the alleged failings of such market activities in crime control, and policy alternatives to encourage more entrepreneurial discovery.

Nature and Growth of Markets in Crime Control

Market provision of goods and services to facilitate all types of crime control activities is quite substantial, but much of it is undocumented. A few surveys and studies have been conducted, however, and although some are dated, indications of the types of markets that exist and their growth can be gleaned from these sources.(1)

Private Security Personnel for Protection and Pursuit

Table 1 indicates that from 1964 to 1991, employment by private firms specializing in protective and detective services increased by 746.8 percent, and the number of firms offering such services grew by 543 percent. Entrepreneurial entry has clearly been substantial. Furthermore, the figures in table I do not include direct employment of private security personnel by nonsecurity firms (vertical integration), residential developments, or other institutions. A 1970 estimate put the number of privately employed security personnel, including internal security, at roughly equal to the number of public police, but by 1983, there were more than mice as many private security personnel as public police in the United States (Reichman 1987, 247). A 1991 NIJ study reports a ratio of about 2.5 private security employees to each public police officer (Cunningham, Strauchs, and Van Meter 1991). Roughly $21.7 billion was paid to 1.1 million full-time security employees in 1980 (Cunningham and Taylor 1985, 12). By 1991, these estimates were up to $52 billion for 1.3 million private security personnel (Cunningham, Strauchs, and Van Meter 1991), making this the second-fastest-growing industry in the United States. Even these employment figures "greatly underestimate the extent of private policing. Surveillance of private places and transactions is being conducted by actors who traditionally have not been counted as among the rank and file of private police" (Reichman 1987, 246). Examples are insurance adjusters, corporate risk managers, and other "loss consultants."

Table 1. Number of Firms and Employees in Detective Agency and Protective Services, 1964-1991

Number of Number of Year Firms Employees 1964 1,988 62,170 1967 3,389 151,637 1973 4,182 202,561 1976 5,841 248,050 1979 6,502 310,333 1982 8,424 345,874 1985 10,066 410,625 1988 11,675 473,308 1991 12,783 526,435 % change 1964-91 543.0 746.8 Average % change 1964-91 20.1 27.7 Source: Bureau of the Census, County Business Patterns (Washington, D.C.: U.S. Department of Commerce, Bureau of the Census, various years).

Security personnel include the stereotypical minimum-wage night watchmen, of course, but also included are fully qualified police officers (many public police moonlight as private security, and many other police officials have resigned their positions in order to enter the lucrative private-security market), and highly trained and skilled electronic-security experts. Although manufacturing firms and retailers rank first and second in contracting with security firms, government agencies rank third (M. Chaiken and J. Chaiken 1987, 3), which suggests that the government also is turning to the market to take advantage of the various cost-effective services available.

A 1972 survey found no city contracting directly with a private firm for all police services, and fewer than I percent dealing with private firms for subservice police functions (Fisk, Kiesling, and Muller 1978, 33). This situation has changed dramatically. Local governments now contract with private firms for a Wide array of traditional police functions, particularly in the area of "police support" services, including accounting, maintenance, communications, data processing, towing illegally parked cars, fingerprinting prisoners, conducting background checks on job applicants, and directing traffic (M. Chaiken and J. Chaiken 1987, 1-3). Security firms also provide guards for public buildings, sports arenas, and other public facilities. Wackenhut Services, Inc., for example, has a number of contracts with governments. A partial list includes security for courthouses in Texas and Florida, patrols for the Miami Downtown Development Authority, guards for the Miami Metro Rail and the Tri-Rail from West Palm Beach to Dade County, complete police services for the Tampa Airport, and predeparture security for many other airports (Reynolds 1994, 11). The state of Florida contracted with Wackenhut for security guards at all its highway rest stops after a 1993 rest-stop murder of a tourist.

Wackenhut also provides the entire police force for the Energy Research and Development Administration's 1,600-square-mile Nevada nuclear test site and for the Kennedy Space Center in Florida (Poole 1978, 41-42). Several local governments have also contracted for complete police services. For instance, in 1975 Oro Valley, Arizona, arranged such a contract With the major provider of contract fire-control services, Rural/Metro Fire Department, Inc. (Gage 1982, 2 5). The Arizona Law Enforcement Officers Advisory Council challenged the arrangement, however, arguing that under Arizona law an employee of a private firm could not be a police officer. Rural/Metro could not bear the high court fees required to fight the challenge, so the arrangement ended in 1977. Several other similar contracts have been written elsewhere. Guardsmark, Inc., began providing full police services to Buffalo Creek, West Virginia, in 1976 (Poole 1978, 42). Wackenhut had contracts with three separate Florida jurisdictions in 1980 and had proposals pending with twenty communities in 1985 (Cunningham and Taylor 1985, 47). Reminderville, Ohio, contracted with Corporate Security, Inc., in 1981 (Gage 1982, 24). After the entire police force of Sussex, New Jersey, was dismissed due to a drug scandal, the community contracted with Executive Security & Investigations Services, Inc. (New York Times, July 13, 1993). Government contracting for all police services is, it appears, increasingly recognized as a serious alternative. In fact, this practice is quite common in certain other countries. For instance, in Switzerland one firm, Secuitas, provides police for more than thirty villages and townships (Reynolds 1994).

Specialized Products for Prevention

Security personnel are not the only privately provided...

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