The market for criminal justice: federalism, crime control, and jurisdictional competition.

AuthorTeichman, Doron

TABLE OF CONTENTS INTRODUCTION I. JURISDICTIONAL COMPETITION AND CRIMINAL JUSTICE A. Jurisdictional Competition B. Displacing Crime C. Displacing Criminals II. REGULATING THE MARKET FOR CRIMINAL JUSTICE A. A Race to the Bottom or a Race to the Top? B. Resolving the Potential Race to the Bottom Problem 1. Local Solutions 2. Central Planners CONCLUSION INTRODUCTION

In the last few decades the United States has been engaged in an escalating war against crime. Between 1982 and 2001, the resources dedicated by American taxpayers to the justice system have more than quadrupled. (1) Discounting for inflation, this number reflects a 165% real increase in spending, (2) as well as an increase in the percentage of the American Gross Domestic Product dedicated to the justice system (3) At the same time, criminal sanctions in the United States have also been on the rise. The incarceration rate has more than tripled, from 139 per 100,000 residents in 1980 to a staggering 476 per 100,000 residents in 2002. (4) This rate of increase is in sharp contrast to other Western countries. (5) Finally, in recent years we have witnessed a constant decline in the procedural safeguards granted to criminal defendants by courts in the United States, which again is in contrast to foreign countries. (6)

The systematic harshening of the American criminal justice system (7) is a complex phenomenon lacking a single explanation. Rather, it relates to American attitudes toward crime, local crime rates, and the partisan politics surrounding criminal law. (8) This Article aims to add another piece to this puzzle by pointing out how the decentralized structure of the American criminal justice system creates a dynamic process in which local communities have an incentive to increasingly harshen that system's standards. This argument builds on the insights of two parallel lines of literature that scholars have not yet combined in a complete fashion. (9) The first is the jurisdictional competition literature. This line of literature demonstrates that under a stylized set of assumptions, competition among local governments might lead to efficient levels of taxation and of supply of public goods. (10) In the past few decades this literature has covered a wide array of legal fields including corporate law, (11) environmental law, (12) taxation, (13) bankruptcy, (14) trusts, (15) and family law. (16) The common characteristic of these studies is the treatment of the different units of a decentralized government as actors who compete among themselves to attract desirable types of activity and repel unwanted types of activity.

The second line of literature my argument builds upon is the crime displacement literature. (17) This literature treats the decision of profit-driven criminals (e.g., car thieves, drug dealers) regarding where to commit a crime as a rational decision in which criminals aim to maximize their expected payoff from crime. Thus, this literature has pointed out that both public measures such as additional police activity, and private measures such as building fences, may simply cause crime to move from one place to another.

Combining the insights of jurisdictional competition and crime displacement illustrates how the goal of encouraging crime migration might drive local communities to gradually harshen their criminal justice system. If one jurisdiction raises the price of committing a crime within it, either by increasing the sanction or the probability of detection, then neighboring jurisdictions become more attractive crime targets. This, in turn, will cause these neighboring jurisdictions to adjust their sanctions and probabilities of detection in order to prevent criminal activity from moving to their communities. Over time, these dynamics will cause a decentralized criminal justice system to shift toward harsher standards. In other words, while some commentators have argued that we are witnessing an arms race between law enforcement agencies and criminals, (18) what we might actually be witnessing is an arms race between local communities attempting to drive crime to their neighbors.

From a doctrinal perspective, the analysis presented in this Article is closely related to the debate triggered by the Supreme Court's ruling in United States v. Lopez (19) regarding the role of the federal government in the realm of criminal law. (20) Thus far, this discussion has mainly focused on issues such as the historical limits of congressional authority, (21) the relative advantages of the federal and state criminal justice systems, (22) the burden imposed upon the federal judiciary, (23) the potential effects of the federalization of criminal law on individual rights, (24) and the importance of normative diversity in criminal law. (25) This Article adds to the debate by using a political economy perspective to illustrate the potential advantages and disadvantages of allowing local communities to control criminal justice policies. The theoretical argument presented in this Article leads to the conclusion that, contrary to the commonly held view among legal scholars, (26) additional federal regulation in the area of criminal justice might be desirable to limit the inefficient harshening of that system caused by jurisdictional competition. Furthermore, unlike scholars who argue that federal intervention should focus on areas in which local jurisdictions fail to deal with crime, (27) this Article makes the counterintuitive argument that in the context of criminal justice, federal intervention might be necessary when states are successful at reducing crime.

The Article is organized as follows: Part I introduces the concepts of jurisdictional competition and crime displacement and argues that, as a positive matter, a decentralized criminal justice system may create a competitive process among the different units composing it, in which each such unit attempts to divert crime to neighboring communities. Part II then turns to evaluate the normative aspects of jurisdictional competition in the area of criminal justice. In this context I will show that competition can have both advantages and disadvantages. On one hand, the forces of competition might drive jurisdictions to fight crime efficiently, since any jurisdiction that functions inefficiently will suffer from a rise in its crime rate as a result of crime displacement. On the other hand, jurisdictions might face a collective-action problem in which they are spending increasingly high resources on their criminal justice system simply to deflect crime to their neighbors. In such a case, every jurisdiction's interests would be served if jurisdictions could commit themselves not to compete in the area of criminal justice. The second half of Part II examines more closely the problem of inefficient competition in the realm of criminal justice, and explores different ways to deal with these inefficiencies. Finally, I offer concluding remarks as well as suggestions for future research.

  1. JURISDICTIONAL COMPETITION AND CRIMINAL JUSTICE

    For the most part, the United States has a decentralized criminal justice system. State legislatures define the majority of crimes and set out the punishments for those crimes. (28) In addition, the enforcement of criminal laws lies, in most cases, in the hands of local law enforcement agencies. (29) Furthermore, the officials controlling such local agencies are often elected directly by the communities they serve. This, in turn, promises the development of policies attuned to the preferences of local communities. (30) Employing the tools of positive public choice theory, this Part will evaluate the decision-making process that units of a decentralized system of government face when they design their criminal justice policies.

    1. Jurisdictional Competition

      To model the behavior of the different units within a decentralized system of government, one must initially develop a concept of the decisions made by these units. In recent years positive public choice theory has suggested that we view local units in a decentralized system as players aiming to maximize their own welfare. (31) Thus, the interactions among these units can be categorized as competitive in nature and the tools of game theory can be employed to model the expected equilibrium to which those interactions will lead.

      The jurisdictional competition literature can be traced back to Charles Tiebout's article on the topic, (32) in which he demonstrated that, under a stylized set of assumptions, (33) competition among local governments might lead to efficient levels of taxation and of supply of public goods. (34) While some view the normative aspect of this model (i.e., jurisdictional competition is efficient) as controversial, few would contest its positive aspect (i.e., competitive incentives drive local policies). Since the publication of Tiebout's article, the jurisdictional competition literature has spread to a wide variety of legal fields. (35) Two illustrative examples, which reflect reverse incentives, can be found in the areas of corporate law and welfare benefits. In the context of corporate law, states have an incentive to attract corporations to incorporate within their jurisdiction in order to increase their tax revenues. (36) Given the high mobility of corporations associated with the relatively low costs of reincorporation, corporations will tend to reincorporate in states that offer them a set of corporate-governance laws maximizing their value. Thus, states wishing to enlarge their tax revenues will attempt to offer corporations the most attractive set of corporate-governance rules. In the context of welfare policies, on the other hand, the interaction among jurisdictions leads to different results. (37) Welfare policies redistribute wealth from the rich to the poor. Thus, a state adopting such policies will encourage migration of poor people from states that do not have such policies...

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