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Should police departments be privatized?

Written By: Jason Shafrin - Aug• 19•10

With state budgets running low, funding for police has fallen.  Can private security forces step in to fill the gap?  Temple Professor Simon Hakim believes so.

The police is a monopoly. It’s less innovative than the private sector that is under the gun of competition. A police department will never go bankrupt; private company could go bankrupt. So private companies adopt more technology. I expect we may find contracting out of small police department, ’cause a lot of small police departments really don’t have the justification, in many cases, to exist. And for the consumers, they get better service in much lower costs.

No one would question whether police have a monopoly, but whether this arrangement is welfare improving or not will depend on what the monopoly is over.  Those who prefer private security firms often claim that the police have a monopoly over security.  The logic then proceeds that allowing private competition will increase innovation as well as the equilibrium level of security supplied.

On the other hand, the police may not in fact be in the business of security but rather in the buiness of violence.  In this case, one of the police’s fundamental roles is to restrain the supply of violence and, by doing so, making themselves more valuable.

One empirical example of a monopoly on violence comes from Colombia during the time of Pablo Escobar.  Escobar was the unquestioned drug king of Medellín and–although he personally was very violent–he did not tolerate violence that he did not sanction.  When Escobar died, the violence market was “open to competition” and the quantity of violence supplied grew exponentially.

Although many tragedies have occurred under the direction of state police, having a single (hopefully responsible) authority to maintain a monopoly on violence may, in fact, be optimal.

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