At Marginal Revolution, Tyler Cowen links to an article by Scott Bland titled, “George Soros’ quiet overhaul of the U.S. justice system.” Basically, the article discusses the possibility of achieving significant criminal justice reform by electing prosecutors sympathetic to progressive reform goals. Specifically, Bland notes Soros’ support for prosecutors that run on platforms of “reducing racial disparities in sentencing and directing some drug offenders to diversion programs instead of to trial.”
Could this work?
I’m skeptical. I always say that prosecutors are sentence maximizers, but their sphere of competition is limited to their district. If the average sentence associated with some crime falls across the district (because that charge becomes eligible form pre-trial diversion, for example) prosecutors will be indifferent. This rule change results in a level effect – the annual sentence level for each prosecutor falls, but the distribution of sentences is preserved. In other words, if prosecutor A’s average sentence length is 10% greater than prosecutor B’s average sentence length, this rule change does nothing to effect that. Of course, if you believe – like I do – that crime and punishment is overrated, expanding pre-trial diversion programs makes the world a marginally better place.
But I don’t believe the fundamental problem with the criminal justice system is sentence-maximizing prosecutors. I do believe the fundamental problem is low-quality police. Adding 87 people a year to a pre-trial diversion program is nothing compared to restructuring police incentives to align with the common social welfare goal of successfully prosecuting criminals. In northern Virginia, it is extremely common to find police officers with wildly different nolle prosequi rates across black and white defendants for the same crime type. You can probably guess which group is on the bad end of the disparity. It’s also common to find police who arrest people basically arbitrarily and consistently have virtually all of their cases dropped. Unfortunately, many defendants (especially when detained before their trial) face tremendous pressure to accept plea bargains just to get on with their lives.
Fix big problems first. I would much rather George Soros pour money into legislative efforts to tie police compensation (for example) to successful prosecution rates. It would probably cost less than what he’s doing now and it would certainly better serve progressive criminal justice reform goals.
When I first began researching the legal services market, I quickly became aware of the serious information asymmetry problem across the marketplace – especially for criminal defense. As I’ve probably mentioned before, defendants have no real way to estimate the quality of an attorney when considering hiring one for a criminal case (except obviously by consulting Blackstone Trial Analytics, LLC – the trusted name in attorney referrals and quantitative LSM analysis). This is a classic adverse selection problem. Defendants know (or can approximately make themselves aware of) the average outcome of a criminal charge; but they don’t know which attorneys contribute better than average outcomes and which contribute worse than average outcomes.
Ultimately, attorneys seem to set roughly comparable prices for their services and share the market. Of course many defendants would like to pay more for high quality attorneys and probably all defendants would like to avoid low quality attorneys (at least at the prevailing prices). I wondered why (high quality) attorneys didn’t try to solve this problem. They could, for example, publicize their records. But this wouldn’t work if many other attorneys simply didn’t publicize their own records. Probably the public would have a hard time interpreting the record in the context of suppliers of criminal defense services generally. This is especially true if people systematically overrate their probability of success at trial.
More plausibly, I thought, attorneys could make their fees contingent on case outcomes. For example, they could charge some variable amount (by quality) for plea bargains and more for trials – much more where the defendant wins. Obviously any specific deal is possible, including zero or even negative fees. These arrangements, I thought, would probably produce few poor incentives, remove some bad existing incentives and communicate important facts about quality to defendants.
Generally, when there appears to be an obvious and easy solution to fix an apparent market failure, a non-market failure lurks just behind it. This is one of those cases. Here’s the relevant ABA rule:
(d) A lawyer shall not enter into an arrangement for, charge, or collect:
(1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof; or
(2) a contingent fee for representing a defendant in a criminal case
Sometimes it seems that virtually all claims about monetary policy are either incoherent or wrong. Take for example the following comments from a recent Washington Post article about the Fed:
The FED never got us out of any recession, it’s Still here. The FED caused the last recession, why on earth would it fix it. GDP is a sham as the numbers are very cooked. Unemployment numbers are cooked and well stirred. Inflation is at 8% and this is brought to you by FED / Global government in conjunction with Corrupt government overspending and a complicit PRESS who lies and misleads on a daily basis.”
- “Want to improve economic growth? Start with reeling in Big Pharma. A few Epipens cost Thousands of dollars that could be used to purchase goods and services throughout the whole economy instead of being used to enrich a handful of greedy execs.”
The first case is obviously incoherent. Ayer would call this “literal nonsense.” How must the commenter view the world for his view to be correct? GDP is a “sham” and the numbers are “very cooked”; of course if this is true we would expect the government (given broad latitude over GDP figures) to release more robust figures. Ditto for unemployment numbers. The entire last sentence is unfalsifiable/silly.
The second case is an example of just being plain wrong. The commenter is probably relying on some idea that consumption is an “important” component of aggregate demand and investment is a trivial component. The commenter’s theory is at least testable.
Obviously these comments are from laypeople unschooled in macroeconomic theory. I suppose we can forgive them, although I find that intellectually unsatisfying. At any rate, it’s more surprising when you see this from real economists.
John P. Hussman argues for the following view of monetary policy:
Remembering the Quantity Theory of Money (QTM):
Velocity is defined as Py (nominal GDP) over M (money supply).
The only way V could fall in direct proportion to the rise in M is if increasing M had no effect on nominal GDP (NGDP). In other words, we drop the classical advice that nominals only effect nominals and replace this with nominals only effect reals. Hussman’s story is further complicated by the fact that markets actually react to increases in the monetary base as if they are expansionary (they are). If the announcement of an increase in the monetary base causes asset prices to rise, NGDP has increased.
Honestly, I’m not sure how Hussman’s graph was constructed. A graph of the size of the (indexed) monetary base versus M1 velocity is reproduced below:
I think the “dogmatic monetarist” story looks more plausible.