Why do most people want their teachers, doctors, detectives, soldiers, park rangers, etc. to be state employees, or heavily regulated “professionals,” instead of vigorously competing business-folk? Yes, many specific market failure rationales are offered, but it seems to me that humans also feel a psychological need to keep their sacred social institutions looking similar to the families, bands, and fiefdoms of their distant ancestors. We want something like key people swearing an oath of loyalty to us and our dearest norms; otherwise it just doesn’t feel right.
Such psychological needs seem to me our biggest barriers to making an efficient flexible legal system capable of rapid and effective adaptation to the huge sudden economic changes I foresee. We insist, for example, that those who investigate and prosecute criminal law must be state employees operating under a single unified command, as in an ancient fiefdom. And even though for-profit bounty hunters have been consistently cheaper and more effective at making accused folks show up for trial, most nations ban such hunters, and legal elites in the few remaining nations very much want to do the same (Quotes below.)
Yet it seems to me that we’d probably be better off if generalized bounty hunters replaced government detectives and prosecutors on most sorts of crime! Here’s how it could work. For each type of crime, we’d set a bounty amount to be paid to anyone who successfully convinced a court that a particular in-custody person had committed that sort of crime. (What to do with the guilty party is then a separate issue.) We’d have to decide what investigative powers to grant bounty hunters, what regulations to impose on them, and what plea-bargains to allow. We’d also have to set rules on when to detain suspects, and how to prevent double jeopardy. (Options below.) We might want especially solid anti-trust regulations, to prevent bounty hunters from conspiring to create a police state.
But if such regulations worked, we’d gain the advantages of economic competition – not only better efficiency, specialization, and adaptation to change, but also more uniform legal treatment and reduced corruption. Instead of having the level of crime enforcement vary by neighborhood or ethnicity, as it does now, or having police and prosecutors go easy on their friends and extra hard on those they dislike, profit-driven bounty hunter firms would be just as eager to prosecute similar crimes regardless where they happened or by who. And each bounty hunter firm would be eager to profit by exposing the crimes of its competitors. This stands in stark contrast to the way we now tolerate corruption by having crime labs and corruption investigators report to the same police chief who would be embarrassed by exposed corruption.
The main downsides of this approach are close to its upsides: we’d actually uniformly enforce the laws on our books. Politically connected people and districts could less use “suction” to tilt the scales of justice their way, and we’d have to admit when we aren’t serious about enforcing laws with very low bounties. We’d also have to admit when we can’t solve cases, and can’t find something to pin on undesirables.
Now for those promised quotes. From the NYT in ’08:
In England, Canada and other countries, agreeing to pay a defendant’s bond in exchange for money is a crime. … Four states — Illinois, Kentucky, Oregon and Wisconsin — have abolished commercial bail bonds, relying instead on systems that require deposits to courts instead of payments to private businesses, or that simply trust defendants to return for trial. Most of the legal establishment … hates the bail bond business, saying it discriminates against poor and middle-class defendants, does nothing for public safety, and usurps decisions that ought to be made by the justice system. …
Commercial bail bond companies dominate the pretrial release systems of only two nations, the United States and the Philippines. … Critics [complain] defendants who have not been convicted of a crime and who turn up for every court appearance are nonetheless required to pay a nonrefundable fee to a private business. …
According to the Justice Department and academic studies, the clients of commercial bail bond agencies are more likely to appear for court in the first place and more likely to be captured if they flee than those released under other forms of supervision. That may be because bail bond companies have financial incentives and choose their clients carefully. …
Still, critics say, efficiency and business considerations should not trump the evenhanded application of justice. … Bond companies … have every incentive to collude with lawyers, the police, jail officials and even judges to make sure that bail is high. … The Oregon prosecutor said doing away with commercial bonds had [hurt] the justice system. … The failure-to-appear rate has skyrocketed.
Now for some details. Keeping bounty amounts near fine amounts avoids many problems, though raising fines and lowering bounties allows for cheaper deterrence. Regarding when to detain a suspect, and how to avoid double jeopardy, I’d suggest using open prediction markets, a la Michael Abramowicz. Detain a suspect when his market odds of guilt pass a threshold, and let the first firm whose odds of successful prosecution pass a threshold gain the right to prosecute. Let them lose that right if prosecution hasn’t begun and their odds fall below a threshold. If several firms have above-threshold odds from the get-go, pick the one with highest odds.
I’d also suggest slowly raising the bounty amount with time elapsed since the crime was committed; this let’s us pay a low price to solve easy cases, yet still offer a high price for hard cases. The bounty amount should get fixed when a firm gains the right to prosecute.