What Does Protection Cost? I have been talking about "Protection Agencies" that compete in a market for the business of consumers. One question worth considering is: how much does protection cost? If it is a lot of money, then perhaps the poor will not be able to afford it. That may or may not be a problem, per se, but certainly it raises issues of justice.

Well, check out the Statistical Abstract of the United States. In table 424, we find that the total spent by states and localities on "Police protection" in 1998 was $187 per capita. On "Corrections", per capita spending was $157. I infer that costs of running the court system are included in that, since there is nothing else it fits under, other than possibly "Financial administration", $96 per capita. But let's assume courts are under administration. Total: $460 per capita - per year.

The Federal court and prison systems are much smaller than the states, something like 10% or less. So we can ignore them for this.

Keep in mind that a good bit of both the law enforcement costs and the corrections costs are the costs of apprehending and imprisoning victimless "criminals". This is perhaps half of the total. Then we should also decrease the amount one might pay in anarchy based on the near-certain fact that the current system is bloated and inefficient. That will also be perhaps half. So the costs of protection in an anarchic system should be something on the order of $115/year, about $10/month. Anyone can afford that.

Now, I think that anarchy will do even better than that. I have written before about the function of our current prison system as rapist factories. More generally, our current prisons are fantastic places to learn to be a criminal and not very good for anything else. So, reducing their throughput drastically would cut crime disproportionately. Another advantage of anarchy is that prisoners will work to earn their keep and to pay restitution to their victims. This would be a huge gain in financial efficiency, since currently incarceration costs an average of $20000/prisoner/year. Finally, I suspect that given a highly competitive market, protection agencies will not just "cut out fat" and get leaner, but they will invent whole new ways to police that we won't try today. As I said yesterday, liberty is like that - unpredictable. So the price may well come down even further. I can certainly imagine "free" policing that really poor people provide by themselves, for themselves, as a sort of militia system.

In short, currently the State spends surprisingly little on protection, especially given how much they steal in taxes. In anarchy, total spending will be less. It's affordable.