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FISCAL EQUIVALENCE: PRINCIPLE AND PREDATION IN THE PUBLIC ADMINISTRATION OF JUSTICE

Published online by Cambridge University Press:  11 October 2021

Emily C. Skarbek*
Affiliation:
Political Theory, Brown University, USA

Abstract

Fiscal equivalence in the public administration of justice requires local police and courts to be financed exclusively by the populations that benefit from their services. Within a polycentric framework, broad based taxation to achieve fiscal equivalence is a desirable principle of public finance because it conceptually allows for the provision of justice to be determined by constituent’s preferences, and increases the political accountability of service providers to constituents. However, the overproduction of justice services can readily occur when the benefits of the justice system are not enjoyed equally. Paradoxically, the same properties that make fiscal equivalence desirable by imposing restraint and control between constituents and local government also create internal pressures for agents of the state to engage in predatory, revenue-generating behavior.

Type
Research Article
Copyright
© 2021 Social Philosophy & Policy Foundation. Printed in the USA

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Footnotes

*

Political Theory Project, Brown University, emily_skarbek@brown.edu. I would like to thank the other contributors to this volume, as well as Daniel D’Amico, Brandon Davis, Samuel DeCanio, David Schmidtz, David Skarbek, and anonymous referees for helpful feedback. I would also like to thank the John Templeton Foundation for financial support for this project. Any errors are my responsibility.

References

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3 Department of Justice, Civil Rights Division, “Investigation of the Ferguson Police Department,” p. 15.

4 Matt Apuzzo and John Eligon, “Ferguson Police Tainted by Bias, Justice Department Says,” New York Times, March 5, 2015. https://www.nytimes.com/2015/03/05/us/us-calls-on-ferguson-to-overhaul-criminal-justice-system.html

5 Department of Justice, Civil Rights Division, “Investigation of the Ferguson Police Department,” p. 2.

6 In 2013, the Ferguson Municipal Court disposed of 24,532 warrants and 12,018 cases, or about 3 warrants and 1.5 cases per household. See https://archcitydefenders.org/wp-content/uploads/2019/03/ArchCity-Defenders-Municipal-Courts-Whitepaper.pdf

7 Department of Justice, Civil Rights Division, “Investigation of the Ferguson Police Department,” p. 2.

8 Ibid.

9 In the ten years leading up to the 2014 incidents in Ferguson, the county was averaging 13 percent of their total annual revenue from fees and fines. By comparison, even the worst offending counties (in the 98th percentile) during this period were averaging less than 4 percent of total revenue. Author’s calculations based on available county budget data https://www.fergusoncity.com/DocumentCenter/View/561/2010-COFM-CAFR?bidId= Census of Governments, U.S. Census Bureau (Census) 1977–2012. In February 2019, the Supreme Court ruled in the case of Timbs v. Indiana 586 U.S. __ (2019) against the ability of states to levy excessive fines. While this demonstrates recognition of the problem, it doesn’t specifically address the systematic problem.

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44 Olson, “The Principle of ‘Fiscal Equivalence’."

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51 I am aware of the large literature on private provision of public goods, including policing, law, courts, and jails. Nevertheless, this characterization is standard in public economics (Paul Samuelson, “The Pure Theory of Public Expenditure,” Review of Economics and Statistics 36, no. 4 [1954]: 387–89) and public choice (James M. Buchanan, “Contractarian Political Economy and Constitutional Interpretation,” The American Economic Review 78, no. 2 [1988], 135–39). Empirically, more often than not, the institutions charged with the administration of justice are publicly administered.

52 Otherwise known as Lindahl pricing of public goods.

53 Moreover, as public choice scholars have pointed out that even reasonable estimates would be hard to make in the cases where benefits differ among people and are not correlated with observable metrics like the crime statistics, location and types of crimes committed, arrest rates, conviction rates, clearance rates, etc. Vickery (W. Vickery, “Counterspeculation, Auctions, and Competitive Sealed Tenders,” The Journal of Finance 16, no. 1 [1961]: 8–37), Clarke (E. H. Clarke, “Multipart Pricing of Public Goods,” Public Choice 11, no. 1 [1971]: 17–33) and Groves (T. Groves, “Incentives in Teams,” Econometrica 41, no. 4 [1973]: 617–31) provide a formal mechanism design solution to the problem, which fails to address the fundamental problem regarding the demand estimation and revelation process for justice services.

54 Wicksell understood this point and was particularly concerned with measurability, even though he did think it was conceptually possible (Buchanan, “Wicksell on Fiscal Reform”).

55 Buchanan, Collected Works of James M. Buchanan, 154.

56 “The sum of the payoffs in each column is the same, as consistent with the Samuelsonian analysis in which cost shares do not affect the efficiency of the provision of a pure public good” (James Buchanan, and R. D. Congleton, Politics by Principle, Not Interest: Towards Nondiscriminatory Democracy, [New York: Cambridge University Press, 2006], 155).

57 Note that this example says nothing about the allocation of justice services between policing, courts, and jails. The total quantity is an aggregate and assumes quality is held constant.

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61 For instance, the example generated outcomes based on a majoritarian system. Lacey argues that parliamentary systems of voting are likely to generate different dynamics as they tend to be more inclusive of minority voice (Nicola Lacey, The Prisoners’ Dilemma: Political Economy and Punishment in Contemporary Democracies [Cambridge: Cambridge University Press, 2008]).

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71 Ibid.

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