Wednesday, October 08, 2014

John Oliver on Civil Forfeiture:Incentives Work

Vox links to a John Oliver piece on civil forfeitures (police taking assets on the basis that they're linked to a crime, usually drugs), a subject which has been in the news recently.

What's interesting to a bureaucrat is that usually the police department can keep most or all of the assets they seize.  But spending the money is difficult, because good management says you shouldn't depend on seizures for your operating budget.  So as one sheriff (I think) says, you treat it as "pennies from heaven" to buy nice-to-have stuff.

Keeping the money gives the police an incentive to, at the least, push the envelope, leading to abuses which are easy to mock, and Oliver does a good job.

One of the problems for bureaucracy is giving incentives.  For example, when the IRS collects delinquent taxes the money goes to the Treasury.  When a bureaucrat comes up with an idea which saves money, her agency doesn't get any of the savings, it's all buried in the established appropriation process. (A side note: one of the physicists who just won a Nobel worked for a corporation who paid him $200 as a reward for his work.  He eventually sued and got a settlement in the middle millions, nowhere near the importance of the work.)  Other bureaucracies live on fees--for example I believe it's true that parts of AMS and APHIS are funded by fees, which means when we have government shutdowns due to lack of appropriations (as we did a year ago), those employees can continue to work.

Back to the forfeitures--I don't think originally the idea was to reward police departments, it was to take away ill-begotten gains.  Would be interesting to know how the rule that the police kept (most of) the money came to be. 

Bottomline: we haven't solved the problem of incentives for bureaucrats.

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