April 25, 2016 3:39PM

Economic Perspectives on the Criminal Justice System

President Obama's Council of Economic Advisers (CEA) has just released a new report, "Economic Perspectives on Incarceration and the Criminal Justice System."  I attended a briefing on the report this morning at the White House led by Jason Furman, who chairs the CEA.  A panel discussion followed and C-SPAN covered the proceeding.

In this post, I want to excerpt some of the most interesting aspects of the report based on my quick perusal and offer some comments.  Instead of asking the Attorney General and the director of the bureau of prisons to examine the criminal system, Obama asked for an economic analysis.  That was an interesting choice.  From the report:

From an economic perspective, the goal of an efficient criminal justice system is to maximize the safety of citizens and minimize criminal activity while also limiting the direct and indirect costs of criminal justice policies to individuals, communities and the economy. Broadly, debates about the criminal justice system can be framed as a comparison of the system’s societal benefits in terms of reduced crime and its societal costs in terms of direct government spending and collateral consequences for individuals, families and communities. Likewise, any reform should offer an improvement to current practice, through increasing safety, rebuilding communities, improving economic opportunity, or reducing expenditures or other social costs.

One of the panelists, Douglas Holtz-Eakin, joked that many in the room may think that economists may be heartless because of their number crunching ways, but he said cost-benefit analyses can be a very useful framework to organize our thinking.

This is "re-entry week," which means we're supposed to focus on how prisoners can successfully transition from life behind bars to a life in civil society.  More than 600,000 prisoners are released each year and over 70 percent of those prisoners are re-arrested within 5 years of release.  A businessperson and an economist might say that the system has a failure rate of 70 percent.  If we could find a way to reverse those numbers--so that less than 30 percent of the prisoners would be re-arrested following release--economists would say we have a superior system (if all other variables remained constant).

The re-entry system in many American jurisdictions is either broken or nonexistent.  Imagine a guy that is 32 years old.  He has just completed a 10-year prison sentence.  He dropped out of school after a year in high school and started transporting drugs between cities--until he got busted.  He has no high school diploma, no job skills, no real job experience, and a criminal record.  In some states, when he walks out of the prison gates, he'll have a bus ticket and $50 in his pocket.  If he does not have a family to support him, he's going to get desperate fast.  The government seems to be setting him up to fail--and that makes little sense.

Many things can and should be done to improve the re-entry process.  A lady sitting next to me said there should be more emphasis on "no-entry," by which she meant there are too many people entering the criminal justice system who shouldn't be there at all.  Precisely.  The drug war has been a public policy disaster.  Locking up a marijuana dealer or someone who unloads a boat of cocaine is expensive and does almost nothing to improve community safety.  That person is immediately replaced by another small fry.  As we await the government to admit its mistakes in the area of drug policy, it can at least reduce its regulatory barriers to employment for the millions of people who now have criminal records.

Another excerpt from the report:

The American Bar Association National Inventory of Collateral Consequences of Conviction documentsover 46,000 State and Federal laws restricting employment, occupational licenses, and business licenses for people with criminal records (American Bar Association 2016). As discussed above, policies that improve access to employment and sufficient wages for individuals with criminal records not only benefit individuals and their families, but also have the potential to decrease recidivism and increase the economic viability of communities.

Our liberal friends always seem to be searching for regulations that can make things better.  As libertarians, we must try to show them that things might get better if the government would start regulating less.  And our conservative friends might consider subjecting criminal justice policies to cost-benefit analyses to determine if our taxpayer dollars are being misspent.

More here.