Just over a year ago (Jan 6 2017), I wrote about ‘Pop Up’ Prisons, more accurately called ‘rapid build’. Rapid build is used in war zones where there is a sudden and urgent need. It is extremely expensive. Overcrowding of our prisons had led to this now being considered an urgent need, but why had we not foreseen it? One answer had, in fact, been earlier suggested by Mark Neasbey in his post “Infrastructure decisions we make when we don’t think we are making any”(Aug 12 2016) where Mark had brilliantly, and entertainingly, explained how the ‘costless’ decision to put more police on the streets to combat crime had cost consequences which were not only extensive, but, unfortunately, invisible in the eyes of decision makers.
Now, today, comes news from America where incarceration rates have increased 500% over the last few decades. Philadelphia in Pennsylvania is even more extreme, their incarceration rates have increased 700% in the same time. But that is already changing with the appointment a few months ago of a civil rights lawyer, Larry Kranser, as the new District Attorney who is taking extreme action to reduce the cost and human damage involved. The whole encouraging story can be found on the Slate website here but I would like to draw your attention to one move which could effectively be used more widely.
“In a move that may have less impact on the lives of defendants, but is very on-brand for Kranser, prosecutors must now calculate the amount of money a sentence would cost before recommending it to a judge, and argue why the cost is justified. He estimates that it costs $115 a day, or $42,000 a year, to incarcerate one person. So, if a prosecutor seeks a three-year sentence, she must state, on the record, that it would cost taxpayers $126,000 and explain why she thinks this cost is justified. Krasner reminds his attorneys that the cost of one year of unnecessary incarceration “is in the range of the cost of one year’s salary for a beginning teacher, police officer, fire fighter, social worker, Assistant District Attorney, or addiction counselor.”
The same reasoning could be applied to just about any new rule or regulation introduced by government.
Comment?
In Economics this is known as Opportunity Cost. Would we make different decisions if we were to apply Krasner’s approach to assessing the interest and ongoing costs of proposed new capital acquisitions and to consider the lost opportunity of extra community services?
While I would not mind missing out the opportunity to demonstrate the cost / benefit ratio for the particular sector, I definitely look forward to demonstrating the benefits for the social side of the socio-economic equation for the society as a whole. This should be readily quantifiable and “projectable” through cross-asset management reasoning, which is based on the same principles of Kranser.