I don’t know if you have followed the issue of asset forfeiture in these United States. It is a situation that smells something rotten.
You may know that the law often allows police or other authorities to keep the ill-gotten gains from a criminal transaction. That’s bad enough as far as creating a financial incentive. But the moral hazard is serious enough that police often take assets when no criminal action has been shown to have occurred, or if the owner of the asset was not aware of the crime. Spending sprees are known to result as well.
Here’s a fun John Oliver rant on it.
Reform efforts are underway–slowly, slowly considering the opposition of law enforcement, which appears to now be addicted.
Serious reform efforts attempt to block police from spending sprees. In my state, Massachusetts, it appears that reform is more modest, and limited to reporting, presumably under the doctrine of sunlight being a good disinfectant. That’s pretty weak tea.
So–speaking of modest proposals, here is one of my own: if it is currency burn it, at least any amount above and beyond administrative overhead for managing the asset forfeiture process.
Start with a distinction between a hard asset, like a car and a house, and currency. The former is real. The latter is not. Currency is in fact nothing other than a convention we have established such that the rightful owner can store value for the acquisition of real things at a later date. It is a shared symbol, and has legitimacy not only out of habit but out of the shared belief that the owner of the symbol has undertaken legal action, like labor, that entitles that person to store value until a later date when a real asset or real services may be obtained.
It is for the latter reason–the legitimacy of ownership of a claim on future resources–that we deny lawbreakers their ill-gotten gains. But what then entitles the authorities to gain access to the symbolic shared value of the currency seized?
Should it not just be destroyed? Nothing of real value will be destroyed in the process. The only thing that will go up in smoke is paper. And the only real world effect would be that the authorities would not be able to avail themselves of what amounts to free assets and services.
So I can see no conceptual justification for the transfer of symbolic assets generated in illicit ways to allow for free purchase of goods and services. Nothing of value is destroyed in the destruction of that currency–it is only the free purchase of goods and services later that is halted. And beyond the conceptual justification is a practical one too: the complete elimination of the moral hazard of financial incentive. I daresay that when the financial incentive is gone the temptation to what amounts to theft will be greatly diminished.
NOTE: Since the blog posting I corresponded with the ACLU of Massachusetts. A representative confirmed that the legislative initiative here amounts to baby steps. But as to my idea about currency obliteration:
Currency in the U.S. has legitimacy in the sense that the U.S. Treasury does know how much currency is in circulation and it is a crime to destroy currency. That is why all currency has serial numbers. We could not have police departments destroying currency as if it were paper – because they do not operate in a bubble and that currency is attached to and accounted for in our financial measurements as a country. Additionally, we would be adding another level of problems with additional corruption when money that should have been destroyed ends up back in circulation due to theft and other issues of corruption.
So it appears my modest proposal has about the same legs as Jonathan Swift’s.