Impact of Justice on the Economy

The problems that have been growing in our justice system have major negative effects on our human and social capital, and thus have considerable indirect effects on our economy.  Combined with the direct costs to our economy, they add up to a hefty chunk of lost growth.

Lost human capital

Damage from the War on Drugs

Underfunding the justice system

The costs are hard to quantify, but the fact is that all of these things do cost the economy, in terms of disrupted lives, lost income, increased costs to individuals and businesses, and lost productivity.  All told, the aggregate cost to the economy of our problems in Justice (as I’ve defined it as a part of the Interlock) are somewhere in the neighborhood of $200 billion a year – around 1.3% of GDP.  We have saddled ourselves with a new, more expensive version of Prohibition, made our legal code extremely burdensome on the people it was supposed to protect and on the people whose job it is to enforce the law, and then topped it all off by underfunding our police and courts.  Leaving aside the personal tragedies and massive injustices that happen every day, we need to do something about this if we want to regain our prosperity.


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