I'd demur on the second: I worry about the incentives facing the government to create more criminals when they have a pecuniary interest in doing so. David Friedman makes the same point in Law's Order:
- Tyler Cowen tells me very poor parents in Haiti today sometimes sell their kids into slavery, expecting such kids to at least be fed. Its sad some people are that poor, but given that they are, this seems a good option to have.
- To make punishing criminals cheaper, instead of prison I could support auctioning off the right to use criminals as slaves for so many years.
- I’d accept private law contracts, if entered into with sufficient solemnity, specifying slavery as a penalty under particular circumstances.
All of these examples [Friedman's from the chapter, not Hanson's] demonstrate a common problem - the effect of efficient punishment on the incentives of enforcers, public (civil forfeiture and BATF entrapment] or private. The same institutions that, seen from the perspective of a philosopher-king model of law enforcement, produce an unambiguous improvement by lowering the cost of enforcing the criminal law have the potential, seen from a perspective of rational self-interest, to set off a costly rent-seeking struggle, a war of each against all, with each side trying to use legal institutions to expropriate others and avoid being expropriated.