The Chronicles of a Capitalist Lawyer

It's been a while since the last time I wrote in this blog. I admit, I have sinned. But enough with the excuses. I've just finished two papers having completely different themes. The first one is titled: "Special Purpose Vehicles in Law and Economics Perspective". You can download the paper here. The second one is titled: "Legal Positivism and Law & Economics: A Defense". You can download the second paper here.

The first paper will be published in the Journal of Indonesia Corruption Watch to be published this year. In this paper, I discuss the nature of Special Purpose Vehicles (SPV) in the form of corporation, their function and benefits, their potentials for misuse, and also the techniques to solve or prevent such issue. I believe that for a developing country like Indonesia, relying on legal doctrine such as piercing the corporate veil to chase the ultimate shareholders of SPVs who conduct illegal acts would be too costly. They are just too cunning and some countries specialized in the formation of SPVs have all the incentives to assist these crimes.

So, the other solution is to ensure that those SPVs established in Indonesia will be here to stay, namely, we need to put some of their capitals as hostages in Indonesia by way of mandating minimum capital requirement or bank guarantee/insurance requirements. I also discuss the costs and benefits of these solutions as there is no such thing as a perfect solution. The rest can be read in the paper.

The second paper will be presented in the third Indonesian national conference of legal philosophy to be held at Surabaya on 28 August 2013. I always enjoy legal philosophy, particularly Legal Positivism and I think that most Indonesian scholars misunderstand the nature of Legal Positivism by equalizing Legal Positivism with Legal Formalism or even worse, strict textual method of legal interpretation.

Of course this is wrong. Legal Philosophy is a theory of law while Legal Formalism is a theory of adjudication. But the mistake is so persistent that Legal Positivism is often blamed for many issues in Indonesian legal system! I think the conference would be a good place to present a defense on Legal Positivism so I decided to write this paper.

The paper will discuss the main thesis of Legal Positivism, i.e., the Source Thesis (that law is a social fact and can only be derived from social sources) and the Separability Thesis (that the content of the law does not have any necessary connection with its validity). People usually connect Separability Thesis with the relationship between law and morality. But I believe that the issue is wider than that, it can include religion, local custom and other type of norms.

I certainly believe that Legal Positivism (if applied correctly), is a democratic thought that will allow various legal theory to compete for domination within a legal system. I argue this by showing how Law and Economics (which is obviously not a pure theory of law) can survive in the framework of Legal Positivism but will be kicked out from the game in the framework of Natural Law (because by nature, Natural Law which supports only one absolute value will not be tolerant to other type of thoughts). As usual, the rest can be read in the paper itself.

Happy reading and hope it is useful.

This article is a continuation of my previous article: In Defense of Legal Positivism - A Reply to Iman Nasima. Since Imam has kindly responded to my article here, I think it should be appropriate to press the discussion one step further (though I have to apologize for the huge delay in responding to his second article).

Legal Positivism is Not a Method of Legal Interpretation

The first question that I asked in my previous article is: how critics to Legal Positivism perceive Legal Positivism? Is it a legal theory or method of interpretation? For me, the answer is obvious. Legal Positivism does not deal with method of legal interpretation, it is a theory of law.

Why does this distinction matter? Because from my readings of various people who criticizes Legal Positivism, I get a tendency that they equate Legal Positivism with strict Textualism or Legal Formalism, i.e. that under Legal Positivism, judges tend to interpret the laws solely based on the texts of the formal laws issued by the state, and that these judges do not consider other basic principles such as justice and morality when they can found a governing law in resolving legal matters.

Of course this is completely wrong and shows a lack of understanding of what is Legal Positivism. You cannot make a good critic if you don't understand the concept that you criticize. It will simply be a waste of time for everyone.

Whose Authority?

This is indeed a really difficult question. In practice, questioning the normativity of law will not be completed without asking who is the authority that must be honored in the first place. This is in line with the support given by Legal Positivism to the Source Thesis, i.e. that the existence of law can be solely derived from its sources and not its contents.

Under the Source Thesis, people can recognize the existence of the law by paying attention to the sources of that law, i.e. the authority who issues the law. HLA Hart tried to explain this thesis through Rules of Recognition, i.e. secondary rules in a legal system that give guideline on when certain rules can be treated as laws.

When certain rules meet the criteria of the Rules of Recognition, those rules will be deemed as laws with all of their authoritative/normative power upon their subjects. The problem is, who stipulates the rules of recognition and why we should follow those rules of recognition in the first place?

At this stage, Legal Positivism as a descriptive theory of law would be unable to answer that question. Why? Because it is a question of fact. Imam correctly shows that there are various competing theories on dealing with the concept of authority and how authorities derive their power.

To give more context on the above discussion, I recently read Justice Scalia and Bryan Garner's treatise on Legal Interpretation where they said that British and US judges differ in terms of authority. In England, the judges can hold the same position with legislators, so they can make the law and interpret the provisions at the same time. While in the United States, the power to make laws lies with the legislators while judges are required to enforce the laws.

The basis for this separation of power in US (at least according to Scalia and Garner) is to maintain the basic principles of democracy, i.e. that laws should be promulgated by representatives of the people that will be held accountable to their voters, and not by judges who are not appointed through democratic process.

It's an interesting theory of how judges and legislators should behave in a legal system, but I'm not sure that we can consider this as a pure legal theory. It's more of a political theory. There is no legal basis on why judges should behave like what Scalia said nor a rule of recognition for that given the fact that judges in the United States are still debating on their roles in the legal system.

The same thing is also applicable for Indonesian case. Suppose that judges political power is weak here, would that be a concern of Legal Positivism? I would say no and that would be enough for the purpose of defending Legal Positivism. From the very beginning, what I want to show through my previous article is that the critics misunderstand the issue. If the judicial branch is weak in Indonesia, it does not have any correlation with Legal Positivism as a theory of law.

How Social Facts Are Determined?

In dealing with Imam's second question, I find it interesting that he made a correlation between public acceptance of judges decision with the normative power of such decision. Should the judges decision be accepted by the majority of the public in order to be eligible to be considered as a valid law?

As interesting as it may be, it is actually not a question that can be answered by Legal Positivism as a descriptive theory of law. It is again, a question of fact. Legal Positivism only says that law is a social fact, that its existence relies on the acceptance of the majority, including the people and legal authorities.

However, Legal Positivism is silent on the actual practices of social acceptance because they can have many different forms. Theoretically speaking, we can have a legal system where court's decisions will be automatically considered as an authoritative source regardless of public acceptance of the content, and it is also possible to have a legal system where in order to obtain validity, a court's decision should be accepted first by the majority of the people. Can we use Legal Positivism to endorse the first system against the second one and vice versa? I don't think so.

In fact, we already have a very good example when we discuss the power of judicial precedents. It is common to aspiring Indonesian law students that in Indonesia (and other civil law countries), unlike in the common law countries, the principle of stare decisis, i.e. that a court's decision will be considered as a binding precedent to be followed by future court decisions, is not applicable. Thus, in Indonesia, future judges are free to disregard previous decisions and make their own decisions for a similar case.

Will Legal Positivism say that common law stare decisis system is better than civil law system? No. Can Legal Positivism explain why Indonesia and civil law countries choose to abandon stare decisis system? No.

But I am confident that Legal Positivism can explain to us that stare decisis is not applicable in Indonesia because most, if not all, of Indonesian legal authorities reject the concept. In other words, under Indonesian rules of recognition, court decisions do not have binding precedent power toward future court decisions (at least as of the date of this article). Can this rule of recognition change in the future? Might be, who knows?

Can Law and Economics Succeed in Indonesia?

Imam claimed in his article that Law and Economics method will fail as long as the judicial power is not strong enough to uphold any form of legal certainty. I do not think so. After all, judicial branch is just a part of the overall legal system and Law and Economics can become a mainstream legal thought through many windows, including the academic world and other branches of government.

When Imam mentioned the names of Posner, Dworkin, Barak, etc, I do not think that he discussed their debates in legal theory but more on legal interpretation method. This is not relevant to Legal Positivism. How the judges should interpret the laws is not a question for Legal Positivism (the same mistake made by Dworkin when he criticized Legal Positivism).

As a descriptive legal theory, Legal Positivism would be more interested on what are the actual methods of interpretation that are acceptable in a legal system. What does this mean? In a situation where there is no clear ground rules for legal interpretation, every system of legal thought can fight for domination.

As I said in my previous article, Law and Economics was not a mainstream thought in the United States prior to the 1970s era. It was thanks to Richard Posner and many other academics and political patrons that Law and Economics could finally gain a dominant position in the US legal thought. We see more judges using economic analysis in resolving cases.

How about in the executive branch? It was Cass Sunstein who brought cost and benefit analysis to the next level in the US government regulatory making process through his office, OIRA. Is this because of Legal Positivim? Of course not, it's a political and academic fight. The same thing can also happen in the legislative branch through political process.

This is what I want to reiterate to the misleading critics of Legal Positivism. If you want to ensure that your personal legal thought (whatever that is) can dominate Indonesian legal thought, it is a waste of time to criticize Legal Positivism because it is not Legal Positivism's mistake in the first place. In short, try other persuasive methods and good luck with that.

One of my favorite legal issues is the existence of victimless crime, usually defined as non-forceful actions whose participants are not complaining for their participation and no direct injuries are inflicted to non-participants of such actions.

Victimless crimes are traditionally associated with actions performed by consenting adults which harm the society's moral foundations but not the society directly. These include drugs use, prostitution or non-marital sex and gambling, to name a few.

Some economists would argue that rather than criminalizing the above acts, it would be better to instead legalize them. Not only that those acts can provide additional income to the government in the form of tax, it can also minimize the costs of legal enforcement. A good example would be the war on drugs which has caused a significant costs in the form of money and lives.

Contrary to the above opinion, I, on the other hand, argue that victimless crime does not exist. If we are calculating the general welfare of the society, the costs imposed to each member of the society, even if they don't directly affect other members, would still matter.

There are costs involved associated with drugs usage, health costs of the user. There are also costs associated with prostitution, costs related to sexually transmitted disease and possible costs to marriage relationship because yes, marriage too is a form of investment between the parties.

And how about gambling? It is a form of property transfer which may easily fall into an inefficient form of resources allocation. Why? Because the game is usually designed to ensure that the bookie will always win.

A simple example: most gamblers' chance of winning is very slim in many types of games, while the winning chance of the bookie depends on the probability of the gamblers losing the game, i.e. 1 – whatever the probability of the gambler to win. If the gambler only has a chance of 1 percent or 0.01, the bookie will have 99 percent chance to win the game. A really easy way to gain money.

Sure, we always have the usual argument: those adults have already given their consent and they must take the responsibility for themselves. And it is also true that the regulations are not always consistent.

Take the cigarette industry as an example. The business is legal and they pay a considerable amount of taxes to the government each year in order to maintain the business.

So why don't we do the same for other type of "victimless crimes"? Let us view this not from moral point of view, but from economics point of view. Usually most people forget that when we legalize certain acts, it does not necessarily mean that the enforcement costs will disappear into thin air.

You still need to spend money to ensure that the "legalized" business will comply with the rules set out by the government.

As an example. If you criminalize drugs sale, you will need to allocate funds to enforce the law and punish the violators. If you legalize drugs sale, you will spend funds to also supervise the business, ensuring that these "business men" will play in accordance with the rules on drug sale. And if they don't? You will simply penalize them again.

How about income from tax? Well, you don’t need to legalize an act in order to gain additional income via tax, you can simply change the rule so that instead spending times in the prison, the criminals are required to pay all of their profits to the government. The effect will be similar to a tax and the government will receive money too.

How about prostitution? Legalizing the prostitution might reduce the costs of supervision because legalizing the business is usually associated with its localization. This will reduce the possibility of sexual diseases transmission and improve the protection of the sex workers.

But it is also not without additional costs. Localization may also increase the costs of the prostitution business. The procurer will need to pay taxes and the building lease fee, not to mention that there will be additional costs for moving the business place. With increasing costs, the service fee will also increase.

Who will guarantee that it will not create incentives for a black market with cheaper services for consumers who don't have enough money to go to the valid prostitution area? This will again impose another costs for legal enforcement, i.e., eradicating the illegal prostitution outside the legalized area.

Through these examples, I would like to show that thinking about victimless crime is not as easy as imposing tax and reducing legal enforcement costs. Instead, for every action, there would be economic consequences and if we want to make a proper policy, we need to carefully calculate the costs and benefits of such policy.

Recently, I found an excellent paper from Ronald Coase which summarizes the basic concept of Adam Smith on human nature. I would urge my readers to read the whole paper (first published in The University of Chicago's Journal of Law and Economics) as I think it provides a correct summary and a strong insight on how economists and also lawyers should think about human nature.

The final paragraph of Coase's paper is very important that I will just copy it here for ease of reading. Enjoy!

"It is wrong to believe, as is commonly done, that Adam Smith had as his view of man an abstraction, an “economic man,” rationally pursuing his self-interest in a single-minded way. Adam Smith would not have thought it sensible to treat man as a rational utility-maximizer. He thinks of man as he actually is-dominated, it is true, by self-love but not without some concern for others, able to reason but not necessarily in such a way as to reach the right conclusion, seeing the outcomes of his actions but through a veil of self-delusion. No doubt modern psychologists have added a great deal, some of it correct, to this eighteenth century view of human nature. But if one is willing to accept Adam Smith’s view of man as containing, if not the whole truth, at least a large part of it, realization that his thought has a much broader foundation than is commonly assumed makes his argument for economic freedom more powerful and his conclusions more persuasive"

As the title says, this article is a reply to a very interesting post from Imam Nasima on Legal Positivism Trend in Indonesian Legal System. As interesting as it may be, personally, the article raised a fundamental question, i.e. did Imam and the people he mentioned in his article discuss Legal Positivism as a legal theory or as a method of legal interpretation? If they talked about the second, I'm afraid that there is a misunderstanding here and my gut feeling says that this is a mistake similarly made by the majority of Indonesian legal scholars who deal with progressive legal theory.

Legal Positivism as explained by HLA Hart does not specifically deal with method of legal interpretation. After all, it is a theory about the law, on why law exists and has authority upon the people. In Hart's view, a rule existing in the society shall be treated as a law when the majority of the people in such society accept the authority of such rule from an internal point of view and the legal officers in such society treat such law as an authoritative source in rendering their decision.

Hans Kelsen, the father of Legal Positivism in the Civil Law tradition, also holds a similar position, albeit in a more normative way, i.e. that the validity of the laws is based on power conferring norms existing in a hierarchical system until we reach the basic norm where we presuppose the authority of such basic norm. Upon reaching the basic norm, Kelsen believes that the acceptance of the community of such basic norm is basically a social fact, something that cannot be explained by legal theory anymore.

Thus, in short, under Legal Positivism, law is a social fact, and to certain extent, it might be just a matter of head count. If most people believe and treat a rule as a law, such rule will eventually be considered as a valid law (of course this is a super simplified version of the theory). This however, brings us to the next question i.e., what's the relationship between Legal Positivism and legal interpretation?

A book titled: "Between Authority and Interpretation" written by Joseph Raz, one of Hart's best students, can give a good hint that a theory on legal authority does not automatically deals with theory on legal interpretation. In fact, to the best of my knowledge, I do not think that legal positivism endorses certain kind of legal interpretation method over another method.

This is the crucial point when we deal with Imam's post. From my reading, the critics to Legal Positivism made by the people in his post seem to be confused because they mix up Legal Positivism with rigid textualism. The idea that judges and lawyers should see beyond the text of the law is not an idea rejected by Legal Positivism.

Hart, which was also a master of the linguistic philosophy, acknowledges that there is a limitation for languages in delivering meaning, namely, there is a penumbra, a condition where confident speaker of the language will have different interpretation of a term. In other words, languages might not be able to convey the full intention of the speaker. And in such case, interpretation would be necessary.

Granted, in Hart's view, legal cases should be divided into two types, the easy cases and the hard cases whereas in easy cases, legal interpretation should be minimum since the judges will only need to apply the relevant law to the particular facts while in hard cases, judges will have more discretion. But even in easy cases, Hart believes that there are instances where judges do not have to apply the rules due to reasons such as justice and morality.

Regarding the above division of easy and hard cases, rather than making a normative argument, I think that Hart is making a practical argument, namely, the division is made based on his assessment of judges practices in the real world.

Most modern legal positivists believe that there is no prima facie moral obligation to obey the law, i.e. that the law does not have the highest power to exchange any moral reasoning that can be used by someone as a reason for action. The authority of the law simply lies in the fact that most of us accept such law as an authoritative source but it does not necessarily mean that we have a primary moral duty to obey the law and disregard any other moral reasoning.

This is consistent, I believe, with Hart's theory that law is a social fact. It is the fact in the real world that will determine how the law will be accepted, implemented and interpreted. Hart's theory of Legal Positivism therefore cannot be expected to endorse certain moral values or method of legal interpretation.

So what is the real problem here? If legal positivism can accept interpretation of legal texts, why are we still seeing people blaming Legal Positivism for the lack of progressive movements in Indonesia legal community?

Two possible explanations can be given here. First, the majority of Indonesian judges might actually believe that the law should be interpreted rigidly. Second, rigid interpretation is only being used to justify judges prior belief on certain moral and social issues. For both cases, further research should be done to know what the judges really think. In the United States, such type of research is common because their legal scholars really want to understand how judges will decide cases and what factors will be considered by them. I don't know though about Indonesia or whether our researchers will walk on the same path.

In any case, given the above explanations, I do not think that Legal Positivism can be blamed for the rigidity of the judges (assuming that is correct). Again, we return to the concept of law as a social fact. Legal Positivism will just say that descriptively, the majority of Indonesian judges adhere to strict textualism. Therefore, we can say that in Indonesia, the use of strict textualism will be considered as an authoritative way of reading the law. That's it. As simple as that.

Whether having strict textualist judges is good or not is a completely different question and I don't think that Legal Positivism would have the answer because it is not in the scope of a descriptive/positive theory to say about something normative such as, whether we ought to have judges who are not strict textualists and who will consider other norms and values in rendering their decision.

For me, the fact that Indonesian judges are strict textualists (again, if the assumption is correct since we need more data) does not have any correlation with Legal Positivism. I mean, I am a supporter of Law and Economics movement, who believe that legal rules should be interpreted in a way that maximize efficiency and the welfare of the society, and at the same time, I am also a Legal Positivist.

Can that actually happen? Being a Legal Positivist and at the same time becoming a supporter of Law and Economics? Why not? The problem is, Law and Economics is not yet a mainstream thought in Indonesian legal community and therefore, I would safely assume that most Indonesian judges would not taking it seriously, or even consider it as a part of valid consideration in deciding cases.

But should I blame Legal Positivism for such problem? Of course not. The only reason why strict textualism can become an authoritative method of interpretation is because most of the judges adhere to such method, not because Legal Positivism imposes a normative criteria that good judges should only use strict textualism in order to become authoritative.

If say, I would be able to convince most Indonesian judges in the future that Law and Economics is the best method of legal interpretation and most of them accept such theory and apply it in their cases, would not it be that from Legal Positivism point of view, Law and Economics becomes an authoritative method of legal interpretation that should be followed by the judges? This shows that any method of legal interpretation can live side by side with Legal Positivism.

I think that blaming Legal Positivism for Indonesian judges behavior is misleading. At the highest level, we are dealing with social facts, not normative issues. Prior to 1970s, Law and Economics was not a mainstream thought in the United States, but after the work of many people including scholars, law schools, and NGOs, it became a mainstream thought and currently holds a strong position in antitrust and corporate law cases (though weaker in the field of contracts and torts). The same thing might happen with the legal progressive movements in Indonesia. The question is, do they have a strong basis to convince our judges and lawyers to convert their belief or they simply don't have what it takes to survive in the field of legal theory? Time will tell.

I attended a national conference on the rule of law last week. At the conference, I presented my paper on the application of public choice theory into legislation system in Indonesia.

(Those interested to learn more about the subject can go to my website and search for the 'public choice' tags by clicking here)

It was a nice experience and a good chance to see how Indonesian legal scholars perceive the law and its normative values. Having a quick reading on various papers, it seemed that abstract normative analysis still conquers the Indonesian legal scholarship, at least from the conference attendees. In this context, abstract means vague principles or values that are difficult, if not impossible, to quantify.

For instance: the idea that law should promote the interests and happiness of the people, that law should promote justice and national interest etc. There is nothing wrong with promoting such ideas in terms of freedom of expression, but the problem is that abstract values usually stay vague in practice.

In one discussion, a participant raised a question that is addressed to me: "Should we quantify the law?"

I replied, "To some extent, of course, we should."

If we want to speak about normative legal issues, about what should be done through the law for the betterment of the society, quantifying the law is absolutely necessary. This is, after all, the essence of all of my law and economics discussion in this blog.

Normative law and economics uses terms like efficiency, costs and benefits analysis, and welfare maximization as tools to analyze quantitatively whether a law can really make a society better off after the enactment of such law, and whether a law will improve the welfare of the society or only imposing another unnecessary burden.

We all know that the law should be made by the people, of the people and for the people. Not the other way around. But how can we really know that a law is made for the sake of the people if we do not have any standard for measuring a successful law?

Therefore, how can we say that a law is good or bad if we are simply relying on abstract standards? Even worse, have any of you realize that politicians love those abstract standards because they can abuse them as a way of gaining votes or distracting public attention?

Anti-corruption law is a good example. Politicians play with people's moral values when they toss the idea of whether death penalty should be abolished for corruptors. The debates range from the protection of human rights, the moral cruelty of corruption, to deterrence effect of the death penalty (on the basis that death penalty is the ultimate punishment).

The notion of law and economics would criticize the above abstract discussion because frankly there is no way that we can resolve a conflict between those basic principles until the end of time. Some people still think from morality point of view that death penalty against human rights, while others think that it is fine if it is used to punish such a morally reprehensible act.

Instead, law and economics will ask the following questions:

1. Are there sufficient data supporting the claim that death penalty really reduces the rate of crime?

2. Is death penalty an efficient sanction for corruption? Or should we instead focus on something else, such as taking away the corruptors assets and preventing them to take any other official positions?

3. What would be the cost and benefits of having death penalty from procedural perspective? Is our criminal justice system ready to implement the higher standards of imposing death penalty?)

By proposing the above questions, we are, in a sense, quantifying the issues that need to be tackled in order to formulating a good law. We think how the current procedural problems in administering death penalty will affect the people, the innocent and the villains (the costs that will be imposed to them); the impact of solving such problem to our state budget; the incentives that we will create for current and future corruptors, etc.

Of course, quantifying the law might not be a perfect standard, but it would be better to have some concrete measures of success than none at all. And the above is just a really simple explanation. The same way of thinking can be used for analyzing any area of law, from criminal law to family law, and will be effective in analyzing controversial laws such as laws dealing with people's clothes.

Quick question, have we ever heard any of our politicians ask similar questions with the questions presented by law and economics? Most likely no.

Why bother asking the public to think critically about very important issues if nice rhetoric is enough to make the public confused or to vote for the most dramatic act of politicians?

The National Police Deputy Chief Nanan Sukarna on Thursday admits that there are corruption practices in his organization, as quoted by tempo.co. One of the many factors he cited was inadequate salary for police officers.

"How should we ask them to not stay clear of corruption if their salary is not enough to pay for their children's school?" he said.

From an economics perspective, this is an interesting topic. It is widely known by the public that being a police officer who only depends on salary will not make them rich or even survive day-to-day living. But despite such truth, why are there still many people apply to be one? If the job and payment are that bad, why do they pursue such career?

A case like this offers several explanations. First, it might be possible that the majority of people who apply to become a police officer put more value on the authority attached to their position. This means that for these people, the fact that they gain such position is more valuable than getting a civilian job — even with higher salary. Thus, there is a trade-off between authority and money.

Second, it might also be possible that the applicants believe their comparative advantage is to become a police officer and they will not be able to compete with other people in doing their jobs. As a result, receiving low payment is a risk they must bear due to their own limitation.

Third, worst case scenario, the applicants might see a possibility of becoming rich in the future, provided they can use their power for their own benefits. Being underpaid can be considered as an investment that must be sacrificed in order to gain more money in the future.

Last but not least, it is always possible that there are some people out there who pick the career as a temporary job until they find a better job offering. These people might be clueless about their choice of life or simply see the police badge as a stepping stone into something bigger.

Based on the possibilities above, we have two complex issues to be solved if we want to reduce the level of corruption in the police body.

First of all, we don't know to what extent the trade-off between salary and authority will remain useful to control the behavior of the police. Will eventually the basic needs of life defeat the need to obtain power and respect in the society? I'd say yes.

Then, how does one control authority? Without any proper check and balance mechanism, the ability to abuse the authority would increase significantly. Thus, the fact that they can't get much money from their salary would be meaningless since they can get more money from abusing their authority anyway.

In solving the above issues, although its effect is limited, increasing the overall compensation of police officers might be a good start. It must be combined with good indoctrination on the intrinsic value of becoming a police officer and strict sanctions for violation of code of conduct.

Otherwise, increasing the salary would be useless since they can get higher income from doing side jobs and abusing their authority — and they have a lot of incentives to choose that way. In such case, we will end up wasting more money for paying higher compensation, but with worse results.

If we do choose to increase the overall compensation, there is a budgetary problem. Asking the government to simply increase their salary might be problematic if the government does not have enough fund. So, what if we sell certain services of the police to private parties but with different price tag?

Although this might be a good way to raise funds, it will also create discrimination of service. I fear that the costs of such discrimination might outweigh the intended benefits.

Once the police service can be legally bought by certain party with higher price, the police will have more incentives to act for a certain group instead of the society and thus they will no longer be different from private security officers or troops.

It would be nice if they have enough officers to satisfy the entire need of the society and the higher price for special services can be considered as a subsidy from the rich to the poor. But if the supply of police officers is limited, it will be counterproductive.

Another thing to be considered is to let criminals, especially those that are involved in financial crimes and corruption cases, to bear the costs of legal enforcement. This can be in the form of giving a portion of the recovered assets or fines for such crime to the police officers who successfully solve the criminal case.

Of course, the case must be legitimate and any abuse of authority in getting the additional benefits must be strictly punished (including taking back all of the profits made by the officers from such illegitimate case) to avoid any incentives to bring false claim to innocent people.

My final suggestion is to make the resignation process easier within the police corps. Considering the fact that the compensation is not high enough, it might be better to let officers leave as soon as possible once they feel that this is not the right job for them.

This might save a lot of money and reduce the incentives to corrupt from the very beginning. If you realize that being a police is not the right job for you and yet you have no way out, what would you do? Could you stay sane or would you succumb to the temptation of corruption?

Men are weak, so we should not put too much burden on them.