JP Landman

Political & Trend Analyst

Crime

Crime Justice and Growth Summary 29 May 2017

There is a widely held belief in South Africa that high levels of violent crime constrain growth and investment, and that government may do something about it. However, there are three caveats:

1. There is little knowledge about the links between crime and growth, and how crime constrains growth, and by how much.
2. Policies available to government to reduce crime are relatively crude, and may either reduce or increase crime levels. Available evidence is inconclusive as to why crime rates rise or fall in a city or country over a period. However, crime and justice policy can reduce specific crimes in specific places, and the key is to find pathways to achieving solutions to specific problems.
3. Economic growth should not be the primary goal of crime policy – reducing crime and delivering justice are themselves substantive goals.

The distinctive feature of crime in South Africa is its violence rather than its volume. Three categories of violent crimes are particularly frequent: murder, robbery, and rape, while housebreaking causes similar levels of fear. Despite their frequency, police and justice officials have the capacity to address and reduce these crimes.

There are no simple solutions to drive down national crime rates and also no foolproof approach for reducing specific crimes. However, there is a growing consensus that a process of iterative innovation – a disciplined practice of experimentation, assessment, and then larger-scale experimentation – can improve the prospects of lowering crime. Iterative innovation is a route involving thorough analysis of specific crime patterns and the cooperation of multiple government departments to deploy a variety of experimental responses targeting specific crime patterns. The process must be supported by real-time management and accountability measures as well as appropriate law enforcement partnerships.

Seven broad themes describe the ways in which crime constrains growth:

1. Crime imposes costs on business (direct losses and costs of security) that reduce profits and divert funds away from investing in productive capacity.
2. Crime prompts government spending on law enforcement, crime prevention and delivery of justice that could otherwise have been allocated to growth incentives.
3. Crime induces households to spend money on healthcare and security, rather than on school fees and other investments.
4. Crime erodes human capital by driving emigration and impacting (through injury and death) on skills available in the labour market.
5. Crime keeps workers out of the labour market by discouraging them from taking up jobs requiring work outside of business hours or work far from home.
6. Crime discourages foreign investment.
7. Crime disrupts schooling and other public investments aimed at enabling long-term growth.

These seven assertions can be distilled into two propositions on which government can act:

1. Crime (theft, fraud, corruption, destruction of property and violent attacks on staff) imposes direct and indirect costs on business that reduce profits, deter new investment and increase business failure.
2. The perception that violent crime is high and out of control causes people to restrict their work and social activities, while it also impacts on investment and tourism – all of which inhibit growth.

These two propositions address actual crime as well as the perception of crime, while also focusing on businesses as victims and the broader business climate.

Government needs to prevent the cost of crime to businesses from increasing further. A suggested approach is to adopt a range of experimental measures in coordination with businesses most important for achieving a shared growth strategy. For example, if the growth strategy focuses on boosting manufacturing goods for export, then government policy should involve manufacturing firms in public/private partnerships.

Economists recognize that a high growth strategy depends on growth of both the first and second economy. In the second economy most business ventures are household-based, and the cost of crime for such businesses may be more severe, esp. in low-income areas. (For example, crime can kill a household business). Crime-fighting policies in the second economy should engage communities and focus on improving safety in communities where most household-based ventures are converged.

Authorities are challenged in managing the perception of crime as there is no automatic link between isolated victories against crime and broader public perception of crime. Deliberate efforts are needed to nurture confidence in the criminal justice system. Crime-fighting operations should focus on specific crimes in specific areas, and when these succeed, the successes should be leveraged through effective communication into broader campaigns to restore hope and build trust in the justice system. While appropriate strategies and tactics are needed to reduce crime, so too are institutional and political leadership.

Crime reduction policies to spur growth should use iterative innovation and experimentation and focus on two areas:

First, the cost of crime to business must be contained. Public/private partnerships should be formed in the first economy in sectors targeted for growth. The partners should gather data on business losses to crime, and then assess and review the resources made available to reduce commercial crime. In the second economy efforts should focus on strengthening community safety in areas with high concentrations of household-based businesses. Crime problems faced by household-based businesses should be documented and be used to inform the process of iterative innovation. Several government departments (police, justice, social development and correctional services) should be involved in the strategic analysis and planning together with the business sector.

Secondly, there needs to be greater levels of cooperation among leadership of the component parts of the justice system. The various departments in the broader justice system should have a common set of indicators that can serve to strengthen cooperation to reduce violent crime.