Hans F. Sennholz, “The Costs of Crime” (1994)

This file is a short single-author policy essay. Sennholz writes in a classical-liberal and libertarian register, treating crime as both an economic burden and a symptom of political disorder. Its central thesis is that the official cost of crime is radically understated because statistics count offenses but miss fear, lost activity, defensive expenditures, and the diversion of police and courts toward regulatory enforcement rather than protection of life and property.

The essay first separates morality from legality. In Sennholz’s account, modern law often criminalizes conduct that is not intrinsically predatory while permitting or even organizing forms of political plunder. This distinction grounds the whole argument:

Crime, in the legal sense, is anything made illegal by legislators and regulators.

From there, he proposes a three-part classification: violent crimes, property crimes, and violations of government rules and regulations. The third category is the essay’s conceptual hinge. Sennholz argues that not all illegality is economically destructive; some “crimes” consist of mutually beneficial exchanges forbidden by the state.

Violations of government rules and regulations may actually improve the economic conditions not only of the perpetrator but also of the people he serves.

The cost analysis likewise expands beyond official accounting. Violent crime produces medical costs, lost earnings, and care burdens; property crime destroys or transfers assets; but fear itself becomes a social tax, suppressing movement, work, investment, and community life. Sennholz’s strongest formulation treats insecurity as a form of impoverishment:

A fearful society is a poor society that is crippled by fear and burdened by high costs of defense.

The essay then turns from private losses to public expenditures. Sennholz presents government’s legitimate task in narrow protective terms, using that standard to judge actual institutions. The point is not that public spending on police and courts is inherently wasteful, but that it must be measured against the benefits of genuine protection.

In a free society it is the very raison d'être, "the be-all and end-all" of government to protect life and property against all enemies, foreign and domestic.

Against that ideal, he emphasizes the scale and inefficiency of American crime-control spending, estimating annual expenditures above $150 billion and arguing that rising budgets have not produced security. The institutional critique is aimed less at policing as such than at the incentives of agencies that seek larger appropriations while tolerating plea bargaining, overloaded courts, early release, and weak deterrence.

The crime protection system is the most expensive system in the world and yet rather inefficient and possibly even counterproductive.

Sennholz’s most distinctive move is to connect this inefficiency to overcriminalization. Courts and police, he argues, are clogged by licensing, permitting, tax, drug, labor, environmental, communications, banking, trade, and workplace regulations. In this view, the regulatory state manufactures caseloads and then cites overload as proof that more resources are needed.

The present court overload would soon turn to excess capacity without the countless charges made by the regulators.

The final section shifts from institutional economics to moral sociology. Sennholz claims that the welfare-transfer state alters public standards by legitimating coercive redistribution. Once government preys on productive citizens, he suggests, private criminals imitate the same logic on a smaller scale.

The welfare-transfer state is both cause and effect of changing standards.

He also attacks the idea that poverty or capitalism excuses criminal conduct, arguing that such doctrines weaken responsibility in trials, sentencing, and corrections. His comments on prisons are deliberately polemical: he portrays punishment as too mild, amenities as excessive, and the correctional system as failing to deter. Whether one accepts these claims or not, they reveal the essay’s core framework: crime policy cannot be separated from property rights, incentives, moral responsibility, and the scope of the state.

The work’s relevance lies in its fusion of cost accounting with political theory. Sennholz does not merely ask how much crime costs; he asks which acts should count as crimes, which institutions profit from enforcing them, and whether the state’s expansion has displaced its primary protective function. The essay closes by refusing a single-cause explanation, but its diagnosis is clear: crime is magnified by fear, regulatory overreach, weakened responsibility, and political redistribution.

Criminal activity stems from many causes. Some are clearly visible in our courtrooms and prisons.