Paying hookers to not hook.

In Ipswich, England five prostitutes have been brutally murdered in just two weeks. There is little I can say about that. But I can comment on how the situation is being handled. Take this report from the Guardian.

Prostitutes in Ipswich are being given money by police and drug workers to stop them risking their lives by touting for business on the streets, it emerged yesterday.

As officers continue to hunt for a serial killer feared to have murdered five women, it was revealed that women who work in the red light area of the Suffolk town are receiving cash handouts.

Detective Chief Superintendent Stewart Gull urged prostitutes to stay off the streets, saying: "It's not safe to engage a client or punter at this time."

One has to wonder about this tactic. Here is my thinking on the situation. This town supposedly has 30 to 40 women who offer such services. They are now being paid to not offer their services until the police can find the killer.

First, what do they do about a woman who says to them: “I am going to have to work the streets starting today.” Assume she is new to the business. Do they pay her also to not prostitute herself? Most women are happy to avoid prostitution for free. The supply of women willing to “not prostitute” for a fee has to be virtually endless.

But in any financial transaction where a commodity is sold there are two sides to the issue: supply and demand. Now let us assume that they pay to get the women off the streets and to refuse customers for the time being. Fine and dandy but what about the male customers? They are still out there.

Now when you reduce the supply of a commodity but not the demand you push up the price. In other words to hire a hooker in Ipswich is going to be more expensive. So the woman who does work on the side, while still collecting the charity pay outs, is likely to earn what is called a “windfall profit”. Circumstances will push up what she can charge for her service.

The supply of prostitutes to meet the needs of the clients has been vastly reduced so the price of a prostitute will rise accordingly. The higher price means more profit for those women who do prostitute at this time thus attracting them back to the streets -- especially if they try to work on the sly while still collecting the higher fees. In every field of commerce I can think of higher profits usually attracts more suppliers. In Ipswich the police and this charity apparently believe the opposite happens.

This does not mean that they couldn’t take an action that reduces the number of women on the streets. If they want to discourage these women from selling their services they could do so. But that would require them having “volunteers” giving away sexual services in a safe environment. If these charity workers were willing to give the men a helping hand for free then they would cease hiring the working women. That would drive down the wages of the women working and at some point McDonalds counter work starts looking good as an alternative.

If you want to reduce the number of women working the streets the profit in doing so has to be reduced not increased. Of course I’m not seriously suggesting that charity workers or policewomen give away such services. But I do think they are going to find that they are merely increasing the incentive for women to go back to work.

Obviously police have to do their work and find this killer before he strikes again. I wonder if my readers have suggestions as to how they could resolve the perverse incentives that they are now creating.

The only thought I have is for the charity to arrange with a local motel (there has to be one that is appropriate) to rent out the facilities entirely. Allow the women to all work from there. And arrange plainclothes police protection on site. It is the duty of police to protect people from murder. Instead of driving up the profits in prostitution, which is counterproductive, this merely makes it safer.

What do you think?