Comment: I can't begin to explain

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I can't begin to explain

how many ways that seems unrealistic to me. But the clincher is "It is hard to say what exciting ideas the free market will work out as punishment and rehabilitation." It's like the missing second step in the underpants gnome episode of South Park. The missing part is the hard part.

So someone who is poor and unskilled and has nothing to lose, takes up a career as an armed robber. Eventually they get caught. The insurance company has to cough up the $500,000 or whatever payment on the policy of the victim. It also costs them money to find the guy. Then he can't pay, so if they don't want to let him go because of what that would do to the deterrence factor, are they going to lock him up and incur even further expense? Chopping off a hand is cheap, and a visible deterrent to other would-be thieves, and the guy won't have any insurance after he's convicted so there's no worry about retaliation. Maybe that's the exciting free market solution? Not that it's a new idea, of course.

Also, you've created a huge incentive for insurance fraud, since being the victim of a crime now means a huge and very tempting payoff. Desperate people do desperate things, and you're dangling a huge incentive in front of them. You've created what's called a "moral hazard."