Suboptimality with security as a private good
This was a blog I wrote in Nov-2013 after this ATM attack incident in Bengaluru (then Bangalore!). Earlier it was at http://logos.nationalinterest.in/manning-the-atm/. Since the platform no longer exists, I’m reposting here.
The recent order from Bangalore police mandating all banks that run an ATM to have a guard posted at the outlet to ensure security to the ATM users has already been criticized by many for many reasons. People have quite reasonably questioned the wisdom of the state shirking the responsibility of public security. I guess the order may not even stand the test of legality if challenged in a court.
However legalities aside, the order clearly fails the test of maximizing productivity for the resources deployed, thereby improving the welfare of the society.
Gregory Mankiw in his book “Principles of Macroeconomics” provides a simple reason why rich countries are rich and poor countries are poor. Mankiw explains in very simple terms that the reason some countries are rich is because the people there are more productive than the people in the poorer countries. One can argue about the reasons why people in some countries are more productive than those in other countries. However drilled down to the most basic level, Mankiw’s definition provides us a compass for measuring the efficiencies in public policy. Is the public policy designed to maximize the productivity in terms of goods and services for the resources deployed?
As per police estimate, Bangalore has around 2,900 ATMs. Assuming a security guard works 8 hours a day and 6 days a week, each ATM would need on an average 3.5 security guards to comply with the order of the Bangalore police. That means we would have deployed about 10,150 security personnel guarding the ATMs in Bangalore.
The total sanctioned strength of police personnel in Bangalore is approximately the same as the above number. What this means is if the manpower (pardon the masculine usage) guarding ATMs were redeployed into the formal police force, it would double the total police strength in the city. It will halve the ratio of police personnel to population from the current one police personnel per 1,000 people to about one per 500 people. This is close to what is considered the ideal police-population ratio. So without much extra demand on the society, we would have taken a big leap in improving the policing in Bangalore!
As per the banks, the cost of each guard is about ₹10,000 per month. Considering that the TCO for a police constable is about twice this cost, we will still be able to increase the police force strength by 50% without any additional cost incurred by the society.
A private security guard sitting in front of an ATM kiosk for 8 hours a day is clearly not a means of achieving maximum productivity from the resources deployed. The same capacity can be used in a more efficient manner by bringing it into the framework of formal policing with all the associated training, access to resources and wider remit.
Extending this to Karnataka level, there are about 20,000 ATMs. The police strength in Karnataka is 94,762. Applying the above math, we are looking at increasing the police strength at state level by 75%, bringing the police-people ratio to 400, or at neutral-cost redeployment to 450!
Vijay Kelkar in his talk to the Takshashila GCPP6 students said that money is not a big constraint in India. It is the sub-optimal usage of the limited resources that is hindering the pace of India’s progress. The knee-jerk reaction for the recent ATM mugging incident proves Kelkar-ji’s point.
Disclaimers:
1. I’m not indicating that the same 10,150 personnel can be moved from private security to police.
2. I don’t intent to trivialize police reform to just police-population ratio. There are also other systemic issues to tackle like effective training, adoption of technology and avoidance of political interference. But it is safe to say that this will be a significant step in itself.