Walking down the street here in Brazil one can spot many signs on homes and businesses warning criminals that the property is protected by company X. For a free market proponent like myself this was a particularly interesting observation which prompted me to do some research.
One problem many Brazilians complain about is corruption. Transparency International’s Corruption Perceptions Index has Brazil consistently hovering around 70^th place in the world in recent years. Considering that any score below 50 indicates a serious corruption problem, Brazil’s public sector corruption level is given the thumbs down with a score of 42.
It should be no surprise, therefore, that over 60 percent of Brazilians distrust the police. The problem is particularly serious in the state of Rio de Janeiro, where extortion by police is the most common. While a 2012 crackdown resulted in the arrests of 63 Rio police officers, the Mensalão (Big Monthly Payment) scandal exemplifies the pervasiveness of corruption in many if not all layers of government. In 2010 an industry trade association in the state of São Paolo estimated the average annual cost of corruption as roughly between $32 billion and $53 billion.
While the Mensalão scandal had a big impact on then-president Lula’s administration, for most Brazilians corrupt police comes at a much greater cost. According to Human Rights Watch “police officers in Rio de Janeiro and São Paolo routinely resort to lethal force”, killing more than a thousand people every year in those two cities alone. Since 2003 more than 11,000 residents of Brazil’s two major cities have lost their lives at the hands of police. Though police reports often claim the victim(s) resisted arrest, Human Rights Watch reports that forensic evidence contradicted the official version of events in many cases.
Such abuse of power is pervasive and in many cases practiced with impunity, as those in the judicial system who seek to hold the police accountable face threats of violence. Police officers are rarely even suspended for a killing, even if in (highly) questionable circumstances. The two policemen charged last March with the murder of a 38-year-old mother of four had reportedly been responsible for dozens of on-duty killings since 2000.  All layers of the Brazilian police force have been fraught with accusations of human rights abuses, torture, and summary executions.
The corrupt and violent nature and subsequent distrust of the police, among other reasons, have led to a thriving private security industry. Starting out as neighborhood watches the industry is now composed of thousands of firms, the vast majority of them being small businesses. Many a police officer is known to work for these businesses in his spare time. Ironically, while the Ministry of Justice is said to be doing a poor job of ensuring only licensed private firms are allowed to compete with the police, a large chunk of the demand for these firms’ services actually stems from the public sector. Banks are the second largest customer, followed by other private companies and industries.
Despite a drop in homicides, Brazil remains one of the most crime-ridden countries in the world with the fourth largest prison population, leaving little to brag about. Though it is impossible to dissect how the presence of private security firms impacts these statistics, there are some positive indicators. Government statistics reveal that cases of security firms losing their licenses are almost unheard of. Given the pervasiveness of corruption in Brazilian government this does not necessarily indicate an entirely clean track record, but the fact remains private industry has a much better reputation than the police itself.
Although the current system is far from perfect, especially since it is almost impossible for any Brazilian government worker to lose his job, there is at least some semblance of competition. Compared to the situation in my native country of The Netherlands, where even value transport vans drive around unarmed and virtually unprotected, that is a major step forward. The case of Brazil shows that just like with so many products and services, private enterprise when given the chance will fill any void left by government incompetence.