Incarceration Rates vis-a-vis the Labor Market

The Atlantic's Megan McArdle dissects and ultimately refutes the idea that our incarceration rate is correlated with the job market. The points I found most convincing:

Even if crime were a labor market outcome, incarceration is a policy outcome, not a labor market outcome, because incarceration has increased even as crime has fallen. Furthermore, what correlation there is between crime and the economy is to property crimes--burglary, etc. Violent crime, which accounts for more than half of America's incarceration rate, and virtually all of the change in our incarceration rate since 1980, isn't clearly related to the economy. In theory, being laid off might make you more prone to bar fights or beating on your girlfriend. In practice, it doesn't seem to show up in the numbers.

And, of course, an appropriate shot at the ineffective war on drugs:

That is not to defend American incarceration policies, which are lunatic, as is the drug war which contributes to them. Mark Kleiman has some very good ideas on how we might lower those rates by using targeted intensive surveillance of those on probation and parole. I'd like to lower it even more by legalizing drugs and eliminating the black market profits that fund today's gangs. But a preference for fewer prisons doesn't require me to believe that someone who rapes a stranger is just a victim of a weak job market.