The economics of crime

People are rational, at least in general. There is a reason for action, or inaction.

Why do people commit crimes? There are a hundred justifications but only one that commits to logic and that is, crime is profitable. It makes sense to do crime. In other words, crime does pay.

Let us look at three examples. The first one is illegal drugs, specially of the synthetic kind. Chemicals are mixed and brewed and the product is ready. The margins are at several hundred to a few thousand percent. We know this from coffee shop talk to published reports. With interest at single digits and businesses returning 12% on investment, the economics is simple and clear.

When drugs are smuggled, like any imported good, it is even more lucrative. There is no need for land, building, machinery, and manpower to locally manufacture.

The second case is assassination. A brand new bullet is 25 pesos, a recycled one 5 pesos. A branded gun is at 50,000 pesos, a paltik one at 5,000. Putting a contract on another’s life is cheap at 100,000 pesos payable in two tranches before and after. The economics is again simple and clear. There is no need for application form, application fees, medical check-up, daily grind, or sour boss. The only qualification is willingness and ability.

The third is illustrated in illegal gambling. Gambling is immoral but legal in this side of the world. But not all gambling is legal. When gambling joints operate in breach of labor, tax, or local government requirements, their main business approved by the gambling regulator does not excuse their breach or non-compliance of laws. The entities are not legal.

How profitable is gambling? Look at the huge buildings, high wages, junket terminology and easy money and the economics is of similar calculation.

Crime does not pay; it pays very well.

The other side is the hierarchy of evils. Surely, gambling cannot be worse than peddling drugs or toppling people. Drugs or killings are harder to call. Thus, the use of the words drug killings or killer drugs is in vogue. Crime, like economics, can be simple and clear too.

The flip side of evil is good, the good. While evil may admit of several shades, good is only one color, shiny. Either good or something else, there is no choice but to be good as the philosophers of old contend.

When an action or omission is bad for an individual or a society, laws take shape and serve to protect. The police mantra is “to serve and protect.” The justice slogan is “to uphold the rule of law.” These are carried out by state institutions that are empowered by the citizenry with the authority, functions and funding to watch over the public good.

That the problem of illegal drugs has worsened, that bloody, daylight killings are daily occurrences, and that gambling is driving economic growth means that we are not served nor protected. There is no law that rules.

The effect is that the prevention, detection, investigation, arrest or search or cybercrime warrants, preliminary investigation, inquest, prosecution, information, defense, bail, pre-trial, trial, demurrer, offer, proffer, postponement, more postponements, motions, orders, resolutions, decisions and judgements, conviction or acquittal, appeal, finality, commitment, rehabilitation, hardening of inmates, escape of convicts, early or late release, reintegration, and recidivism of crimes and criminals by justice institutions are not part of the rational calculation of the criminal mind.

Or perhaps they are part of the cold computation. With the impunity of tandem killings, the never ending buy-bust sagas and the proliferation of illegal online or overseas gambling, a one-time payoff can do wonders and make all the problems go away. It makes the commission of crime more economical and efficient.

Fortunately, there is a solution. There has always been a solution. It is not a magic bullet and it does not involve unicorns or AI. It is simply the constant enforcement of the law with all its complications and hassles. It is the clear adherence to an agreed set of rules laid down by our system of rules that can work wonders on crime and its punishment.

But laws and rules are made by men and women. Men and women who are rational, in general. But what happens if the people who man (and woman) our rule of law institutions perform the same arithmetic?

This brings us to the fourth case and this is the crime of corruption. It is by far the deadliest, the most immoral, and the worst evil. Deadliest because it kills the victims twice over when justice is corrupted, when the guilty is as free as the innocent. It is immoral because the oath to duty with tax money as salaries bastardizes public service. It is the worst evil because it simply and clearly is.

The economics of crime makes sense with the corruption in our midst.