Wednesday, August 18, 2010

Crime and Insurrection: Local Economics, part 1

Credit: AP, via UK's Independent
When I read law enforcement blogs, I frequently come across writers who are convinced that civil conflict has started or is on its way. They don't mean a bad Friday night, either. They frequently see the destruction of civil society as a permanent or lasting problem, close to or past the tipping point to insurrection.

This is hard for many of us to reconcile in other neighborhoods. And as a nation, we don't seem to be at that point. Look at Iraq: just yesterday, a suicide bomber blew himself up along with 61 Army recruits. Perhaps we could look at Hemet, California, or Chicago, Illinois, and see equally deadly, unpredictable, and fatal or potentially-fatal results for law enforcement. Places where terrorist attempts or local violence has escalated to mean that local authority has no sway.

Customary Expectations
Nevertheless, even in Hemet and Chicago, most people have an expectation that they will be able to buy groceries from their desired list instead of whatever's available. They expect to be able to drive there without too much chaos, complain about gas prices but still be able to obtain some from a safe device, complete their shopping, and go back home without incident. Odds are highly favorable that this set of actions will occur as predicted. This is not the case in Baghdad. Baghdad has civil conflict. They have war.

The United States is not at war with itself. But something is up, and it is a crisis for us as a society. It's past time to examine what these law enforcement professionals are telling us. It's important to relate their real-life, anecdotal, experiential accounts to a discipline and study instead of a platform or set of platitudes such as "tough on crime" or even "soft on crime".

This post compares the economic predispositions toward civil war, as studied by international political economy, applied to our own international, local, political economy. (Footnotes below).

Paul Collier  on Economic Drivers of Civil Conflict
Earlier I posted twice on Paul Collier's work. He asserts that civil conflict has consistent economic features. Here are the high points:

A. Economists view civil conflict as crime, since it
1. is against the law and
2. causes the destruction or seizure of capital assets (reorganizing ownership).

For those of you who aren't used to this way of looking at it: when an army invades: they take your factory or trample your crops. They loot your house, eat or waste your food, kill your sons and carry off your daughters. These are property crimes and crimes against persons.

When your car stereo is stolen, and somebody fences it, it changes something for you--but not on the same Scale. Likewise, if your son is murdered for his watch or your daughter brutalized, these are horrible, life-changing tragedies. But they are still not war, because in general they are Exceptions to the local Majority experience. There is still someplace to go (the police, a minister, a counselor) in your milieu. It is still, terrible as it is, on a lesser scale.

 Yet if you take these crimes against property and even persons as an economic event, you will see that they have reorganized ownership. They took a watch, a car stereo, a life that did not belong to them. They disposed of it as they saw fit. Add all these up in aggregate--a car stereo, a watch, lost human capital--lost wages as well as a lost life. Pretty soon you're talking about a lot of reorganized wealth.

And when that reorganization and violence become Customary, or the Majority experience under local conditions, with little or no recourse, it begins to approach the conditions of War.

B. Three economic features drive civil conflict. They are:
1. Nation trades in one (or few) commodities, and does not produce what it needs to live. It must trade for those goods. Or put it another way: the economy is unvaried. It has one main industry, and everything else supports it. consider a mining town, for instance, with a few stores that all live on mine owner purchases and mine worker wages.

2.Low national income.

3. The "revolutionaries" have the means to fund revolt, (through appropriation/theft of national commodity, remittances or donations from elsewhere, and / or illegal activities such as piracy, kidnapping, or extortion.

C. The economic causes of civil war will be cloaked in public relations, the language of grievance and protest.
--I won't get to this one today.

Macro versus Micro
In aggregate, this country is huge, with plenty of resources. On the local level, in many inner cities or poverty enclaves (condition # 2), these conditions do apply. These are what police bloggers are informally calling "war zones." There is little industry: chain restaurants, a few drug stores, some bottle-and-sandwich outlets. If you need to buy a shower curtain or a decent frying pan, you must go elsewhere. Same with services: no dry cleaner, few auto repair shops, pawn shops that lock down like jails and maybe a hardware store. Joblessness is high--if you count legitimate jobs especially.

Illegitimate jobs
There are two kinds of illegitimate jobs. One is to do honest work (car repair, house-cleaning, house-painting, plumbing, whiskey distillation, clothing import/export by the suitcase-load, etc etc) without benefit of a license or payment into the government's tax regime (of which licenses and permits are a part). The other is to engage in illegitimate work that is in itself a crime (selling drugs, pimping, kidnapping for ransom, and so forth).

The former is a drag on the tax system--just ask Former Soviet states, where a good part of the challenge of building the economy is to get it on an official standing. But again, this is a matter of scale. We forget that most business in the U.S. grew under a lack of licensing and permitting by the state. Just as an example, stagecoach stations had horses, carriages, guns, food and sometimes beds--but also no standards for animal care, stagecoach repair, marksmanship, sanitary food or sheets on the beds. Conditions were frequently appalling. Yet they were integral to continental transit. They hired people. Poverty does not grow into a middle class unless some barriers to entry are low.

In the unofficial economy, many services are bartered or run on a goodwill system--untaxable already. And it's not optimal, according to our contemporary standards. A renegade auto mechanic is not disposing of oil properly (I'm betting). He's not paying taxes or attending classes that certify his understanding of computer chips in cars. A woman who sells home cooking without a food license has not taken food handler classes (these cost $500 to $1000 per person, are only offered occasionally, and do not automatically net you the license, which is another fee).  On the other hand, the mechanic and the cook are not unemployed. They are entrepreneurs, building a local economy that inner cities would otherwise not have. Their industry is also very precarious.

Illegal Markets
For the United States, the real challenge is the second category of illegal work. In a way, the unofficial-legal economy is part of the good in a poor neighborhood. They make up a sector of productive economy. They keep normal life running in a location with few official goods and services.

In contrast to the unofficial-illegal economy, the criminal market is running on one class of industry--that in illegal drugs. Other sorts of crime are lucrative, but the various drug markets constitute the overwhelming percentage of dollars earned and numbers employed. The other crimes have become externalities to drug markets, or a source of capital for entering the drug market in a bigger way.

The world market for illegal drugs is hard to get a dollar feel for, because it is unofficial. But figures from the United Nations Office of Drugs and Crime estimated USD 110 billion yearly ten years ago. When I checked the Worldometer at the time of this writing, the total they estimate so far this year world-wide is 251 billion and counting. This is, for a poor neighborhood, the only rapid-growth industry. It dominates economic activity and  ensures that Collier's condition # 1 is met in full--a one-note, unvarying economy. Because it leads to other crime, it creates barriers to entry for other, more varied industry, goods, and services. It also looks like the only real-money profession around.

The third condition of civil conflict is that there is money to spend on it--that there is funding. The funding in the "unofficial war zones" that law enforcement continually faces comes from a variety of sources. There is, when you add it all up, plenty of money to be found.

1. Illegal drug sales.
2. Prostitution
3. Property crimes
4. Extortion from other criminals, such as the "street tax" collected by the Mexican Mafia.
5. Public assistance
6. Wages diverted from other wage-earners (e.g., "borrowing" from someone who has a job).

I have more to say on this issue, and to drag other economic findings in. The point I would like to leave with today is that civil conflict does appear to be a huge problem in the United States in growing areas. We are not at war with ourselves in the grand picture. Yet in almost every city we have microclimates that contain the economic elements required for violent civil conflict on a large scale. And because of the money involved, these microcosms are connecting to each other. They are growing in area. At what point could this growth in area, population, and local risk constitute a threat to national integrity?

I am not advocating that everyone buy a bunker and a machine gun. It would be better if we looked at these conditions and made some assessments. Then we can lower the risk of civil conflict and re-introduce conditions conducive to law and order.

I'm going to gather some supporting posts from police officers who blog and collect them here.

I will talk about drug markets more fully, using Levitt and Ventakesh, a few others. This set of thoughts will grow and be extend my Crime, Economics, and Cities series. Also, I want to spend some time on the language of grievance, on the organization/coalitions necessary for civil conflict to organize.

Just food for thought.

References:
Second City Cop for Chicago's out-of-control crime. A recent post.
Hemet California PD's troubles at Ann T. Hathaway
Click on the Worldometer to see the estimated total U.S. Dollars spent on illegal drugs worldwide this year. When I checked, it was $251 billion.
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