The Global Illicit Economy

Interesting video:

A new class of global actors is playing an increasingly important role in globalization: smugglers, warlords, guerrillas, terrorists, gangs, and bandits of all stripes. Since the end of the Cold War, the global illicit economy has consistently grown at twice the rate of the licit global economy. Increasingly, illicit actors will represent not just an economic but a political force. As globalization hollows out traditional nation-states, what will fill the power vacuum in slums and hinterlands will be informal non-state governance structures. These zones will be globally connected, effectively run by local gangs, religious leaders, or quasi-tribal organizations -- organizations that will govern without aspiring to statehood.

Malware is one of Nils Gilman's examples, at about the nine-minute mark.

The seven rules of the illicit global economy (he seems to use "illicit" and "deviant" interchangeably in the talk):

  1. Perfectly legitimate forms of demand can produce perfectly deviant forms of supply.
  2. Uneven global regulatory structures create arbitrage opportunities for deviant entrepreneurs.
  3. Pathways for legitimate globalization are always also pathways for deviant globalization.
  4. Once a deviant industry professionalizes, crackdowns merely promote innovation.
  5. States themselves undermine the distinction between legitimate and deviant economics.
  6. Unchecked, deviant entrepreneurs will overtake the legitimate economy.
  7. Deviant globalization presents an existential challenge to state legitimacy.

Posted on September 8, 2009 at 7:12 AM • 53 Comments

Comments

daveSeptember 8, 2009 7:34 AM

Havening read only the list, it looks like the iatrogenic effect of the drug war. and whatever wars on the people the power structure is using currently, like terrorism which makes the entire flying comunnity a huge pool of suspects.

uk visaSeptember 8, 2009 8:35 AM

'Increasingly, illicit actors will represent not just an economic but a political force.'
It's difficult to look at great swathes of the world and not think this has already happened.

jcard21September 8, 2009 9:38 AM

Having only read your post (and not watching the video), aren't you describing freedom? ... innovative people providing products and services to willing customers? ... bypassing the oppressive government bureaucracy, regulations and taxes?

This is a GOOD thing and should be promoted!

After all, isn't government after their "vig"... "The predetermined amount of money taken from each pot by the house. Also referred to as the house take."

Peter PearsonSeptember 8, 2009 9:45 AM

People who have experienced only benign, smoothly functioning governments might underestimate the value of a robust "parallel economy".

vwmSeptember 8, 2009 9:51 AM

"4. Once a deviant industry professionalizes, crackdowns merely promote innovation." seems a bit "Post-Hoc" to me:

He describes how Brazilian hackers developed from simple defacement to sophisticated phishing after police started to crack down on them. However, that kind of development might have taken place without police intervention as well.

Matt from CTSeptember 8, 2009 10:53 AM

This all sounds like a movie plot.

Something about a Special Executive for Counter-intelligence, Terrorism, Revenge and Extortion and licenses to kill.

However, if it produces sharks with frickin' laser beams, it will be worth it.

DSeptember 8, 2009 11:02 AM

@vwm: "However, that kind of development might have taken place without police intervention as well."

Absolutely. But there's some common sense to apply to his assertion: if law enforcement cracks down on activity X, 'deviants' will innovate ways that hinder detection, or methods that appear more legitimate, or activities that enforcement will be unaware of for some time.

ErikSeptember 8, 2009 12:12 PM

@jcard21:

I take it that you don't live in a Mexican border village suffering from intense gang violence thanks to the liberating cocaine trade. I'm also imagining that the guys down the street from you who manufacture X for the raver crowd aren't using the profits to fuel a bloody civil war. Going even further, the mineral miners in your country probably aren't in a militarized zone and living in perpetual slavery.

At least the government's "vig" comes around in the form of things like roads and schools. You have a funny idea of freedom.

AnonimusSeptember 8, 2009 12:19 PM

This kind of commerce rise a lots of big issues on the society... i live in Monterrey, Mex.

Every night since sept. 1st. i can hear big gunshots near my house... bigger than AK47... its scary... how can i protect my family???

Is it realy worth??
do they realy care about their customers??
nooo! i mean... thats why you pay your tax and you recieve a quality checked product. you pay a tax because there is a lots of things behind that product. (quality control, lots of decent jobs).

Just imagine... would you buy a condom on the black market?
what if your favorite corner store sells this kind of products?

what if your brother or sister is kidnaped by members of any organization... and is doomed to sell drugs and other of their products and if he or she dont want to sell that... they kill all our family?

is that right to you? because it is a real scenario.. a real situation that people who shares that kind of ideology originate...

SteveSeptember 8, 2009 12:38 PM

I was watching a show about a professional "home flipper" operation (remember when?) and couldn't help but notice that a big part of their business model was getting the work done and over ninja style to bypass using building permits or inspections.

Not as dramatic as drug running, but I thought the casual inclusion of this information in a reality show spoke volumes about the an apparent general consensus--the legal route was just beneath discussion.

bzelbobSeptember 8, 2009 2:07 PM

Perhaps it's just because I'm reading "Atlas Shrugged" right now, but I think Mr. Gilman's talk points out directly and unavoidably the failure of the govenrment actors as a whole. The under-developed states, having failed to provide enough infrastructure and regulation, etc. and the developed states having provided too much infrastructure and regulation!

Thanks for posting this Bruce!

MarkSeptember 8, 2009 2:44 PM

@Erik,

You have to ask the question... If the government wasn't trying to enforce getting their "vig" and controlling what substances people are allowed to ingest/use, would there be a bloody civil war and intense gang violence? Would the drug trade be associated with violence at all? Or would it be as benign as cigarettes and alcohol are currently? (Here's a hint: Look at alcohol sales and distribution before, during, and after prohibition in the US.)

"innovative people providing products and services to willing customers? ... bypassing the oppressive government bureaucracy, regulations and taxes?" IS freedom... And it's a lot more pleasant when the gov't doesn't arbitrarily decide to try to stop it.

ShaneSeptember 8, 2009 3:19 PM

It's been said countless times, but is relevant and obvious yet again: legalize illicit substances, and things like gambling and prostitution.

If you want to prevent two-bit thugs from becoming economic superpowers unto themselves, operating with near immunity in the face of law enforcement, and amassing an army's worth of armed recruits, all while generating an incredible amount of legitimate jobs, freeing up an insane amount of taxpayer money, and creating a treasury's worth of revenue via taxation... that's the way to do it.

Remember, legalizing these types of issues immediately serves to usurp the power of the criminal organizations that control them by demolishing their profit margins (money = power) and allowing the rest of the entrepreneurial populace to have a hand in the industries. Not only that, but the government wins the $$ pot three-fold: release of non-violent offenders from the prison system, taxable income from employees working in the newly legalized industries, as well as a tax on the products / services themselves.

You cannot win the 'war' against these types of activities any more than you can outlaw the consumption of meat and expect the world to comply. As long as humanity wishes to partake in these activities (and we have... for millennia), they will find a way.

The only way to really win these 'wars' is to stigmatize the abuse of any of these activities to a point that reduces the number of abusers to a minority of the populace. Tobacco is a great example of this. Since 1964 (the year the Surgeon General released one of its first reports on the link between cancer and smoking) the number of smokers reported in the USA has been on a *nearly steady decline, from 48% (in 1964) to about 20% (in 2006). Although, again, despite a mountain of research detailing the ill-effects of a drug (in this case Tobacco), a fairly significant number of people still use it, and I suspect will continue to, legal or not.

pdf23dsSeptember 8, 2009 3:31 PM

Mark,

You're right that the drug war causes much or all of the pain associated with the drug trade, but unfortunately the problem of the black market goes well beyond drugs. There are things that we don't want to stop prohibiting, because even the legal trade of those items would be damaging to society. (Organs, for instance.) And there will always be a market for stolen goods.

Now, it could be that the illicit economy outside of drugs would be small enough to not cause large-scale problems like organized crime. But I think the evidence points the other way. What percentage of the mob's profits derive from drugs? Though I don't know how accurate they are, from the dramatizations I've seen, it's not a majority.

ShaneSeptember 8, 2009 3:46 PM

@pdf23ds "Now, it could be that the illicit economy outside of drugs would be small enough to not cause large-scale problems like organized crime. But I think the evidence points the other way."

Well, if what we're doing is thinking here, I think you're absolutely off your rocker on this one.

Take away even just cocaine and what exactly would someone like, say, the late Pablo Escobar have left? How about Freeway Ricky Ross? How about [insert your favorite street gang here]?

Take away marijuana and what do the Mexican drug cartels have left?

Then take away gambling and prostitution and what does the Mafia have left?

Sure, it's not exactly easy to get the hard numbers on the main income sources for criminal organizations, but I think it's fairly obvious that more people pay for illegal sex and drugs than shop for kidneys, eyeballs, missiles, and automatic weapons on the black market. I mean c'mon.

Sure, they wouldn't go broke if they had to downsize their drug, prostitution and gambling departments, but we're talking one @$!#ing hell of a downsize here.

There is a reason that there is no 'War on Illegal Organs'.

Peter E RetepSeptember 8, 2009 7:17 PM

There seems to be a progression of deviant practices or public service corruption
that Alex Khan noted in observations as:
singular practioner,
spotted individuals,
minority network,
majority network,
dominant culture,
pervasive practice,
exclusionary use of service to serve only deviant profiteering.
The deviant nature is to selectively prefer serving of the deviant advantage over the serving of the economic custom of the office,
and because it is based on a multiple interaction interface,
its extension [or declension] depends in part of the moral porosity of the service line
viz-a-vis situational ethics rather than moral ideals.
"This is how it gets done" in this case more expeditiously, thus shifts from "for us - sh-sh" to "for many" to "for most" to "for the general case" to "for all".

billswiftSeptember 8, 2009 7:56 PM

What we have here (among other things) is a lack of historical perspective. In the late 1970s and early 1980s, before Reagan's tax cuts, inflation and tax rates had pushed an estimated 15 to 25 % of the U.S. economy into the underground economy. The relatively booming economy and lower tax rates since have caused the underground economy, except for local regulatory avoidance issues (mostly zoning hassles), to disappear. I have been expecting it to start growing again with the economic collapse (lots of people without regular jobs) and even more with increasing gov't encroachments like the taxes that are going to be coming to pay for the stimulus, TARP, and auto bailouts. Depending on what medical plan makes it through congress, it could easily be worse than in 1980, when as much as 25% of the economy avoided gov't involvement.

evilbillSeptember 9, 2009 12:06 AM

I think the "legalize it" crowd is missing the point. Sure, drugs & prostitution make for good "legalize it and the market goes away" arguments. However even legalizing prostitution will bring about sex slaves. And not everything can be legalized. I'm sure no one here will advocate child prostitution, so as long as that is illegal, it will create an underground market.

Th point is legit and illegit things can create a market. Legalizing doesn't change that. You legalize it, I steal it and create a black market.

VincentSeptember 9, 2009 12:16 AM

The only fault I can find with the narrative is the value-laden language and the use of the term "new". The only thing new is that now, the major players in the global market aren't subject to the sort of regulation that evolved over a century of robber barons in the United States. The cult of free enterprise only got any truck with the general public once we were able to enjoy the benefits of living in a state capitalist society, one that enjoyed a sort of de-facto protectionism for so many years due to political isolation from half of the world's people.

The only thing that's new is trade with regimes in a position to exploit their own freedom to exploit, relative to our own. The way I see things, it's either going to be more leveling and a lot more misery in the west, or a new protectionism.

pdf23dsSeptember 9, 2009 12:31 AM

"However even legalizing prostitution will bring about sex slaves."

WTF? There are already sex slaves. Legalizing prostitution will have no effect on that one way or the other.

"And not everything can be legalized."

Umm, read the thread, dude. I made that point two comments up.

Julien CouvreurSeptember 9, 2009 12:37 AM

Much of what Nils Gilman explains in the talk derives from basic economics. There is really not much difference between the black market and the regular market. In the case of drugs for example, the demand exists, so a supply will exist, legit or not, risky or not.
When you try and fight the supply side, following the approach of the "war on drugs", you end up with a distorted market: prices go up (because of risk due to authorities), quality goes down (because of lack of competition) and violence goes up (because contract rules and justice cannot be enforced on the black market using legitimate means).

There is a great book by Walter Block (a contemporary Austrian economist), called "Defending the undefendable" (also available as free pdf), which analyzes in great details activities generally thought of as deviant. In particular, he shows how each of them provides a useful service, just like a normal business (except that a controlling state is trying to suppress those exchanges).

In that context, I encourage you to think about the powerful connotation of the word "deviant". It triggers a blanket emotional response of "bad things", without really questioning why they are considered bad.

VincentSeptember 9, 2009 12:57 AM

Illicit is a much better word, but I wouldn't siphon all of the values out of the discussion either. Some practices are clearly bad for everyone.

Julien CouvreurSeptember 9, 2009 1:00 AM

To address some individual points above:

@pdf23ds, you claim that legally trading items such as organs would be damaging to society. Could you elaborate?
With a white market, more organs would be exchanged voluntarily, with lowered risk or violence and with improved quality and price. What's wrong with that?

@evilbill brings up the points of sex slavery.
Regarding sex slavery, you have to separate the use of violence from voluntary exchanges (such as the business of a prostitute and a pimp). Slavery of any kind is initiating violence, which cannot be legitimated.

For child prostitution, there is a broad question of when children become free individuals, what are they can do and their parents allowed to decide. Good topics for another day.

VincentSeptember 9, 2009 1:08 AM

And speaking in absolutes by using the term "free", is ridiculous. Even a person without food isn't absolutely free.

VincentSeptember 9, 2009 1:58 AM

Also, haha: Brazil. Had some anomalous traffic on google analytics recently, and all from Brazil.

Julien CouvreurSeptember 9, 2009 3:18 AM

Vincent, I am a bit unclear about what "absolutely free" is as opposed to "free".

But it made me think of North Korea, which may help clarify.
These unfortunate people are not free, but it is because of coercion by a tyrannic system, not because of lack of food. If it were not for that government, they would still be hungry, but free to solve their problems and find ways to feed themselves.

Someone without food definitely has very limited options, but why would you say he is not free? There are always options, including charity and labor.

brain fartSeptember 9, 2009 3:25 AM

Hmmm, what about Wall Street thugs and ponzi schemers? Their actions are considered legal.

VincentSeptember 9, 2009 5:08 AM

An absolutely free person would be omniscient, omnipotent, and omnipresent. The rest of us have to make compromises to eat and go to the bathroom, and some of us are jailed by circumstances, as in your example of North Korea, or as in a San Francisco massage parlor staffed by functionally illiterate girls without papers, or a heroin addict, or a victim of domestic abuse nobody finds credible.

Clive RobinsonSeptember 9, 2009 7:01 AM

@ Julien Couvreur, Vincent,

The terms "free" and "slave" are emotive extreams of the scale of human existance.

And in some cases a slave can be better off than a free person.

For instance being a slave usually has a degree of certainty about it in that your "sustinance and lodgings" (however meger) are usually provided for. I suspect that currently there are quite a few people who would trade their (supposed) freedom for the certainty of a meal and a place to sleep.

You could also argue that "ultimate freedom" can only be available at the extream ends of the bell curve of human existance.

That is the to do or not do anything without questioning thought or moral impediment.

As the majority of humans are social creatures this necesitates those away from the bell curve extreams trading the abillity to do or not do anything with the needs of others.

In esence then what is or is not legal is a shifting sand argument based on the norms of the acceptable morals within which ever social group you find yourself.

Ask yourself a question,

"Should the organs of a condemd criminal be sold to the highest bidder?"

And if yes,

"Should the proceads go to the social group (state) or the victims of the crime?"

Then ask yourself what crimes should constitute a punishment of being "broken up for spare parts"?

Then ask yourself,

"Should restitution be made if a person who has been broken up is subsiquently found not to have been guilty?"

Finally ask the questions again in the light of a "licit market" and then an "illicit market".

A RoonSeptember 9, 2009 7:15 AM

This reminds me of an old novella by Alan Dean Foster (as a commenter noted, utter tripe) about a universe with two classes of citizens: Legals and Illegals, with one hundred levels of each. The author notes that if it's hard to understand why people would tolerate illegal citizens, anything which can be dealt with can be formalized, and anything that can be formalized can be taxed. It looks like we're headed in the same direction.

Clive RobinsonSeptember 9, 2009 8:46 AM

@ A Roon,

"The author notes that if it's hard to understand why people would tolerate illegal citizens, anything which can be dealt with can be formalized, and anything that can be formalized can be taxed. It looks like we're headed in the same direction."

With regards why "tolerate illegal citizens",

There's a couple of reasons the first is what your definition of what an "illegal citizen" is.

What about a builder who says's "no sales tax for cash", or a shop advertising "we'll pay your sales tax for cash".

In essence there are two issues the first is the (normal?) assumption that the shop is offering a legitimate discount and the builder is illegitimatly not going to pay the tax. In reality both are giving a discount for a (nearly certain) cash payment.

In reality you have no idea if there is a real discount or not or if the transaction is licit or ilicit.
Which gives rise to your perception of the sale value which is "marketing".

The second is the issue of taxation it is said to be a "social good", others view it as theft by corrupt individuals.

In reality our "elected representatives" have certain obligations (education defence etc) and other measures to buy popularity/votes. In either case the only source of income is taxation.

Prior to the Internet tax avoidance was only carried out by a small minority of either very large or very small organisations and a limited number of people with the ability to hide the income in some way.

Since the Internet we have seen greater and greater "globalisation" and more and more organisations using "semi-legitimate" tax avoidence schemes.

In many places the tax income has dropped due to "globalisation" this puts more burden on waged individuals and those holding imovable assets.

Many see this as "unfairly so", which gives them to choices move to another juresdiction or cheat on taxes.

In practice increasing tax can have a negative income effect. That is when you raise tax by 1% the income actually falls below the previous income level.

That is for whatever reason there is a tipping point where people decide it is worth avoiding tax.

There are three apparent reasons for this,

1, The burden is excessive.
2, The burden is unjustly applied.
3, An entity decides that taxation is being frittered with things they disagree with.

Under normal times there is sufficient tax income so that the burden is not excessive, provided all entities play fair.

In practice the "politics of greed" apply in most juresdictions where the more you earn the disproportionatly more tax you pay. That is those that earn less than a certain amount pay say 25% those that earn twice to three times that amount pay 40% and those on five or more times pay a considerably higher percentage.

Then of course there is the "politics of the squeaky wheel" where some entities make a sufficient noise that they get disproportiantly more than the "fair share" of the tax income.

That is the politicos use a certain percentage of the tax take on "bribing voters" or "pet projects" or other less savoury personal enrichment policies.

The sense of injustice the latter effect has is often disproportianate to the real differential and this significantly effects an entities view on what the acceptable level of tax burden is.

Usually the money that is spent at the politicians discretion is compleatly disproportionate to the benifit the politicians gain from it.

However asside from lobbying a politician will vote in the way that protects their position, unless they are reasonably certain they will not be voted in again.

Often you will see this as the "end of term crazzies".

Julien CouvreurSeptember 9, 2009 11:58 AM

@ Clive Robinson
Thanks for the thoughtful response.

"I suspect that currently there are quite a few people who would trade their (supposed) freedom for the certainty of a meal and a place to sleep."

I agree. But what you describe is not slavery. If I am willing to trade, as you say, then the exchange is voluntary rather than coerced (as slavery is).
As long as the person can decide and pick for herself the option which makes her better off, with no violence or threat of violence, then it is not slavery.

Whether a criminal's organs can be sold as part of the justice process and restitution is a tough question, which I would need to think more about.
I would probably choose not to live in a place with such a justice system, even if I don't expect to go to jail. :-P

Also, it seems the question already exists: we take away prisoners' ownership of their own body (imprisonment, life sentence, death) as punishment for some crimes, rather than fining them or putting them to work to re-pay. How can we compensate the wrongly convicted who spent years in prison? Those youthful years are gone and a trauma is left instead, just as the organs would be gone in your example.

Julien CouvreurSeptember 9, 2009 12:35 PM

@Vincent
This seems like a nirvana fallacy, as we know no such reality or conditions. All men are "jailed by circumstances".
By nature, man acts because he is not satisfied with his circumstances and wants to better them using means available to him.

Freedom means that the illiterate girl can save/trade/etc. and learn to read, or the abused wife can change her situation (leave her house and husband, call the cops). I am afraid that North Koreans do not have such options, because of the violent regime.

sooth sayerSeptember 9, 2009 2:17 PM

Most of the international illicit trade is narcotics.

Intra-country almost all of it is due to stupid tax policies.

In brief, if governments were not run by charlatans - criminals will not be in business.

Corollary of this proposition is that that most governments are run for the direct benefit of criminals.

Most politicians are criminals -- is a natural conclusion.

sighSeptember 9, 2009 2:32 PM

@evilbill

"I think the 'legalize it' crowd is missing the point."

No, sir, I quite think it is you that is missing the point. The 'legalize it crowd', at least for my part, is not stating that legalizing _____ destroys the black market.

The 'point' here is the money. Where is the money? If there are billions to be made in the child porn industry, why then don't we see 'pornlords' starting wars in the streets, like we do over the billions to be made in the drug trade? No, instead you find a few small incestuous networks of the same pervs / photogs running around Europe and the East Bloc hiding their servers and love dens in a cat and mouse game with Interpol.

Helluva lot less harmful than the MedellĂ­n cartel... or is the Almighty Child Porn somehow more atrocious than hundreds of innocent civilians being massacred and thousands more injured and living in fear for years due to OUR (the USA's) demand for an illegal drug they just happened to be rife with?

You take away the illegality of cocaine in the USA, and Pablo Escobar is replaced with some douchebag in a business suit and a 7-figure salary. As much as I hate the latter, it's certainly the lesser of two evils in this case.

As for the prostitution, are you kidding me? Sex slaves? Look, legalizing prostitution will not eliminate sex slavery altogether, especially in certain parts of the world, but think about it: Why keep slaves for prostitution? What's the motive? Perhaps sometimes it involves some kind of psycho-sexual gratification, but on the whole it is the money. Money Money Money. You don't have to pay the slaves, but folks have to pay to 'see' them. So tell me why, in a country where prostitution is safe, STD-free, regulated, and completely legal, would a person choose to pay to see an unwilling, malnourished, abused, disease-ridden sex slave from the Johnny-Pimptard outlet alley instead of going to the local WhoreMart down the street?

That's like saying if Whole Foods started offering bags of organically certified hydroponic marijuana at competitive prices, that the potheads would still prefer going to some shit-ridden alleyway to get a bag of stems and seeds from Roxxo the Crackhead Gangbanger.

Sure, some people might... maybe.

Most people won't.

Think about the money. That is what we're talking about here. *That is the point. And really, what is the more 'moral' thing to do? Legalize a few social stigmas and take billions upon billions of dollars out of the hands of two-bit-criminals-cum-warlords? Or keep our lawbooks free and clear of any moral ambiguity (read: real freedom) and continue to let the criminals fight merciless wars in the streets, upend the economy, and control billions and billions of untaxed dollars worth of people, guns, and power?

Legalize the stigmas, and watch the lifeblood of the major cartels and mafias of the world dry up like a dewdrop in the desert sun. Sure, they'll find another black market niche, but it won't get their Bentleys back from the repoman, that's for sure. Think about why they are rich... they deal in the illicit activities that, statistically speaking, the neighbors on either side of you will both partake in at some point in their lives regardless of its legality.

There will always be a 'black market'. I don't think any of us have any illusions of seeing it destroyed, we're talking about how to regulate the size of it down to a mere nuance as opposed to a competitive, growing global economic player.

VincentSeptember 9, 2009 6:17 PM

My point exactly, using the term "free" in an economic discussion states a case based on a nirvana fallacy.

cjacobs001September 9, 2009 9:22 PM

wow! no morals about this and that, selectively, eventually leads to no morals period, doesn't it? And no morals, period, builds\maintains what kind of society ? There has to be another way . . .

Julien CouvreurSeptember 10, 2009 12:37 AM

@ cjacobs001

Not having a society force its 'morals' isn't to say that morals would disappear.

Cheating on your wife is wrong without having to be in the law (in many states).

I'm a total-tea kind of guy, but I cannot see why my morals should prevail by law on everyone else (or other people's on me). Forcing my views on people who do private stuff in their private space and property seems immoral.

VincentSeptember 10, 2009 12:55 AM

@Julien
I won't get into how potheads tend to reduce net global utility, study economics, and argue libertarian theory on internet message boards.

averrosSeptember 10, 2009 4:27 AM

"Deviant globalization presents an existential challenge to state legitimacy."

Is it supposed to be bad? Anyone who had at least half-awake at lessons in history of 20th century knows that governments of "civilized" countries managed to butcher nearly 300 million people not so long ago.

No other kind of crime is remotely as dangerous as statism.

daveSeptember 10, 2009 8:34 AM

@ cjacobs, morality, there are certain societal truths, thou shalt not kill, thou shalt not steal, etc, but whether women can show thier ankles, well that changed over the last 100 years and it was only the opinion of puritan selfrighteous meddlers who wanted to lord it over all the people who they would never let have the power the puritans had.
@ averros, excellent point, only states practice serial mass murder on the industrial scale and give the people who chose to practice this a pass on the brutality they practice in pursuit of the power and resouces that the state covets

DavidSeptember 10, 2009 11:46 AM

@averros: An existential challenge to state legitimacy is a big deal. Governments, with all their flaws and horrors, exist because the alternative is worse. Destroying the legitimacy of government means that its power devolves to other groups, not that its power is destroyed. Typically, this seems to mean that the inhabitants of the failed state get the worst of both worlds: they are just as vulnerable to whoever has the power right then, but they don't have a functioning society to live in.

A challenge to the legitimacy of some governments on moral grounds is one thing; a challenge to governments in general resulting from the lust for money and power is quite another.

Peter E RetepSeptember 10, 2009 2:26 PM

@averros:
The meta-lesson would seem to be that we must learn to stop empowering psycho- and socio-pathologies,
while adopting new technologies that amplify these [previously dysfunctional] individuals' powers.
@sigh
Your idea is neither new or unreviewed. It was described as "prolegomony" by Gjuirdjieff, who thought the safest place to put criminals was in state office under public scrutiny. Interestingly enough, his protege, Stalin, and one of system's proselytes, Goebbbels, and their mutual stooge Vidkun Quisling, both evaded the limiting effects of public oversight by deploying the Big Lie, a lie about something so big most cannot imagine it, much less imagine anyone would lie [for their own gain] about it. Result: millions of deaths, amortising to thousands per day.

Nils GilmanSeptember 10, 2009 3:53 PM

I use the term "deviant" with the same irony that Walter Block uses the word "undefendable" in his defense of pimps, blackmailers, and slumlords.

sighSeptember 11, 2009 4:20 PM

@Peter

So, as I understand it... my stating that criminals shouldn't be given 100% free reign over multiple markets (legal or not, moral or not) that generate billions upon billions in revenue from legitimate sources (otherwise known as 'your-everyday-citizens') somehow throws me in the ring with the Stalin regime? Well that's fun, first off.

As for 'my idea', it was never claimed to be original or previously unexpressed. As for 'reviewed', by whom? Stalin?! I don't recall the USSR having legalized recreational drug use, prostitution or gambling. Although even if they had, they were a _Communist_ regime... something that has very little to do with the free market economic discussion taking place here.

Don't shout 'fascist' at every idea you don't like, especially when quoting some Armenian mystic a la Crowley/L. Ron Hubbard and his fascist lap dog follower as your source of reference. Nothing in my views imply that I would wish to see criminals in seats of power, in fact I think the seats of power themselves do quite enough in the way of creating the criminals.

I'm speaking, simply, about one thing: how to take the money _out_ of the criminals' pockets, and put it back into our own. We're talking about the economic ramifications of the enormous demand for illicit goods and services, and the insane amount of money that is earned every year through supplying that demand.

The more money we throw at a futile attempt to stop the supply, the more money we put in the pockets of those supplying the demand.

The only way to eradicate the market is to destroy the demand, which doesn't happen through force or legislation (obviously).

In fact, since the fascism card was played here... I see far more parallels with fascism in legislating a moral viewpoint that the public so obviously doesn't subscribe to (ie - attempting to force them to comply with beliefs they do not share), than I see in anything I've suggested.

If the public didn't want to smoke marijuana, snort cocaine, or get a happy ending from the local massage parlor, this discussion wouldn't be taking place.

As is turns out, they do... they really really do... to the tune of billions.

Peter E RetepSeptember 17, 2009 6:39 PM

If one takes a long view of history,
illicit economies have distinguishing features from licit economies, including:
trading in goods not considered goods by the other [contraband, slaves, and ransoms];
discounting the value of durable goods [fencing];
producing services on demand [of any repute];
converting durables to consumables [stolen cars for parts, etc.];
valuing concentrated portable wealth more for its portability than liquidity;
anonymizing assets [sheep-dipping the goods];
competing with monopolies [counterfieting, as of money pasports, or old gold and silver coins];
a semi-permeable border with the licit economy [especially susceptible to illicit market forces];
accepting large infusions of concentrated wealth from the licit economy, profiting from both boom and bust
[where the money went when the speculator's bubble burst [?].
Can you think of any more?

Leave a comment

Allowed HTML: <a href="URL"> • <em> <cite> <i> • <strong> <b> • <sub> <sup> • <ul> <ol> <li> • <blockquote> <pre>

Photo of Bruce Schneier by Per Ervland.

Schneier on Security is a personal website. Opinions expressed are not necessarily those of Co3 Systems, Inc..