Jeffrey Miron is a visiting professor of economics at Harvard University. He is the author of Drug War Crimes: The Consequences of Prohibition and is currently working on a new book, Pragmatic Libertarianism: A Defense of Minimal Government.
Moises Naim’s Illicit is a fascinating book that brings together a vast range of troubling phenomena. Naim discusses drug trafficking, the black market in guns, child prostitution, illegal immigration, bootlegged CDs, pirated software, trade in endangered species, sale of black market body parts, money laundering, and more. In each area, he recounts horrific tales about how purveyors of these goods evade the law for profit, outmaneuvering the best efforts of governments at every turn. With good reason, Naim argues that this illicit trade is an enormous problem for modern society, which generates violence and corruption. In extreme cases, it threatens to destabilize governments, as in Afghanistan and Colombia. Combating illicit trade requires hundreds of billions of dollars for enforcement expenditures, which nevertheless seem to have minimal effect. Naim has a two-fold thesis that not only illustrates the nature and magnitude of the problem, but also convinces the audience that something new and different has emerged over the past several decades that needs to be addressed.
The first component of Naim’s thesis is that illicit trade as it exists today is not just about a small number of deviants committing crime; the illicit trade is simply international trade. The participants are not malcontents who flaunt society’s laws with malicious intent. Rather, the purveyors in illicit markets are businessmen who are motivated by profits. Consequently, so long as the profit incentives persist, the illicit trade will persist as well. Imprisoning individuals presently engaged in illegal activities will have only minor effects.
This component of Naim’s thesis is beyond reasonable dispute. The motivation for the vast majority of those involved in illicit activities is economics; no more, no less. While they are indeed criminals under existing law, thinking of those who participate as fundamentally different from the common individual is neither accurate nor productive. The people who become major drug traffickers, however, are probably less risk averse, more willing to accept physical danger, and more entrepreneurial than the average person. In different circumstances, their skills might have made them CEOs of major corporations. Those engaged in the illicit trade at lower levels are simply people whose opportunities to earn income in legitimate activities are poor, and thus they supplement their incomes with illicit activities when possible. Indeed, as Illicit emphasizes, the distinction between those participating in illegal versus legal trade is blurry; the vast majority do both.
The second main component of Naim’s thesis, and the part that is more open to debate,states that illicit trade is now, in nature and magnitude, different from what the world has witnessed before. For example, Naim writes, “Changes in political and economic life, along with revolutionary technologies in the hands of civilians, have dissolved the sealants that governments traditionally relied on to secure their national borders. At the same time, market-oriented economic reforms that swept the world in the 1990s boosted incentives to break through these sealants—legally or otherwise.” Certain elements of this view are undoubtedly correct, but the broader message—that things are truly different now—requires careful consideration. The claim that illicit trade is growing in magnitude and scope is plausible. Good data are hard to come by, however, and illicit traffic is hardly new. The validity of this conclusion is therefore difficult to evaluate.
The claim that technology has played a significant role in the spread of illicit activity is reasonable. Cell phones, e-mail, the Internet, and other aspects of the electronic revolution either facilitate certain kinds of illicit traffic or create the opportunity for that traffic. Cheap cell phones and beepers allow prostitutes to receive solicitations by phone, making it harder for police to target them; faster boats and high-tech surveillance techniques make it easier for smugglers to evade border authorities; pirated DVDs exist because DVRs are so cheap that anyone can go into the bootleg business. Of course, improvements in technology should mean that law enforcement officials also have more tools at their disposal. Nevertheless, it seems the traffickers often get better technology or acquire it sooner than government officials, perhaps due to bureaucratic delays in government processes. For example, while law enforcement officials get faster boats, drug traffickers get submarines. As such, technological advances may widen the gap between the illicit market and law enforcement...(more)