Week 7: McMafia

Distribution Source: TED.com
Content Source: Misha Glenny
Format: Video
Length: 19 minutes, 30 seconds
Link: Misha Glenny investigates global crime networks

After a fun but exhausting weekend in Las Vegas, I will be writing a shorter post this week... following Sin City I decided to watch a talk by BBC journalist Misha Glenny on organized crime. Misha chronicles the globalization of organized crime in "McMafia," a book he wrote after spending years traveling the world meeting with both perpetrators and victims, from the drug trade to human trafficking to cyber crime.

While I think Misha was a little too ambitious in his attempt to somehow link all types of organized crime across multiple regions of the world, his basic point - that globalized crime has thrived and evolved in the last two decades, and that "we" are ill-equipped to fight it - makes sense. Organized crime is estimated by Misha to account for 15% of global GDP. If true, this is a staggering number; 2009 global GDP is roughly $57 Trillion, which would put organized crime GDP at over $7.5 Trillion. Were it a country (isn't that a lovely thought), this would make the organized crime industry the third largest economy in the world, after the US ($14.5 Trillion) and China ($8.8 Trillion). In short, we are no longer facing your old-school Italian mob family.

Today's organized crime is not only bigger than before, but significantly more connected. Misha talks about how, when faced with a problem of declining membership, Japan's Yakuza mob simply outsourced their killings to the Chinese mob. He views the various organized crime players as savvy, well-resourced businesses supported by a significant demand base for illicit products and services and greatly assisted by access to off-shore banking services.

He divides the global organized crime business into zones of production (e.g., Afghanistan & Colombia), zones of distribution (e.g., Balkans & Mexico), and zones of consumption (e.g., the EU, US and Japan). The zones of production and distribution tend to take place in the developing world, and are often accompanied with extreme violence. Last year some 6,000 people have been killed as a direct consequence of cocaine trade through Mexico. And this pales in comparison to the Democratic Republic of Congo where, since 1998, 5 million people have died in the fight to control the illegal mineral trade. To give some perspective, in terms of deaths, this represents the largest conflict on the planet since WWII. Mafias around the world cooperate with local Congolese paramilitary officers to coordinate supply of minerals. The trade is simple: Congolese warlords send minerals to mobs in exchange for guns, and the various mobs sell the minerals to western markets.

With this production, distribution and consumption model in place, organized crime has become an increasingly efficient business, and one area in particular, the Balkans, has emerged as a hotbed, for two primary reasons. The first is geography; the Balkans are in many ways a gateway to Europe and are surrounded by the Black, the Aegean, the Mediterranean and the Adriatic Seas. All kinds of illicit goods come to Europe through the Balkans: heroin from Central Asia through Iran & Turkey, cocaine from Columbia through Western Africa, women from Russia through the Ukraine & Romania and of course minerals from Africa. In addition to geography, like many Soviet satellites, the Balkans experienced a major institutional collapse following the fall of communism. Governments fell, of course, but so too did the underlying institutions, from the legal systems to the security forces. Across Eastern Europe and the Balkans, tens of thousands of police and intelligence officers, trained in surveillance, fighting and killing, were left jobless. With such a massive structural void, and a supply of unpaid, disgruntled thugs-in-training, it is easy to see how organized crime could thrive. After all, even legitimate business owners would in this environment be forced to buy protection for their assets. And while important political progress has been made in the Balkans since the fall of the Berlin Wall (most obviously the splitting up of Yugoslavia), it is unfortunate that a political void allowed these players to gain power and legitimacy, further entrenching them and their businesses.

From Misha's brief video, it's clear that the illicit goods and services trade represents a complex problem for which there doesn't seem to be a globally coordinated, comprehensive counterbalance. While he does not make any policy recommendations, the lecture takeaway is that organized crime is a massive economic force that has to be taken seriously. I won't pretend to have any answers, but what is clear to me is the impossibility (and futility) of using top-down "bans" on drugs or prostitution in hopes of ultimately eliminating them. It simply doesn't work. So if the zone of consumption cannot be eliminated by force, either another method must be attempted, or we must instead focus on incentives to disrupt zones of production and distribution.