A Closer Look at Crime
I just finished that book everybody's talking about called "Freakonomics" written by two dudes (that's right - two) who claim to "explore the hidden side of everything". I don't think "everything" was covered in the two hundred or so pages, but other than starting each chapter with a quote from someone stating how brilliant and creative the author(s) was/were, it was a rather interesting read. However, I do think they should change the name to "Legalized Abortion is the Reason for Decreased Crime in the US" - which was basically their claim throughout the book. And really, they're probably right.
Steven Levitt who co-authored this book with Stephen Dubner is an economist at the University of Chicago and specializes in the economics of crime. He certainly threw lots of correlation/causality stuff in there that can come from nowhere but the world of academics, but he did a decent job of keeping it down to Earth.
I was about half-way through this book that took hard looks at the business models of drug gangs and their detailed financials, when I was talking with a friend who I hadn't seen in about a year. (And no, this friend is not me) He told me that he had about a four month stint of selling drugs. The business of crime is a rather fascinating topic which may be why "Freakonomics" hit the best seller list. So with my new found curiosity for the drug dealing business I asked by buddy some detailed questions about the intricacies of his business.
He told me that he would pick up a shipment of cocaine from "the man" for about $5000. I don't know how much that was but I do know that he would turn around and dice it up into about ten portions and sell them for $650 a piece, which would bring his revenue for one shipment to $6500. That's about a 30% margin - which for any business is pretty damn good. But it was funny because he only sold to other dealers. So he had about five or six clients who then turned around and sold their goods with another hefty mark-up.
I asked him why he didn't sell directly to the little people thus cutting out the middle man and possibly doubling his profits. He cited the desire to remain unknown and the fewer people who knew about him the better. I didn't argue with him there.
All said and done, in four months he cleared about $16,000 (he did confess to having about $1,500 still "out there"). And with the stress and worry he described, it seemed hardly worth it. He talked about being scared to go out to his car because of possible stake-outs by the cops. He also had several sleepless nights thinking about the possibilities of being thrown in prison for several years. This anxiety of possible law enforcement was in fact the reason for his departure from the world of drug dealing.
The risk of being put in prison for several years far outweighed the benefit of making $16,000 in four months. In my mind, even with the tax free benefits of dirty money, you'd have to add about two zeros to that number to make it even remotely worth while. So for an able-bodied and educated American with an ounce of intellect, it makes no financial sense to venture into the world of selling drugs. However, for the "nothing to lose" folks, like people described in Levitt's book who lived in inner-city Chicago projects, the opportunity at a tax free salary of nearly $100,000 was not only temping but almost a no-brainer. What the hell else would they do? Making minimum wage at McDonalds wouldn't buy them that Mercedes in which the drug dealer down the street pimps around.
Analysis like this makes me feel nothing short of fortunate. I could have been one of those kids growing up in the project of Chicago, but instead my problems arise more from people calling me an "east coast yuppie import".
Things could be a hell of a lot worse.
Try before you buy at poolejohn@gmail.com
Steven Levitt who co-authored this book with Stephen Dubner is an economist at the University of Chicago and specializes in the economics of crime. He certainly threw lots of correlation/causality stuff in there that can come from nowhere but the world of academics, but he did a decent job of keeping it down to Earth.
I was about half-way through this book that took hard looks at the business models of drug gangs and their detailed financials, when I was talking with a friend who I hadn't seen in about a year. (And no, this friend is not me) He told me that he had about a four month stint of selling drugs. The business of crime is a rather fascinating topic which may be why "Freakonomics" hit the best seller list. So with my new found curiosity for the drug dealing business I asked by buddy some detailed questions about the intricacies of his business.
He told me that he would pick up a shipment of cocaine from "the man" for about $5000. I don't know how much that was but I do know that he would turn around and dice it up into about ten portions and sell them for $650 a piece, which would bring his revenue for one shipment to $6500. That's about a 30% margin - which for any business is pretty damn good. But it was funny because he only sold to other dealers. So he had about five or six clients who then turned around and sold their goods with another hefty mark-up.
I asked him why he didn't sell directly to the little people thus cutting out the middle man and possibly doubling his profits. He cited the desire to remain unknown and the fewer people who knew about him the better. I didn't argue with him there.
All said and done, in four months he cleared about $16,000 (he did confess to having about $1,500 still "out there"). And with the stress and worry he described, it seemed hardly worth it. He talked about being scared to go out to his car because of possible stake-outs by the cops. He also had several sleepless nights thinking about the possibilities of being thrown in prison for several years. This anxiety of possible law enforcement was in fact the reason for his departure from the world of drug dealing.
The risk of being put in prison for several years far outweighed the benefit of making $16,000 in four months. In my mind, even with the tax free benefits of dirty money, you'd have to add about two zeros to that number to make it even remotely worth while. So for an able-bodied and educated American with an ounce of intellect, it makes no financial sense to venture into the world of selling drugs. However, for the "nothing to lose" folks, like people described in Levitt's book who lived in inner-city Chicago projects, the opportunity at a tax free salary of nearly $100,000 was not only temping but almost a no-brainer. What the hell else would they do? Making minimum wage at McDonalds wouldn't buy them that Mercedes in which the drug dealer down the street pimps around.
Analysis like this makes me feel nothing short of fortunate. I could have been one of those kids growing up in the project of Chicago, but instead my problems arise more from people calling me an "east coast yuppie import".
Things could be a hell of a lot worse.
Try before you buy at poolejohn@gmail.com
posted by John Poole at 9:00 PM
1 Comments:
yeah, you east coast yuppie import with fancy glasses and polo collar turned up.
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