Richard Baumol tells us that the choice of a country’s entrepreneur is among the options of being productive, innovative in the Schumpeter sense, rent seeking (enriching themselves without increasing the wealth of the country), or even destructive via organised crime.
Indeed over the years we are seeing at least one aspect of the choice of crime by some, the increasing homicides, particularly gang-based. In March 2013 I wrote an article, “Gangs of T&T”, in which I tried to put in context where our increasing gang-based activity fit. Many see these gangs as violent youth groups that deal in criminal acts- that these gangs are unsophisticated, uneducated and largely interested in controlling swathes of destitute urban areas that they claim as their territory.
However, recent observations see the gang more like an organised crime group, an organised economic entity with even a positive impact on our GDP. This illicit drug trade is a business with the objective of making money by those involved; it is part of our economy and consists of the producers, the transportation sector that takes the product to the major markets and the distribution/sales in those markets.
T&T is part of the transportation sector drug trafficking though we produce marijuana. Thus our drug trade is not monolithic; it forms part of the global value chain that produces, ships and distributes the drugs. Our gangs are foot soldiers of the local sub network that interfaces with the international networks, taking orders from the local “big fish”. The expertise gained by the gang makes it easy to include other activities like human trafficking.
The question then arises: why the burgeoning violence even among the gangs themselves in the conduct of their business, besides the direct conflict with the authorities? Further, why has this illicit business activity spilled over into other petty crimes like housebreaking, car-jacking, robbery, even revenge conflicts all with violent gun-related results?
More so, as a result of this violence, is this aspect of our economy, the activity of the gangs, in this global value chain, posing a growing threat to national security, undermining the fabric of society in which they operate? Indeed, we are hearing that this illicit business is affecting negatively the rest of the economy—recently DOMA (Downtown Owners and Merchants Association) claimed that it is affecting their legitimate business, others that the cost of security for the business increases their costs.
In a licit business the courts are there to settle any breach of contract among the participants in the economy. This facility is not available to this illicit business. Hence disputes, for example non-payment for goods or services, or stealing or non-delivery of goods, are settled by violence. Also violence is used to intimidate the population at large to ensure that they do not pass on information to the authorities and punish those who do so. Also there is competition among the gangs to serve the global value chain, again resulting in violence. Still, the immediate neighbourhood of the gang supports this business activity, “godfather style”, since they benefit directly from the rewards/spoils of the business.
The gang members themselves have access to guns and hence the ability to moonlight, even rent guns to other petty criminals, commit other crimes, using their equipment to commit other crimes and even settle personal strife. We saw recently a pirate attack which was about using such force to acquire assets. However, whether these gangs pose a threat to national security is a more fundamental issue. The list of countries with the most gang-based homicides is headed by El Salvador and includes Honduras, Belize, Guatemala, Colombia, T&T, etc. What is interesting to note is that the influx of refugees who are trying to get into the US via its southern border are fleeing from the violence, the virtual collapse of their countries, is from El Salvador, Honduras, Belize and Guatemala. All of these countries are suffering from the extreme violence of gangs- these gangs have destroyed national security.
Another concern is whether the availability of guns to these gangs has multiplied the gangs’ impact on the security/violence of their countries. Most of the literature sees little correlation between the availability of guns and gun violence and homicides in US cities. As I write this piece, 19 people have been killed by a lone gunman in an El Paso Walmart in the US and as I post this article another gunman kills nine in Dayton, Ohio, USA. Still, we see New Zealand clamping down on the availability of guns after the killings in a mosque. However, the relationship being sought is between the availability of guns to these drug gangs in developing countries and the level of violence they perpetrate in the conduct of their illicit business.
When one considers that the US is a major producer of these guns that find their way into these outposts of the global drug trade it is ironic that these exports, guns, that earn money for the US companies could be directly responsible for the enforced migration to the US from El Salvador and its southern neighbours, and the tragedy that is unfolding at the US-Mexico border. Surely something should be done at the source of the guns, manufacturers, as these poor developing countries struggle to protect their borders from gun and drug entry. Gangs and guns, a deadly mix!
Daurius Figueira tells us that our governance institutions are inadequate, dysfunctional and he gives a list of things to be done to combat the gang problem locally, including the legalisation of marijuana. However, one of the fundamental things to appreciate is that the underlying characteristic of our drug-based gang crime is economic reward and to curb this, the gang-based economy has to be made unprofitable. Money is fundamental to the business as is its transfer among participants. Hence strict monitoring of money transfers, unexplained wealth, money laundering is crucial in crippling this sector. Interestingly some of the godfathers seem to invest in gold. The promise of cryptocurrencies will make this monitoring difficult. What is of concern is the large number of unexplained suspicious financial transactions seen by the banks/FIU, with nothing being done to follow up, which puts us at odds with the FATF recommendations.