How government creates crime

One of my pet peeves is how government creates crime and gets away with it. Not even a whisper of it in the press when some new crime creating law is being debated. “Government creates crime?”, you ask. Yes, beyond any doubt. Alcohol prohibition is one example that most people can agree on without much effort. By banning most types of alcohol consumption they created a black market for a product that was in high demand. Turf wars, corruption of the police and public officials, and enforcement of business contracts via violence were the inevitable result.

Most people can also see a similar result has occurred with recreational drug prohibition.

Firearm prohibition has the same result but, probably because demand isn’t as great, to a limited extent.

Prohibitions are just one of the areas however. Taxes are another. Anytime the taxes become “too high” on a product a black market is created. It’s simply a light version of a ban on a product. I’ve heard it said that “too high” is greater than about 15%. When the taxes on a product are below 15% of the free market retail price a black market isn’t viable. Above 15% and the government created a black market and all the crime that comes with that black market.

And what most people don’t realize is that taxes on income helps create crime too. If someone steals $100 do you think they are going to report that as income and pay taxes on it? $100 of illegal income, assuming you don’t get caught, is worth more than $100 of legal income you report and pay taxes on. The higher the income tax rate the more incentive there is to obtain your income from illegal sources. Hence government taxes on income are a crime incentive.

In general it boils down to this: Any government restriction on the free market is an incentive for people to “go illegal” to bypass that restriction. Anytime someone “goes illegal” they no longer have the court system available to them to resolve disputes and enforce contracts. The result is not only the crime of bypassing the government restriction but the crimes of police and political corruption and contract resolution via violence.

I’m not saying that all government restrictions on the free market are to be abolished. I’m just saying that any restrictions increase the price such that it exceeds some threshold, perhaps in the range of 15% of the unrestricted price, and a very careful cost/benefit analysis is required. And of course as we know from the gun control debates people seldom bring up the downside of a government restriction. They seem to be only able to see the potential upside.

And before someone else points it out (Lyle, I’m thinking of you) most government in the U.S. is already criminal. Where do they get the authority in their constitutions to do even one tenth their normal “business”? So it’s not surprising they wouldn’t be concerned about creating crime–criminals are their idealogical brothers.


One thought on “How government creates crime

  1. Atlas Shrugged, Hank Reardon’s persecuter..
    “We don’t expect people to obey the laws….”

    Create such a hash that obedience is impossible and even those who wish to knuckle under will still be under the thumb of the government, which in at least Rand’s view is where government wans the people.

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