Chapter 33 of 47 · The Freeman 1961, Vol. VIII by Foundation for Economic Education
Keeping the Peace; W.M. Curtiss
KEEPING THE PEACE t'l W. ffl. eu,.li~~ THE SPOTLIGHT has been on rockets to the moon, outer space, and summit meetings. But these bold headlines divert our attention from important things going on right in our front yard. In the less conspicuous parts of our newspapers and magazines we rea~ that crime is increasing at an alarm ing rate. J. Edgar Hoover says that since 1950, the crime rate has increased four times as fast as population. It has been estimated that crime costs this nation some $22 billion a year-$12 for every dollar spent in our churches. Without going into technical and legal definitions, crime is used here simply to mean the breaking of laws. No doubt about it, crime is big business and a threat to our comfortable way of life. Earlier this year, Life magazine carried a story on world crime that covered about 25 pages in four issues. Investigations are going on at all levels of government and the conclusion is in variably the same: Pass more laws; tighten up on law enforcement; expand the police force; give police more power; have the churches and schools instill more rever ence for laws.
326 KEEPING THE PEACE 327 In contrast to these solutions, it is here suggested that much of today's crime is directly caused by government action of one kind or another. In other words, the gov ernment, whose function is to protect life and property, to prevent fraud and stealing, to enforce contracts, and the like, in many cases actually promotes the very crimes it is supposed to suppress. By nature, most men are law-abiding-they want to live according to the rules. Only a minority are law breakers who seem to gain satisfaction by flouting ac cepted modes of behavior. There comes a time, of course, when normally law-abiding citizens feel moved to vio late laws which seem unduly oppressive. A classic ex ample was the American Declaration of Independence. The colonists believed that men are endowed by their Creator with such inalienable rights as life, liberty, and the pursuit of happiness, and that "whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government .... Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accord ingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations ... evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government."
The Declaration is quoted merely to show that law328 W. M. CURTISS breakers are not always the thugs and gangsters com monly associated with the term. A number of examples, some in the United States and some international, will show that certain acts of gov ernment encourage criminal behavior as when the fol lowing conditions prevail: 1. A product or service is desperately wanted by some of the population. 2. A law prohibits free and open trade in the prod uct or service. 3. A chance of a high profit from the trade if one is not caught by the police. As a rule, the greater the possibility of profit and the more severe the penalty if caught, the more likely are those in the business to be desperate and venturesome persons with few qualms about lawbreaking. The prob lem grades down to the very small possible profit for a very tiny risk such as fudging on one's income tax about how much went into the church collection plate.
A motivation back of these crimes is similar to that which moves honest men to become great merchants and industrialists. The hope for .profits is a tremendous force which may be directed toward good or evi1.1 A number of "crimes for profit" involve smuggling. 1 "Profits" include all sorts of satisfactions and not only monetary or material gains. In the nonmaterial area, some men gain great satisfaction from· having power over others-in enslaving their fel low men. Such a drive must have played an important role in the lives of Napoleon, Hitler, Stalin, and many others. At the other extreme, we find a Schweitzer, a Pasteur, a Gandhi, and number less unknown persons whose profits come from serving others.
KEEPING THE PEACE 329 According to the Life story: "More people are engaged in it [smuggling] than in any other form of interna tional chicanery and, in terms of sheer dollar volume, no illegal practice in the world can match the total profits from smuggling. Wherever local regulations create the right conditions, there the smuggler can be found at work. Because of his activities, billions of dollars change hands each year, and sometimes the entire economy of a nation is seriously affected." Among the smuggled items are gold into India, choco late from Switzerland into Italy, nutmegs, precious stones and jewelry, tropical fish, refrigerators, television tubes, Salk· vaccine, paintings and statues, U. S. ciga rettes, coffee, gasoline, and people. One can hardly be critical of the police whose job is to apprehend lawbreakers. One might be concerned, however, about laws preventing the free movement of goods and services. For example: An automobile may be purchased in Germany, taken to South America, and sold for six to eight times its purchase price. Profits of this magnitude could not long continue in a free mar ket. But, in this case, the South American government either wholly restricts imports of the German autos or levies an exorbitant duty on them. So, in order to take advantage of what appears to be a fine profit, the trader resorts to smuggling, and runs the risk of being caught and assessed a high penalty-a kind of business likely to be taken over by the so-called outcasts of society.
In an open society where there is relative freedom to engage in manufacturing, trade, or the service industries, 330 w. M. CURTISS there is a tendency for man to engage in those businesses that appear profitable. Competition with others seeking the same ends assures reasonable prices and a modest profit for those who are most efficient. The profit motive is at work. While considered a noble force in the free market economy, the profit motive also may encourage men to break laws, in which case it becomes an evil force to be dealt with by government. The buying of a car in Germany and reselling it in a South American country would appear on the surface to be an ordinary transaction useful to all parties con cerned. But, if the urge for profit leads to broken laws and smuggling, then it becomes a dirty business, engaged in by the underworld, a case for Interpol-International Police. Smuggling occurs when aU. S. citizen returns from a trip to Canada with goods exceeding a certain value, which he has not declared· and on which he has not paid duty. Though the law clearly defines this a crime, one may still ask why it is a crime to do that. And the same question might well be asked wherever smuggling occurs.
Prohibition The prohibition of the sale of alcoholic beverages in the United States in the 1920's is a classic example of how government intervention may increase crime. It is not our purpose here to pass judgment on the evils of "demon rum." Certainly, intemperance takes many forms, and when associated with alcohol, it is demonKEEPING THE PEACE 331 strably evil. How to correct such intemperance is not be ing debated here. The point is that the attempt to con trol the situation by law was a source of a considerable increase in crime. Involved was a product many persons wanted. Some, who weren't interested before Prohibition, began drinking only because it was illegal or the "smart" thing to do. When the transportation and sale of alcoholic bever ages became illegal, this gave rise to the new and highly profitable trade of bootlegging. The profits were suf ficient to cover the pain of getting caught. In fact, the potential profits were so large that an "underworld" was drawn into the business with rival gangs competing for the right to serve certain territories. Under such condi tions, crime was rampant.
To make matters worse, many consumers thought the restriction violated their rights, and much of the law enforcement was only half-hearted. The setting was per fect for lawbreaking by consumers, for crime among the suppliers, and for corruption of the law enforcement agencies. As is so often the case, once government assumes re sponsibilities which individuals have theretofore as sumed, the tendency is for individuals to relax and as sume the government will do the job. Before Prohibi tion, many educational forces in the country, including schools, churches, and the home, emphasized the evils of the excessive use of alcohol. Even with the repeal of Prohibition, these forces apparently have not regained their former effectiveness.
332 W. M. CURTISS In looking back over the history of the United States, it appears that the advent of Prohibition brought a gen eral winking at law violation that has since spread into other fields. Liquor law violations did not end .with repeal of the Eighteenth Amendment. It has been estimated that 55 million gallons of unlawful hooch were produced by U. S. moonshiners during the past year, accounting for about one-fourth of all liquor consumed in the country. This illegal business grosses a fabulous amount of money and is said to be operated by organized gangs which means considerable crime. What accounts for this illegal business that engages such a sizable part of our law-enforcement efforts? The obvious answer is that avoiding the exorbitant tax on liquor yields such "profits" that lawbreakers are drawn into the business, much as they were during Prohibition. The tax on liquor is designed not so much to raise revenue as to regulate people. It has become so high a percentage of the selling price of the product that a high premium is placed on tax-avoidance.
It is not our intent here to pass judgment on the mo rality of gambling. The fact that gambling is the source of frightful tragedies in some families is too well known to require elaboration. Our point, rather, is that much of the crime associated with gambling stems from the government regulations surrounding the practice. It may be inferred that the State does not consider gambling as such to be either immoral or harmful to its citizens, since it encourages betting at race tracks.
KEEPING THE PEACE Church Gambling 333 Nor are the organized churches unanimous in oppos ing gambling. In New York State some churches use bingo and other games of chance to raise money for their activities. A special license from the state is re quired, which further proves the point: The evils of gambling are removed if the state supervises it and gets a share of the proceeds. There can be no doubt that some individuals have a tremendous urge to gamble, however foolish this may seem to others. If gambling is prohibited by law, ways will be found to circumvent the law. And persons will pay a goodly sum to wager, even though it is unlawful. As a result, it is highly profitable for "bookies" or others who handle bets to provide the machinery for betting. The potential profits are sufficiently great to attract ne farious characters who are willing to risk the heavy penalties of getting caught.
Governor. Rockefeller recently stated that illegal gam bling is now big business in New York State, conducted by criminal syndicates which use the revenue for other organized rackets. A special commission to investigate gambling disclosed that one ring in central New York grossed $250 million a year, had tie-ins in 14 states, and netted a profit of 10 per cent or $25 million. The chair man of the commission testified that "huge profits from bookmaking led to their control by organized criminal groups who too often can be found making substantial contributions to sympathetic officials." This unsavory 334 w. M. CURTISS situation was confirmed by the Superintendent of the New York State Police. The commission concluded with suggestions for stronger laws, better-trained police, more severe penal ties, more efficient court procedures-in other words, more and better use of present methods of control. A more realistic appraisal of the problem by New York City's police commissioner Kennedy suggested that the citizens of the state are understandably confused when presented with our double standard with regard to bet ting. It is legal to bet on the horses at the track but il legal to bet away from the track.
The Freeman 1961, Vol. VIII
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