pageok
pageok
pageok
More on the Law and Economics of the Godfather:

Some commenters on my earlier post on the law and economics of The Godfather noted that I ignored the strong theme of family and personal loyalty in the book. True enough. But this element of the book also fits in with the libertarian/law and economics story I emphasized in my post. The Mafia and other large black market enterprises are often organized on the basis of family, personal, and ethnic ties in large part because it is difficult for them to enforce agreements and ensure loyalty in other ways. Obviously, they cannot rely on courts to enforce labor contracts, address principal-agent problems, prevent employees from appropriating their bosses' property, and so on. Thus, they try to hire people whose family or ethnic loyalties will ensure at least some degree of trustworthiness. Not only do Prohibition, the War on Drugs, and other similar policies foster organized crime - they also increase nepotism and ethnic discrimination. This inference, unlike the ones I mentioned in my last post is not explicitly drawn by Mario Puzo in his book and I don't know if he would have agreed with it or not. But it is a natural extension of the standard economic analysis of organized crime and black markets.

Related Posts (on one page):

  1. More on the Law and Economics of the Godfather:
  2. The Law and Economics of The Godfather:
Tracy Johnson (www):
Are you saying the Mafia is NOT an equal opportunity employer?
5.9.2007 4:59pm
Joe Bingham (mail):
Libertarianism can be a family-based philosophy, as well as an individual-rights philosophy. One traditional perspective (about which I'm ambivalent) holds that the family is the proper organizing unit of society, and that it is the family that should be autonomous, but it's fine for the family itself to be organized either autocratically or communistically. Focus on family loyalty is perfectly consistent with that strain of libertarianism.
5.9.2007 5:33pm
Crunchy Frog:
How else is a family supposed to be run, other that as an autocracy? I'm not about to let my 12- and 8-year-old children have an equal voice with mine when it comes to making familial decisions.

At the same time, it is my responsibily to make decisions that benefit the family as a whole. I could run things so as to benefit myself to the disadvantage of my kids, but I don't. Because they are my family, I make sacrifices for them that I would make for nobody else.

It doesn't take a villiage to raise my kids. It takes me.
5.9.2007 6:48pm
Antonio Andolini:
This is why people don't like lawyers. They write things like this.
5.9.2007 6:55pm
Antonio Andolini:
Your theory is interesting, but it is incorrect. The Mafia is not organized on family/ethnic ties "in large part because" otherwise they do not know who to trust. Instead, they rely on family/ethnic ties because in their culture, everything they do is based on family/ethnic ties. They literally do not know how to act otherwise. That is the whole point of the movie. The movie is about the clash of cultures.
5.9.2007 7:52pm
Joe Bingham (mail):
Antonio,

Because they think critically?

Fortunately, the ATA doesn't. Look them up.
5.9.2007 8:00pm
fat tony (mail):
mafia? Mafia?! What mafia? What is this mafia you keep talking about?
5.9.2007 8:47pm
Dan Simon (mail) (www):
Not only do Prohibition, the War on Drugs, and other similar policies foster organized crime - they also increase nepotism and ethnic discrimination.

Don't forget the heartbreak of psoriasis--as long as meth labs are illegal, they'll have to be well hidden, meaning that their operators aren't going to get much sun....

More seriously (but only slightly), Ilya's argument applies equally to murder laws: as long as bigots can't simply murder people from groups that they hate, they're probably going to discriminate against them at every opportunity. Promote equality--legalize murder!

Still more seriously, the "gateway crime" argument--"outlawing X increases bad activity Y by turning perpetrators of X into scofflaws who are therefore more likely to perpetrate Y" misses the point completely. Those who want to criminalize X want to see perpetrators of X prevented by incarceration from harming society in general--including by indulging in activity Y. The fact that a few perpetrators of X may remain free to perpetrate X, Y and even Z is (provided the law is enforced) a distinctly second-order effect.
5.9.2007 9:35pm
Joe Bingham (mail):
Dan,

Speaking of missing the point, you missed OP's. The black market for drugs is relatively huge. The black market for murder is relatively small (i.e. hired hits). Prohibition significantly increases nepotism and bigotry because people organize around ethnic or family lines for the sake of the market. A la Tony Montana's hatred of Columbians. I don't think OP necessarily meant it as another argument against Prohibition (there are plenty) as much as an observation about a sociological effect that's not a relatively big deal. I personally could care less whether pushers are racist.

He didn't even make the gateway argument, which is certainly true to some extent. If you make someone spend a year in prison in the company of inmates for using, he's going to be more prone to commit crimes...
5.10.2007 1:01am
Dan Simon (mail) (www):
The black market for drugs is relatively huge. The black market for murder is relatively small (i.e. hired hits).

Could that be at least partially because murder laws are much more stringently enforced than drug laws?

Prohibition significantly increases nepotism and bigotry because people organize around ethnic or family lines for the sake of the market.

Again, isn't the significance of the increase largely a product of lax enforcement? If illegal open-air hit-man markets were widely tolerated, but not illegal open-air drug markets, which black market do you think would contribute more to society's net nepotism and bigotry?

I don't know of anyone who supports half-hearted prohibitions. Anyone who supports the kind of legal penalties that currently exist for illegal drug sales or possession must already believe it worthwhile to make Herculean efforts to reduce the number of drug users and dealers by as much as possible. To such a person, the fact that the remaining population of drug dealers might also engage in racial discrimination in employment is merely a minor extra argument for investing still more in suppressing drug dealing--not an argument for abandoning the effort.
5.10.2007 1:31am
Joe Bingham (mail):
You seriously think we expend more resources on solving murders than on the War on Drugs? And that this is why there are fewer murders-for-hire than there are purchases of illicit drugs?

The drug trade is a completely different realm of law enforcement because no one involved in most transactions is interested in ending or preventing the trade. It's a voluntary transaction. That's why it's led to such a vast expanse of police powers. It is in some sense a victimless crime. (You don't need to point out that families suffer, etc. I'm talking about the mechanics of catching the average user or small-time dealer, not social costs.)

The racism and nepotism was not an argument for or against drug prohibition. It was an observation about an intriguing side effect of the perverse incentives created by prohibition; as far as I'm concerned and, I think, OP is concerned, a completely negligible side effect of those incentives.
5.10.2007 3:33am
Ilya Somin:
The Mafia is not organized on family/ethnic ties "in large part because" otherwise they do not know who to trust. Instead, they rely on family/ethnic ties because in their culture, everything they do is based on family/ethnic ties. They literally do not know how to act otherwise. That is the whole point of the movie. The movie is about the clash of cultures.

The problem with this argument is that there were millions of other Sicilian and Italian immigrants who came to this country and entered legal businesses, where did they not rely on ethnic and family ties as much as Mafiosi do. Non-Mafioso Sicilian immigrants came from the same culture as the Mafia ones did, yet behaved very differently in their business practices in large part because of the different nature of the industries they were in. It is simply not true that Sicilians and/or Italians more generally "do not know how to act otherwise."
5.10.2007 3:58am
Anon. Lib.:
Professor,
There is a pretty devastating critique of your position up on crookedtimber this morning. If, as it suggests, you are basing these posts on the worldview expressed by Mario Puzo's fictional novels as opposed to any research on how and when the Mafia actually arose or maintained itself, these posts are big waste of time.
5.10.2007 10:01am
A.C.:
There's a natural experiment to test the theory. Does the mafia practice more nepotism in its criminal activities than in its "legitimate businesses"? I'd be inclined to think not, because supporting an extended family/tribal group is the point of both. Family "empires" are hardly unknown in legal businesses, but they fell out of fashion in the US in the 20th Century. They may come back ... who knows? It's not as if public corporations work perfectly.
5.10.2007 11:02am
American Psikhushka (mail) (www):
Joe Bingham-

Libertarianism can be a family-based philosophy, as well as an individual-rights philosophy. One traditional perspective (about which I'm ambivalent) holds that the family is the proper organizing unit of society, and that it is the family that should be autonomous, but it's fine for the family itself to be organized either autocratically or communistically. Focus on family loyalty is perfectly consistent with that strain of libertarianism.

If it was all consensual and reciprocal it might be OK. But there is major potential for abuse. If you're a teacher and your cousin becomes a brain surgeon, are you entitled to take money from him? What happens when all your money is taken to support older relatives and cousins with families, and you can't even afford to date? It all relies on trust and selflessness, if your relatives are geedy, selfish, and can't be trusted it is theft and slavery. I would opt out - the likelihood is that everyone will be communistic with your assets but surprisingly capitalistic with theirs.

Crunchy Frog-

How else is a family supposed to be run, other that as an autocracy? I'm not about to let my 12- and 8-year-old children have an equal voice with mine when it comes to making familial decisions.

Of course there are limits to this, if you are prostituting them out or signing them up for nonconsensual (for them) human experimentation you are a common criminal. Or trying to force decisions on them when they are adults.
5.10.2007 9:08pm