Sunday, December 2, 2012

Mafia is caused by the government

There would be no mafia without the government.

Mafia, as a phenomenon, is caused by the government. And no, I am not talking about some conspiracy theory. I mean, if the government does what it is supposed to do and claims to do, that causes mafia to exist.

The moment you understand why and how that is the case, you understand all you need to know about the government and economics of freedom.

I will try to explain briefly how this is the case:
  1. There is a demand for some product or service. E.g., heroine or prostitution. Or alcohol.
  2. The government for whatever reason makes it illegal to obtain, produce, or sell this service or product.
  3. The demand for the service or product remains.
  4. Normal, "law-abiding" citizens (also citizens not prone to violence) do not go into the business of providing this product.
  5. Citizens who are not averse to breaking the law or using violence and have enough acumen or connections to get this product will start supplying it. They will, at the same time, attempt to suppress the competition ruthlessly and violently, leading to so-called "mafia wars". They will also mistreat their employees and even consumers.
  6. Because there is a demand, the consumers will still buy the product from these jerks. This will make the jerks stay in businesses. As a result, they will get away with mistreating their employees, especially if the employees (such as drug farmers or prostitutes) cannot find a job elsewhere.
  7. Peaceful businessmen cannot provide competition to the jerks, since a) they tend to shy away from things illegal, b) they don't want to use violence to stay in business (as may be necessary because of its shady nature), c) they cannot hire private protection firms, since protection is monopolized by the government, and the government won't protect someone doing business in this particular area, since it's illegal.
End of story. Demand drives the business. By making the business illegal, the government pushes the nice businessmen from this area of business, attracting jerks to fill in the niche.

What happens when the government makes this product legal?
  1. Peaceful, nice, law-abiding, non-violent businessmen are attracted to this business.
  2. Customers would rather buy the product such as beer from a local grocery store than from some violent tattoo-covered jerk at a speakeasy.
  3. Mafia jerks are pushed out of business.
We can see that both the first sequence of events and the second happened with alcohol, when it was first outlawed and then legalized again.

One could say: there would still be mafia. People prone to violence would still be around.

But ask yourself: why doesn't mafia deal in cars? Or oil? Or airplanes? Why does it always deal with illegal things? Because mafiosi like the adventure? No, because these things are legal, and the public would rather buy from non-violent producers than from the violent ones. So, mafia would lose money if it went into a legal business or be forced to stop being a mafia.

Thus, by making something illegal, the government creates a "shade" into which the "shady types" are attracted.

Which means that if tomorrow the government made video games illegal, there would be spring up mafia dealing in video games. If, on the other hand, the government made prostitution and heroine legal, this would shut down all the respective mafias without a shot being fired by a single cop.

Isn't economics a beautiful thing?

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