Criminal economics is very similar to other forms of economics, with one critical difference, which is that criminals have two forms of money: laundered, and unlaundered. Laundering money is costly, and though doing so is not terribly difficult, it is difficult to launder large amounts of money.
Laundering money is the process of taking money that cannot be spent as personal income (in the case of a criminal this money is not even legally owned), and transforming it into money that can be spent as personal income.
The difference between laundered and unlaundered money is important to remember when looking at criminal activities, as criminal activities can be paid for with unlaundered money, and if a criminal is bringing in more money than they can launder, using unlaundered money to pay for criminal activities is essentially free. Because of this, there is an economic incentive for criminals to be brutal, hiring hitmen and things like that to protect their criminal enterprises. If you figure that the typical cost of laundering money is 40%, hiring a hitman costs only sixty cents on the dollar. So too does buying a fake passport, or doing anything else that can be done with unlaundered money.
Buying a house, a car, or even groceries – criminals need laundered money to do that.
Politicians are in a very similar position, in that they too have two kinds of money – personal and professional. Personal money consists of salaries, personal assets, and anything else a politician may have that they can legally spend on themselves. Professional money consists of campaign funds, charitable foundations, and anything else a politician may have access to, but that they cannot legally spend on themselves.
Unlike criminals, politicians have a very easy time laundering money.
When Hillary Clinton was Secretary of State, she would give political favors in exchange for donations into the Clinton Foundation. As a charity, there were no restrictions on the amount of money that could be donated. This money could then be paid in salaries to, for example, Chelsea Clinton. Clinton Foundation money could also be used to bribe different groups to pay Bill Clinton lavish amounts of money to give speeches. Joe Biden has a cancer charity that pays 90% of every dollar received in salaries, and that has spent absolutely nothing on cancer. We’ve all heard about Hunter Biden’s business dealings, along with those of other Biden family members. There is even a text message Hunter Biden sent his daughter in which he complains that Joe Biden takes half the cut.
Ilhan Omar spends hundreds of thousands of dollars a year to an election consultant who also happens to be her husband. Nancy Pelosi and Diane Feinstein have collectively earmarked billions of dollars toward high speed rail lines in California. Most of that money went to businesses run by – you guessed it – their husbands.
I don’t want to just pick on Democrats. Plenty of Republicans have engaged in such activity too. Dan Rostenkowski was indicted in 1994 for buying hundreds of thousands of dollars in stamps, out of election funds, and then selling those stamps back to the post office. The money made selling the stamps became personal income. Dan Rostenkowski was a Democrat who had just been caught in a sex scandal (at a time when that still meant something), and he agreed to fall on his sword to end a much larger scandal: our congressional building included a post office whose ONLY ROLE was helping Congressmen and Senators launder campaign funds by buying and selling stamps. Virtually everyone was doing it, Democrat and Republican alike…
This kind of corruption is nothing new. Most Americans have heard of the Whisky Rebellion. What they might not know is that at the time of the Whisky Rebellion, George Washington was the largest producer of whisky in the country. Suddenly, under George Washington’s presidency, all whisky was taxed except the whisky he made. Other whisky producers literally rebelled, and when the rebellion was put down, most of them moved across the Appalachian Mountains, where they began producing whisky illegally to avoid the tax. Some legitimate distilleries, like Jack Daniels, eventually opened in the same areas the illegal whiskies were made. Other distilleries still make illegal moonshine today.
When Thomas Jefferson was Secretary of State, Alexander Hamilton wanted to create a central bank, and to absorb all state debt related to the Revolutionary War. The Southern states, who were not in debt, were opposed. Alexander Hamilton made a deal with James Madison and Thomas Jefferson in which Hamilton got his central bank, and the US capital was built in the South. Most people know that. What most people do not know is that Thomas Jefferson bought a ton of swamp land, half of which was in Virginia, and half in Maryland, for pennies on the dollar (in terms of the value of that land). Jefferson then sold that land to the United States government, as the site of Washington D.C., for dollars on the penny.
Some level of corruption has always existed in our government.
Here is a video I would like to invite you to watch. Feel free to click the link – it’ll open in a new tab. In it, Michael Franzese is asked a number of fascinating questions. Most are not relevant to this article, but they are fascinating. He’s asked where Jimmy Hoffa is, and who killed John F Kennedy, for example. The last question he is asked is the relevant one. He is asked whether the government was more corrupt back when he was active in the mob, or if it is more corrupt now.
A little background on Michael Franzese.. Michael Franzese was a particularly powerful captain for the Columbo crime family (one of the ‘five families’ of New York) in the 1970s and 1980s. Perhaps more importantly, his father Sonny Franzese was the underboss of the Columbo crime family. Sonny Franzese died recently at the age of 103, after an 80 year mob career. Just to put that into perspective, when the decisions to kill Jimmy Hoffa, John F Kennedy, and Bobby Kennedy were made, Sonny Franzese was in the room.
The Kennedys were a little before Michael Franzese joined the mob, but just by a few years. Michael Franzese was active in the mob when Hoffa was killed, and though Michael Franzese is very careful not to say anything actionable, he is one of just a handful of people who would know, and he says a lot. He answers questions in ways that can’t put anyone in jail, but he does answer the questions he is posed.
If you want to know about Jimmy Hoffa and the Kennedy’s, watch the video.
As for the last question, Michael Franzese says that politicians are much more corrupt now than they were when he was actively working to make politicians more so. He says that he can’t believe how corrupt politicians have become – that they are far more corrupt than any of his former associates could ever have imagined. Essentially, once RICO statutes were used to break the mob’s power, government politicians became the mob, but instead of loan sharking and book making, government politicians have an actual product they can sell.
That product is us.
And we have in all likelihood (Trump not having conceded yet) put one of the most corrupt players in the White House. The only politician more corrupt than Uncle Joe is Hillary Clinton, and Joe Biden is considering making her our Ambassador to the United Nations.