Naim — Illicit: How Smugglers, Traffickers, and Copycats …

Naim, Moises, Illicit: How Smugglers, Traffickers and Copycats are Hijacking the Global Economy, Doubleday, 2005, 340pp.

[cross-posted on Albion’s Seedlings]

Moises Naim, editor of Foreign Policy magazine, has written an outstanding summary of the flip side of the post-Cold War economic boom. Think of it as the antithesis of Jim Bennett’s book … a “The Global Criminal Affluenza Challenge: How an Army of Fagins Leverages High-Yield Crime while Civil Society Implodes in the 21st Century.”

The author asks a provocative question. What if we looked at global crime from a purely economic perspective?

What industries would form the MisFortune 500? What criteria would criminals use for market development? How would criminal enterprises adapt to the new technological realities (which are also challenging legitimate business)? In other words, setting morals and laws and national sovereignty to one side, how is crime coping with globalization?

The answer is both fascinating and worrisome. Crime has diversified and formed its own “network commonwealths” at a blistering pace over the last 15 years. The end of the Cold War not only spelled the collapse of military antagonists around the world, it dumped hundreds of millions of people into market economies with only a single skill — avoiding government interference while incrementally improving their lot in life. And with that single skill, developed over decades if not longer, those hundreds of millions of people have embraced illicit trade as the only effective means of climbing the ladder of prosperity in the global market. Third World sovereign states may dominate the rent-seeking game in resources but it is their populaces that have embraced the globalized market economy in illicit goods as their own. Profit, not politics, is the new engine of geopolitical change. And as for those politically inclined … well, the fundamental way that political movements now fund and deploy themselves is through the globalized criminal economy. Whether it’s Al Qaeda and credit card fraud in Europe, or North Korea making counterfeit dollars and meth, the Afghanis renewing their old business (heroin) and starting new ones (CFC smuggling), the Columbians selling coke to the US and girls to the Japanese, or the Ukrainians selling ballistic missiles to China and Iran … there’s money to be made in satisfying demand in a hugely expanded (and hugely diversified) global economy. Is it the “government” undertaking crime, or the “rebels,” or both? Ground truth is that no one seems to care.

What are the largest and most profitable flows of illicit trade? Naim gives us few surprises among the Big Five: Weapons, Drugs, Humans (Voluntary, Coerced, Dead/Alive, and Occasionally Just Portions Thereof), Intellectual Property, and Money. Each of these major trades gets a thorough up-to-date chapter. Naim’s professional editorial skills are evident. The book reads very smoothly and pitches just the right balance of detail. Anecdotes are used sparingly and to good effect. Crime is a business and business is good. Very good. And it’s no surprise either that illicit trade piggybacks on the vastly grown legitimate international trade in exactly those same areas. Selling F-16s, Viagra, H1-B visas, Microsoft Office and T-bills just lays down the pathways for less savoury brethren to cut their deals and operate their businesses.

Most startling for me, as I read Naim’s book, was the rapid conversion of criminal networks into diversified transportation networks … shipping any product, anywhere, any time, for a price. Using modern economic tools for establishing commercial trust (and risk management), clan and tribal crime operations can operate with a vastly increased set of co-conspirators across a vastly expanded range of geography. Nigerians in Malaysia talk to Russians in New York who broker Columbian prostitutes in Japan. And obedience to the laws of profit and loss mean that transportation networks now “containerize” their trade flows: indentured labourers are shipped around the world with drugs and money in their bodies, or instead, drugs are shipped in bales of money or money shipped in bales of fake generic drugs. Every shipment responds to economic conditions of the moment. Similarly, African coltan and diamonds are swapped for arms which are converted into money which is swapped for a Rembrandt which is used to pay for a Russian banking cybercrime-extortion team. Heh. How did Rembrandt get in there? Well, 174 of his paintings have been stolen and are on the black market. The fastest way to move one billion dollars without touching the banking system is to send a few such Rembrandts by air cargo. By weight, antiquities and art are some of the most valuable (and durable) commodities on Earth. Market value, and the radically lowered costs of market information and market access, are triggering a dramatic expansion in the black market global economy. And why not? No taxes, no tariffs, burgeoning diversifying demand, low risk and a dwindling role for the extortionate middlemen of yesteryear. It’s a kind of “eBay” for crime families … in fact, eBay is now used to sell vast quantities of proscribed and counterfeit goods to those who are actually looking for such material. Economies of scale now mean that networks of criminal enterprise now operate as an informal but dynamic equivalent to Fedex. To paraphrase Sun Microsystems … “the network is the crime.”

To quote Naim (p.227), such networking has permitted:

  • The rise of global product sourcing, formulation, or assembly
  • A shift in the role of way stations along trafficking routes
  • The emergence of a well-functioning, illicit international financial market
  • The end of command-and-control

If these changes seem familiar, it’s because they parallel the adjustments that legitimate corporations have had to make in the past few decades.

What does all this mean to readers of chicagoboyz?

Well, as implied by my opening sentences, nothing good for civil society nor for the kinder, gentler common law. The amounts of money involved in illicit trade dwarf the legitimate economic activities of vast swathes of the planet, which in turn determine the lives of hundreds of millions of people. For many at the bottom of the economic ladder, their economic value as human beings effectively approaches zero. In many parts of the world, the value of a sovereign state as a entrepot and depot for illicit trade vastly exceeds anything it could hope to undertake legitimately in the next 100 years. As a result, the “failed states” of Asia and Africa, and the no-man’s lands of South America, become nodes in a global shipping business. And that business has every incentive to persistently undermine local civil society and traditional economic development. The locals are there as utility flesh (as mules or for physical export). So the civic value of humans purely as economic units is an idea now gaining the upper hand.

For nations at the other end of the economic scale, it’s clear that (a) normal rules of sovereignty and law are increasingly unable to cope with the expansion of illicit trade, (b) the corruption of formerly transparent, but poor, nations and cultures is well underway, (c) the affluence of the First World is accelerating and diversifying the criminal portion of the global economy, and (d) the scale of this global trade is now sufficient to suborn many First World organizations and citizens as well. Everyone likes a deal … whether it’s a knock-off Prada bag, a cheap nanny, a healthy kidney, a filet of Patagonian toothfish, a hidden PCB dump site, a bootleg DVD, or a bit of blow. Every such transaction, however, is a positive reinforcement. The rule of the market reigns supreme. While our governments try to figure out how to get their law enforcement computers to talk each other, the appetites of their citizens (some innocuous, some despicable) are creating “network commonwealths” which fund the most tribal and predatory of peoples around the world.

Let’s pause for a minute and reflect on some of the trends discussed in earlier book reviews on William Lewis’ The Power of Productivity and Amy Chua’s World on Fire. Lewis documents the vast per capita prosperity gap between all significant nations (> 10 million people) and the United States. In a more recent Foresight 2020 project sponsored by Cisco, and conducted by the Economist Intelligence Unit, it’s clear that that American GDP gap will definitely continue for another 15 years, wishful European thinking aside. Thus we can count on an expansion of international illicit trade out into the future as big as the one seen in the last 15 years (since the end of the Cold War).

The envy and enmity generated by “market-dominant minorities” (as described by Chua), tracks very closely with geographic wealth differentials. The wealth differences between neighbours, both the human variety and sovereign nations, are all the more readily apparent when cheap communication and cheap transportation make the contrast between rich and poor nations unbearable to millions. Little wonder that Chua identifies Israel and the United States as regional and global market-dominating minorities, when they both have among the highest geographic wealth differentials with their neighbours on the planet. The European Union is similarly prosperous compared to its southern and eastern neighbours. These wealthy regions form almost a magnetic field of attraction for the desperate and the predatory. Our First World cultures are morally, politically, and legally ill-prepared to deal with either type (in their millions). Flesh and crime. We’ve shown no interest in discovering how to cheaply dispose of either, despite an Anglosphere history of doing both.

What to Do?

Naim does an admirable and timely job of summarizing the nature and scale of worldwide illicit trade, and the parlous state of law enforcement. The author sets an optimistic tone, however, and directs our attention to “what we know” (p.239):

  • Illicit trade is driven by high profits, not low morals.
  • Illicit trade is a political phenomenon.
  • Illicit trade is more about transactions than products.
  • Illicit trade cannot exist without licit trade.
  • Illicit trade involves everyone.
  • Governments can’t do it alone.

His solutions are also eminently logical:

  • Enhance, Develop, and Deploy Technology.
  • Defragment Government.
  • Give Governments Goals That They Can Achieve.
  • Fight a Global Problem with Global Solutions.
  • Build Political Will.
  • Get Everyone Involved.

But if this smacks of the well-meaning strategy for the “War on Drugs,” we shouldn’t be surprised. Drugs were the first of the globalized criminal enterprises that the Western world had to deal with. And Naim basically offers a New, Improved Model for controlling something that no one is serious about controlling.

Naim’s approach is, to my mind, a form of “squaring the circle” … establish widespread virtuous behavior in civil society (choking down Demand) without using the stick of moral stigmatization and punitive action to reduce Supply. I struggle to think of a time in history where such a program succeeded without religious or ethnic turmoil. Our efforts at the former (invoking virtuous behavior) have been noble but feeble and our attempts at the latter (the Stick) have been insufficient (when not inept) and lacking seriousness. The hypocrisy of expecting the poor of the world to now forego income that would save their lives, so that industrialized nations can sustain (without significant cost) their transitory unsavory appetites is, and always has been, breath-taking.

So for the sake of argument, let’s accept Naim’s hypothesis that illicit trade simply reflects the pervasive success and dominance of the global market economy in the absence of moral or ethnic or national values that would hold it at bay. In the absence of such values, the signal that G7 nations send the world (through the market) is that the elements of illicit trade are just as much of what we are as the timber, and sweatshirts, and television sets that we import.

Yet if we stand back and consider how much the world has changed and into what kind of world order we are headed, the rationale for mobilizing against global criminal networks will become clear, and also urgent. (p.260)

Readers of this blog will cast a jaundiced eye upon Naim’s solutions which depend upon increasing the awareness and dexterity of governments. If Naim is to believed, most of the institutions outside the First World are thoroughly subverted, while those within it are perilously close to it. In the absence of a clear bright line between Them and Us, between Right and Wrong … a line that can be drawn and maintained at minimal expense … it’s hard to imagine anything that will impede a trade that is way “freer” than most of us would prefer. In a sense, the wealthiest parts of the world have lost their immune system. They can no longer resist the toxic, no longer expel the despicable. It all swirls around in the same big soup of trading humanity.

Naim’s book, like Lewis’ and Chua’s, can be highly recommended for its content. It is grist for thinking about just what our global economy and the Technological Singularity mean, in less rosy terms. And if we believe Martin Wolf and his excellent book Why Globalization Works (see an updated article URL for his views on the Anglosphere here), we have no reason to believe that legitimate global trade will shrink any time soon. That illicit trade is a symbiotic part of the “white” economy is our bad luck … and our ultimate responsibility, since We generate it. If anything, it ensures the success of globalization because it serves the needs of the rest of the World far better than the kleptocrats running Third World nations.

“Ye shall know them by their fruits.” In the last fifteen years, we’ve apparently pimped out most of the planet … now they’ve joined the global market to stay. They are driven by hunger, fear, and greed. They are unrestrained by our laws and values (when they haven’t overtly subverted them) but are fully responsive to our baseness and weaknesses. And even in all this, we are far richer (and getting moreso) than they. We can pimp them out yet more, for decades. But we needn’t expect to be loved for it. Nor to be unchanged by it.

Rather than the Anglosphere being an island of civic trust and burgeoning prosperity in the world, we might better think of ourselves as the one lifeboat currently in sight without major leaks. Everyone is swimming towards us, in one way or the other. Criminal symbiotes feed on our frailties, and on our civic strengths. If we continue to indulge our worst appetites, without the capacity to distinguish what strengthens civic society from what profoundly degrades it, our Anglosphere discussions about historical roots, or the deftness of our adaptation to the Singularity will be moot. We’ll have moved on to William Gibson’s world of cyberpunks, splintering markets and anomie. Perhaps there’ll still be an Anglosphere there, but it will need to be one more confident and strident in its values and fully capable of summary justice, on the cheap. The market will demand it.


Table of Contents

The Wars We Are Losing [1]
Global Smugglers Are Changing Your World [12]
Small Arms and Loose Nukes [38]
No Business Like Drug Business [65]
Why is Slavery Booming in the 21st Century [86]
The Global Trade in Stolen Ideas [109]
The Money Washers [131]
What Do Orangutans, Human Kidneys, Garbage, and Van Gogh Have in Common? [157]
What Are Governments Doing? [175]
Citizens vs. Criminals [199]
Why We Are Losing [217]
What to Do? [236]
The World Ahead [261]

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