Does crime help the economy?

Well, I was thinking about this earlier in the day so I decided to post this question here to see what you guys think, right so I was thinking earlier without crime the economy would not be as good as it is first there would be so many more people with no job. What I mean by this is for one there wouldn't be any police officers, also think of the prison staff and all the people who work in the law department and the courts they would all be out of jobs aswell. Next you need to think about all the small crimes, for example people dropping litter on the floor and all the people who work out on the streets picking it up and people who dump rubbish in places that is not permitted. If these people are not around to do this then all the people who pick it up would not have jobs.

So you guys can see where i'm going with this so feel free to tell me your views on this question, I find it very interesting to think about as I believe this is very true. If you would like to talk about this with me personally feel free to PM me so we can chat.

 

This is just a reworded question of "What will the world be like without crime"
Obviously there are jobs that strive off of people committing crimes, but that would not stop the need for police, judges, etc.
They are there to enforce the law, even if there were no crime, they would still be there enforcing that law.
All crime does is piss people off when they realize there iPods are missing or when there family/friend gets killed in a "crime"

I do not believe that killing someone (crime) leads to a better economy.

 

I don't think this is a reworded question to be fair, also I wasn't really talking about big crimes such as murder. Just small crimes and petty ones, also don't get me wrong I really hate crime but it is just a theory I guess.

 

yes it does help the economy IMO. prisons make a LOT of money.
Also all the people in prison and jail doing community service and other things benefits the area and brings in a lot of money.

 

Maybe you're all looking at it wrong. All those jobs, we pay for those jobs. In our taxes. We're all losing money because of said criminals. We pay for said criminals to live in jail getting 3 meals a day and heat and clothes for the rest of their lives. Sure, crime produces jobs, but if there were no crime imagine the all the time that we've spend investigating crimes and such invested into something else, like alternative energy.

 

Yes, either way we would have to pay them anyway even if they went on other things. I respect everyone who works and keeps our streets safe but if there wasn't any need for them then there would be thousands of jobs gone.

 

Also, in a business way of looking at things, crime adds to the statistical discrepancy with regards to GDP, they are not contributing to the economy at all.

 

It's incredibly expensive for the federal government to imprison people. The money used on prison guards/inmate food/building utilities could easily be spent on education/healthcare/subsidies/roads etc., stimulating our economy. Also without crime our workforce would be larger (due to people working instead of being in prison), which means our potential GDP would be higher.


Just because we wouldn't necessarily require as many security/police related jobs, doesn't mean that our economy would suffer. The money currently allocate for police funding would simply be transfered into a different gov't program and still supply jobs.

 

Or, better yet, it would be returned to the taxpayers who would stimulate the economy through private spending. Considering the inefficiencies of government, individuals spending their own money would do much more to spur economic growth than maintaining government run courts and prisons.

 

i think you are probably right. and not only does crime help the economy by supplying jobs, but in a case of theft, oftentimes the victim will repurchase the item that was stolen, therefore stimulating the economy further by spending more money. i.e. buy an ipad-gets+gets stolen+buy another ipad=twice as much money into eco

 

This is something interesting and I have not ever thought about.

You do make sense though but what if the money was a loan and didn't get repaid after the crime?

That would be a lost to the banking sector, and so the economy will get affected.

 

yes it does i think ill go help the economy
lol

 

I am going to take the "crime" to mean the stealing of goods, as killing someone would obviously have no DIRECT effect on the economy.


Crime may be viewed to "spread out" the value of wealth among an Economy, but it actually has very negative effects.

Crime, along with unofficial street stalls obviously do not pay taxes. This is known as "Invisible Employment", as nothing of any income is registered. This means the Real GDP does not increase, whereas if the goods were sold, it would contribute to the country's Real GDP, making it more internationally competitive.

Another negative reason, is if a warehouse has £100,000 worth of TV's stolen for example, the money made from exports is not received by the government, nor is the tax paid in the businesses' revenue. This means the government actually loses out in it's revenue, meaning there is less money for the government to recycle back into the economy.

When the government invests into it's own economy it is known as the multiplier effect. An example of this is helping small businesses start up, as in the future it will generate more for the Economy and boost growth. The more that is stolen from Economy, the less can be recycled, meaning in the long run the Economy loses out.


I rushed this as I have to go see some friends, but I am an Economist and am looking to follow my degree in Economics next year, so if I didn't explain something correctly, or would like to understand the concept better, just swing me a PM

Thanks,

 

I have a question. If say sony made 200 TVs and sold them all to a best buy in the mid west. After delivery, all those TVs where stolen. Wouldn't the production of the TVs still be factored into GDP?

What you said about the multiplier effect is important. Crime effectively reduces the multiplier effect. It takes money out of the measured economy, and is used on black market and illicit items (that do not generate tax revenue). Instead of continuing the stimulate the economy through investment, it ends up in a shoebox/under a mattress in queens.


However, how would laundering money impact the economy? Wouldn't it falsely report a higher nominal GDP?

If it wasn't repaid, the person would default on their loan and their assets would be seized. Bank gets their shit back.

 

People would just get other jobs, there would be more retail companies, more farms, more construction etc etc..
As for the courts, there are more reasons for going to court than just crime

 

No, it wouldn't be factored into GDP as any revenue generated is not directly recorded and if the TV's were to be sold on there is one more the multiplier effect decreased, just to a different economy, but really it depends on the circumstances. In the instance you stated, it possiblly could help the economy, but I was talking about stealing from actual companies, not from person to person.


And the GDP would not increase as most of the time it isn't a re-sale, and is for personal use, and also no tax or anything is payed on the produce, and it is not recorded so no change to the Economy is recorded.


I appreciate the points you made though, as they are questionable and can be argued from any angle.

 

I buy foreign goods anyways

 

yes it does

Due to all the court cost and fines.

Im definitely sure they make bank off all the people that commit the crimes.

GENIUS!

 

I think you're misunderstanding me.

GDP is all final goods and services. If the TVs have already been produced, than they have already contributed to GDP. Reselling them creates additional value. So if a TV is stolen, the worth of production is already factored into GDP.

Laundering money would minimize the negative economic effects of black market dealings. The money is reentered on the system, and spent on legitimate, taxed, items.

I don't think theft is the major economic issue in dealing with crime. Crime effectively reduces potential GDP and limits economic growth. It reduces the work force (inmates/unemployable felons). You could argue that it impacts the job market, reducing the number of qualified, non imprisoned, applicants. With less applicants the workers have the advantages and could argue for higher wages. With higher wages productions costs rise and aggregate demand is lessened. It shifts to the left and you'd end up with a recession.

However all the money spent housing/feeding prisoners also stimulates the economy. If not for taxation, it wouldn't be an issue. Gov't contracts/spending are included in AE/Aggregate Demand and certainly help the economy.


tl;dr illicit transactions don't generate tax revanue and that sux

stealing isn't all that much of an issue, value of production is already calculated

building jails and feeding inmate provides stimulus to economy but taxes suck

if errybody is in jail lack of workers = workers get paid more and companies can't produce as much stuff (assuming labor/production costs are fixed and don't fluctuate quantity).

yolo

 

i think everything makes the economy run even crime which puts people in jail and gives jobs to guards and etc but then again we tax payers are the one who pay :s


Sai,