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CRIME: A TAX ON THE ENTIRE ECONOMY

CRIME: A TAX ON THE ENTIRE ECONOMY
August 24
01:05 2018

“Crime acts like a tax on the entire economy: it discourages domestic and foreign direct investments, reduces the competitiveness of firms, and reallocates resources, creating uncertainty and inefficiency”—(Claudio Detotto and Edoardo Otranto, 2010).

In recent months there have been continuing reports of armed robberies, and in the month of July 2018 alone, the Belize Crime Observatory (BCO)’s data showed that the number of robberies increased by 56%, having climbed from 25 to 39 incidences when compared to July 2017. At the same time, the statistics for July 2018 do show that most other major crimes are down relative to this same period last year.

When looked at from the start of the year to July 2018, the BCO reports that “cases of murder, robbery, and burglary rose: murder and burglary each by almost 12%. The biggest concern is robbery, which has risen by 62% over the same period last year.”

Indeed robberies are a concern, as it appears that this form of crime is the most difficult to establish a type of profile. In mid-July there were the robberies of a tacos vendor, a well-established store on Daly Street, and the attempt at a restaurant. Once the scope is expanded to look from May to July 2018, the victims of robberies become even more diverse, ranging from a fruit stall, to multiple gas (service) stations to even security firms or officers.

The only common thread is that the victims or attempted victims possessed or were perceived to possess valuables, including cash or goods. In short, that common thread fits the description of virtually every micro, small, medium-sized business throughout the country. Additionally, it appears that as the police department begins to concentrate their presence in certain areas, as was done with Albert Street in Belize City, the criminal elements ostensibly shift to those zones where the Police presence is less dense.

Consequently, it is impossible for entrepreneurs to rely exclusively on policing efforts; but rather businesses have to take measures to secure their premises by adding security officers, installing additional security cameras, participating in business (neighborhood) watches, or curtailing opening hours. The latter option, for example, has downtown Albert Street as possibly the most prominent example. Once a bustling business hub even into the late hours of the night, the traditional downtown has evolved into a lifeless part of the city shortly after the standard close of business hours.

And this brings us back to the opening quote from Detotto and Otranto (2010). Empirical works have consistently shown that criminal activity has the ability to reduce economic growth if for no other reason than its “crowding out effect” on private investment. And therein is found an interesting paradox.

A rise in crimes such as robberies and other property crimes are often attributed to the lack of employment; however, the increases in such crimes have also been shown to decelerate the rate of employment growth. Said differently, there is quantitative evidence that suggests that the lack of jobs can cause an increase in certain crimes, but the increase in those crime typologies can also stymie job growth.

Interestingly, Detotto and Otranto had found evidence that crime—which, again, acts “like a tax on the entire economy”—can also hinder the rate of an economy’s recovery during recessionary times. And given that the root of criminal activity is often found within a socio-economic construct, the solution is clearly not limited to one sector of society or the government. Therefore, among the questions that have to be asked and answered is the matter of how can the government, the private sector, and civil society as a whole collaborate to ensure that opportunities—especially employment opportunities—are not only made more “available” but also more “accessible”.

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