November 5, 2006
Crime Epidemics
Crime Epidemics-BECKER
Chicago, where I have lived for the past 35 years, is not the safest city, but it seems like a paradise of safety compared to Mexico City, where I just spent a few days. On first arriving I was told that since robbery and kidnapping are so rampant, it is not safe to go for walks, even in the best neighborhoods. I spent three otherwise delightful days at various meetings where I did not walk more than a few feet in the streets of this enormous and highly attractive city.
As one illustration, we were on our way by car to a luncheon meeting in the middle of the city with an important government official, but were caught in extremely heavy traffic due to a political demonstration. As the time of the trip increased from an expected 20 minutes to over an hour, I suggested we walk the remaining distance, which was less than half a mile. The driver, and my host, a native of this city now teaching in U.S., both said it was too dangerous-although some persons were walking the streets in a neighborhood of small shops selling simple and cheap goods. My companions argued we had a good chance of being robbed or kidnapped since we would stick out in our suits and conversation in English.
I am not trying to single out Mexico City, a city that I am extremely fond of. The same experience could be repeated in major cities in all parts of the developing world, although I will concentrate in this discussion on Latin America. It has been unsafe to walk in Bogot√°, Colombia, and Brazil's Rio de Janeiro for decades. Buenos Aires is a graceful European style city, but it has experienced such a rapid growth in crime during the past decade of economic instability that it too is now considered quite unsafe. To develop solutions to this growing crime problem, a Center on Crime is being created in Argentina at the Di Tella University that has the top economics program in that country.
Not just the rich and middle classes are victims when crime rates are high. Poorer victims lose a few pesos and cheap watches, and may get knifed or beaten in the process, while very small shopkeepers have their take for the day stolen as they close up shop, or even in the middle of business hours. The poor are victimized disproportionately even though they have little money and other possessions because the rich and middle classes take costly precautions to protect against crimes. They drive rather than walk or take public transportation, they install burglary systems and live in gated communities, and they hire security protection.
Crime festers and grows in countries where unemployment is high and economic opportunities low for a large enough fraction of the population. Also essential in encouraging crime is that criminals are not likely to get caught and punished. In Mexico and many other countries, conviction rates are low partly because the police are corrupt and often commit crimes themselves, and they have no time or incentive to go after other criminals.
Statistics reported by the police indicate that robberies and other felonies are much higher per 100,000 persons in the United States than in Mexico. Yet anyone who has lived in or visited regularly both countries would recognize that something is fishy about these statistics. The explanation is found in looking not at police reports, but at crimes as reported by households from Victimization Surveys that ask households if they have experienced various crimes.
These victimization reports indicate that robberies, for example, are far more common per person in Mexico than in the US. However, a much larger fraction of Mexicans do not bother to report burglaries, assaults, and most other crimes to the police (they do report car thefts since they want to collect the insurance on their cars) because they do not expect the police to do anything about it. In fact, the police may hassle them, or otherwise take much of their time, and show no results.
The consequences of high crime rates are serious and far-reaching. A general disrespect for laws often follows when felonies are committed with impunity. In addition, about 2-3 per cent of employed Mexicans are used to provide private security to protect against crimes rather than being engaged in what would be more productive employment if crime rates were much lower. High crime rates add to the difficulty of getting skilled and other natives who are working abroad to return to their home countries. Foreign companies are reluctant to set up businesses because foreign employees do not want to raise families in high crime environments.
Perhaps most costly to welfare is the pervasive fear of crime when children go to and from school, when going to visit friends, to work, or to shop, especially with children. A long time ago Jeremy Bentham, the great English utilitarian, emphasized the importance of the "alarm" created by crime. Over time I have come to appreciate more the significance to welfare of the fear and alarm from the possibility of being robbed or assaulted.
The problems stemming from the high crime rates in Latin America (and elsewhere) are clear, and so too are many solutions. Unfortunately, solutions are not easy to implement in the present political and economic environments. In fact, many persons throughout this region are resigned to high crime rates as if that is inevitable in modern economies and societies. But the US experience shows the contrary. Crime rates grew sharply in this country from 1960 to the early 1980's. Many commentators attributed that to the growing alienation of the poor from the rest of society, or to declines in "social capital" that reduced private group protection activities against criminals. Yet for the past 25 years, crimes against property and against people have fallen greatly, despite a sharp growth in the degree of earnings inequality that might be expected to cause greater alienation by the less educated and less skilled.
The explanation for the fall in American crime rates during the past 20 years is in good part that many more criminals began to be caught and sent to prison. Another part is due to the legalization of abortion in the 1970's, as analyzed by my colleague, Steve Levitt. Politicians like former Mayor Rudolph Giuliani of New York discovered that fighting crime is not only socially useful but also is good politics.
I believe that the President-elect of Mexico, Felipe Calderon, and many other new political leaders in Latin America, are aware that crime is an important deterrent to greater economic and social progress in their nations. I would recommend that they use both the "stick" and the "carrot" to fight crime. The "stick" included apprehending more criminals, punishing severely criminals who commit major crimes, and not punishing severely those who commit minor crimes. To apprehend more criminals, it is necessary to reform their corrupt-ridden police forces, partly through the creation of Internal Police Review Boards that focus on police corruption. The purpose of such Boards would be to punish police who engage in serious crimes, and penalize or dismiss police who do not try to catch criminals and protect against crimes.
The "carrot" partly means much higher pay for police. Their pay is now abysmally low in Mexico and many other countries, so that men and women attracted to becoming policemen expect to supplement their incomes by bribes and other corrupt acts. Good pay would attract more honest men and women to the police force. It would also raise the cost of dismissal to policemen for malfeasance since their best employment alternatives would then be far inferior to police earnings.
Following Argentina's example, universities and think tanks in other countries should create Centers that are dedicated to analyzing the causes of their high crime rates. They should work on solutions that fit best their particular political, economic, and social circumstances.
It is critical also to improve earnings from and availability of legal jobs, especially for persons at the lower end of the job spectrum. Crimes tend to rise sharply when unemployment is high and good jobs are scarce. Significant improvements in the education of young persons from poorer families would greatly increase their earnings prospects. Improved education is an essential part of the longer run solution to both high crime rates and pervasive poverty, but large reductions in crime rates during the next few years must depend on the other changes I have proposed. For they would work much faster.
Mexico's Crime Problem--Posner's Comment
I have been in Mexico only twice, in 1969 and in 2002, and the increased fear of crime in my second visit was palpable. On my first visit, I felt as safe as in the United States; on my second visit, although I did not feel quite as constrained as Becker describes his recent visit (maybe the crime situation has worsened in the last four year), there were constant reminders of the crime menace (such as the metal detectors at the entrance to the Four Seasons Hotel in Mexico City) and my hosts insisted on driving my wife and me everywhere. As Becker points out, despite the absence of good statistics there is no doubt that the Mexican crime rate is very high. Moreover, an increase in a crime rate greatly understates the increase in the demand for crime that generates the increased rate. The reason is that a rising crime rate induces defensive measures (alarm systems, private guards, gated communities, etc.) that, though they nominally reduce crime, actually just transform the costs of crime to crime victims into costs of crime avoidance by potential crime victims.
The increase in the Mexican crime rate is mysterious. It is true that income inequality in Mexico has increased, in major part it seems because of liberal economic policies that, as in the United States, have increased the demand for skilled workers by subjecting employers to greater competition, both foreign and domestic. And increased income inequality, even when it is not associated with an increase in poverty, increases the gains from crime by increasing the number and wealth of people worth robbing, kidnapping, and defrauding. Yet it seems unlikely that the increase in income inequality in Mexico has been great enough to explain the increase in crime, especially since poverty in Mexico has declined dramatically since the mid-1990s, though the crime rate seems to have continued to grow--at least it has not declined.
Becker rightly stresses the corruption and incompetence of the Mexican police as an important factor in the crime rate. This too is mysterious. Mexico is not a poor country by international standards. Its per capita GDP calculated on a purchasing power parity basis is slightly over $10,000, which places it in the upper third of the world's nations and ahead of such countries as Bulgaria, Romania, Turkey, and China, and within spitting distance of placid Costa Rica. Furthermore, because Mexico has a large population, that per capita figure translates into a total Gross Domestic Product of more than $750 billion. Mexico can afford an efficient police force in its capital!
In 2003 Rudoph Giuliani was hired by Mexico City to advise on how to reduce the crime rate. He made 146 recommendations, based in part on his successful campaign to reduce crime in New York City when he had been mayor and in part on the obvious need to increase the salaries of Mexico City's police. Mexico City's police chief announced that he had accepted all of Giuliani's recommendations. But there was no implementation. I find that baffling.
Although the underlying cause of Mexico's astronomical crime rate may be income inequality, it doesn't follow that reducing inequality is the the most efficient way to reduce the crime rate. It is a fallacy to think that the only sound solutions to social problems are those that remove the underlying causes of the problems. If crime can be repressed by improved law enforcement at lower cost than by attacking inequality, then improving law enforcement is the superior strategy. Efforts to reduce Mexican income inequality would probably either be totally ineffectual or stifle economic growth. Certainly the reform of law enforcement is the place to start.
So the task for the think tanks is not to study the Mexican (or broader Latin American) crime problem as such; for the problem is obvious, and so is the solution (better law enforcement). What they should study is why the Mexican government and other Latin American governments are incapable of implementing the obvious solution.