“Crime During Economic Stress”


Created 1/27/09

Economic distress spawns many undesirable consequences across society.  Everything from business to education to charity suffers.  Perhaps one of the most undesirable effects is a rise in crime, ranging from what might be classified as “monetary crime” such as shoplifting and fraud to “crimes of violence” such as carjacking and robbery.  There are many reasons for this rise in crime.  The net result of this occurrence is that it adversely impacts both the cost of living as well as the standard of living.

While there are many types of crime, one that is particularly insidious is that of fraud.  Already, there have been numerous frauds in the money-management arena, with the alleged Madoff scandal perhaps chief among them.   There are several things notable about the Madoff affair – with the size and duration perhaps most striking.  While all of the details have yet to be uncovered, it appears as if this alleged scheme was able to sustain itself because everyone assumed that someone else had conducted adequate due diligence as to the legitimacy of the operations – when in fact no one had.  In hindsight, it really appears to be a rather unsophisticated scheme that could have been easily exposed at any given time.  That is was not is rather troubling on a variety of fronts.

These types of fraudulent schemes seem more prone to unravel during periods of economic distress.   For this reason, as well as others, there will probably be a notable pickup in unraveling frauds across a broad array of businesses.  There are likely a few “Enron-type” corporate frauds, as well as other corporate frauds in existence; it is just a matter of time and proper conditions for them to unravel. 

Cumulatively, these frauds can be devastating on one’s wealth, especially for those victims who are undiversified.

As well, there is another area which is rapidly burgeoning as well – what might be called “wealth reappropriations.”  While this activity is not necessarily “criminal” in nature, in many cases it would strike the common individual as being “unfair.”  This “wealth reappropriation” includes nuisance/dubious lawsuits to extort money, failure to comply with contract provisions, “hidden fees”, and assorted other unscrupulous business and legal practices.  While much of this activity is caused by a desperate need to generate income and thus is hard to prevent, awareness of its possible presence and vigilance are two initial steps that can be taken to guard against it.   

As well, it appears as if increased government fees and taxes will increase.  Government at all levels is experiencing dramatic shortfalls in revenue and the accompanying budgetary distress.  Increased fees takes many forms; the February 2009 issue of Car and Driver had an article detailing “revenue enhancement” measures being practiced through an increase in ticketed traffic violations.  Furthermore, taxes of all types are subject to increase, from sales taxes to changes in the tax code.

Although difficult to forecast, an increase in crime (both amounts as well as types) and “wealth reappropriations” will probably accelerate in a non-linear fashion with further degrees of economic weakness.  This is yet another reason why it is absolutely imperative to be acting upon solutions to economic weakness that are not only correct, but also sustainable.  While there appears to be no other “catch-all” prevention measures to increases in crime, awareness and vigilance against its growing presence as well as other appropriate actions seem prudent.  


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