MAKING SURE CRIME DOESN'T PAY

Let's find an economic solution to what is, in reality, an economic problem

Everyone remembers the tale of Al Capone, the ruthless gangster who ruled
Chicago in the 1920s. A courageous G-man named Eliot Ness formed "the
Untouchables," a tough and incorruptible team that smashed the mobster's
rackets one by one.

Then, in an ingenious move, Internal Revenue Service accountants nailed
Capone for tax evasion and sent him to the Big House for 11 years. Law and
order were restored. Children laughed in the sunny streets of Chicago, the
music played and the credits rolled.

At least that's how we remember the story thanks to the old television show
and far too many movies. Sadly, little about this story is true. Even more
unfortunately, the Capone myth continues to be the model for our thinking
about organized crime and how we should deal with today's chopper-riding
gangsters, the Hells Angels.

I'm sure most Canadians would agree that the solution to gangsterism is more
cops and laws because that's the Al Capone story. Send in Eliot Ness and get
the accountants to follow the money. That's what took down Scarface and it
can do the same to these punks. After all, this is what the police
constantly tell us. Just give us more money and power, they say.

What the police don't say, however, is that we've been giving them more
money and power for years and although they've been stuffing the prisons
with bad guys, there are lots more bad guys running around on our streets.
There's a reason for that. It's the same reason why much of the story of Al
Capone as we know it is false.

"Capone neither 'ran' Chicago nor the Chicago rackets," writes historian
Michael Woodiwiss in Organized Crime and American Power. That's because,
like most organized crime, the so-called Capone gang was not the formal,
hierarchical organization we imagine when we think of organized crime. It
was instead a loose, decentralized system of alliances and business
relationships.

Capone's bootlegging, gambling and prostitution operations "were not
controlled bureaucratically," writes historian Mark Haller. "Each, instead,
was a separate enterprise of small or relatively small scale. Most had
managers who were also partners. Co-ordination was possible because the
senior partners, with an interest in each of the enterprises, exerted
influence across a range of activities."

At this point, the reader may be nodding off. Organizational structure? Who
but an MBA could possibly care? It's a lot more thrilling to talk about gin
joints, Tommy guns and takedowns. But as it turns out, organizational
structure was critical to the Capone story.

The loose associations of the Chicago underworld formed a resilient,
multi-dimensional web in which any man could easily be replaced. Not even
the great Al Capone was essential. "Capone's removal as a criminal force in
Chicago made no difference to the extent of the illegal enterprise in the
city,"writes Woodiwiss.

Now, if Capone's organizational structure were unique to 1920s Chicago, none
of this would be terribly relevant. But as it turns out, decentralization is
the rule in organized crime. The reason for this is almost Darwinian: Formal
hierarchies collapse if key figures at the top are taken out, whereas
decentralized networks shift and adapt when someone is killed or imprisoned.
The Colombian cocaine trade is a perfect illustration, having moved in 30
years from domination by Pablo Escobar and the Medellin cartel to a complex
array of tiny, loosely affiliated groups.

The same evolutionary forces were at work here in Canada, when Quebec Hells
Angels leader Maurice "Mom" Boucher launched a war to monopolize the drug
trade and make himself lord of the underworld. Bikers died by the score and
most of the survivors are in prison, including "Mom."

As the gangsters say in hard-boiled novels: not smart. The Ontario Angels
have learned the lesson and they run a decentralized system of alliances and
relationships that Al Capone would certainly recognize.

Capone would also recognize the Angels' main money-makers: drugs,
prostitution and, to a lesser extent, illegal gambling. Organized crime
exists mainly to satisfy black markets.

True, gangsters also engage in extortion, fraud and theft. But the really
big money is, and always has been, in supplying forbidden goods and
services.

Capone always insisted he was "just a businessman" and he was right.
Organized crime is a business. It happens to be an illegal business in which
disputes are settled with uglier means than lawsuits, but it is still a
business.

Gangsters might break criminal laws, but they have to obey economic laws,
including the fundamental law that demand creates supply. They sell only
what people want and cannot get legally. Jail them and someone else takes
over.

There's always someone else because black markets are, almost by definition,
fantastically profitable, and nothing motivates human beings like fantastic
profit.

That is demand creating supply. Even more than decentralized organization,
it is the reason why, when the Feds took down Al Capone, nobody went thirsty
in Chicago. It's why giving the police more money and power may fill the
prisons with Hells Angels, but it won't touch the underlying criminality.

To do that, we have to accept that organized crime is an economic problem
and look for an economic solution.

In 1933, Chicago hit upon such a solution. It wiped out the black market in
alcohol and put an end to the glory days of the gangsters. It was the repeal
of Prohibition.

Most Canadians may not be prepared for such radical stuff but the inevitable
failure of cops-and-crackdowns approach will give them plenty of time to
contemplate alternatives.