Crime – The Economic Perspective

By Danyal Razi

When my teacher told me that Economics affects everything around me, I had conveniently assumed that it was just one of his other hyperboles. Only recently I realized how right he was. How even crimes and economy are related. And how can these crimes be avoided if our economy was doing better.

If we look at the increasing number of rapes in our country, we will find that the majority of the offenders belong to the lower socio economic classes and are unemployed or unskilled labourers with only an elementary-school education or less. Ever thought why? Frustrated with economic hardships and the consequent problems, they choose to vent all their anger at someone else.

What I suggest here is not merely a hypothesis, statistics support the argument. While the popular debate is always gender sensitization, the policy makers should rather consider mitigating the economic distress that will reduce frustration levels and consequently reduce crime rates in the country. For believe it or not, a crime like rape is also likely to discourage economic activity in the country. When the streets are not safe for women, they refuse to step out of their homes and thus working hands in the economy reduces.

Let alone rape, even a grave crime like terrorism is also fuelled by economic disparities. It is common knowledge that most terrorist organizations have their bases in underdeveloped countries where new recruits are easy to find. In need of money, frustrated against the government and society at large, young people are absorbed into terrorism. According to a UNODC (United Nations Office on Drugs and Crime) report, a link between economic factors and crime could be established in 8 out of 11 countries undergoing economic upheavals. Incidents of theft, robbery and even murder increase as the country witness’s economic slowdown.

imagesEconomic depression is followed by unemployment. The hardest hit is on the young semiskilled or unskilled population. Since mainstream economics has no place for them, they are forced to look at other avenues. Before our policymakers can think of the next step, the “parallel economy” has already made room for itself.

When Mr Minister has come up with a smart economic policy, he fails to realize that he just harboured crime! A recent incident from our economy explains how. The hike in import duty on gold left everyone alarmed. Everybody could predict a rise in malicious activities to import gold and jewellery. Clearly, smuggling is often a result of incorrect economic policies. The hike in import duty was an attempt by the government to reduce unproductive investment. What it didn’t realize was that asking an Indian to part with his gold is worse than asking him to part with money! Thus, this policy backfired and encouraged smuggling.

In fact, one of the primary reasons that a crime like smuggling exists is the basic economics. Smuggling helps to cut down costs that accrue because of Custom Duties, VAT, etc. Demand for a cheaper good with same utility is definitely higher.

Undoubtedly, the state of economy can be a key determinant of crime rate. The economic policies often accelerate crime and behind any crime, there is an economic motive.

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