Economic Effects of Crime in the United States

Economic Effects of Crime in the United States
Criminal enterprises and conduct vary substantially, ranging from low-level, street” crimes against persons, primarily for the tangible property in their possession, to sophisticated, “white collar” crimes perpetrated against large corporations or even against entire industries.
The direct economic impact of criminal activity are those born by its victims, represented by the material value of stolen property, and the cost of repairing the physical damage or destruction of property caused by the methods used to effectuate the crime.
The indirect economic impact of criminal activity are those born by private entities, necessary to prevent and insure against it, as well as the those born by society collectively, to prevent and deter criminal activity, and to apprehend, prosecute, and incarcerate criminal perpetrators.
Street Crime and Property Crime:
The United States Department of Justice (U.S. DOJ) defines violent crimes as those involving either the actual use of physical force or the threat of physical force; it classifies violent crime into four general categories: murder and non-negligent manslaughter, forcible rape, robbery, and aggravated assault (USDOJ, 2006).
The most direct economic costs of violent crime are represented by the cost of replacing personal property lost, but its indirect costs may include both privately-paid and publicly-funded medical treatment and subsequent rehabilitation; time lost from work, including both the cost of privately employed victims’ income and lost productivity for the employers of crime victims; and all the costs associated with preventing recurrence of crime afterwards. According to the DOJ, almost 1.5 million violent crimes were reported in the U.S. In 2006 (USDOJ, 2006)
The DOJ defines property crimes as those not involving actual physical force or threat of physical force against the victim; it includes the crimes of burglary, theft-by- larceny, auto-theft, and arson (USDOJ, 2006). According to the DOJ (2006), approximately 10 million property crimes occurred in the U.S. In 2006, representing almost $17 billion in economic losses.
White Collar Crime, Organized Crime, and Abuse of Public Assistance Programs:
White collar crime encompasses a wide variety of fraud and related criminal enterprises perpetrated against individuals as well as against corporations. It includes banking and investment fraud, insurance and mortgage fraud, corporate and public corruption, money laundering, as well as the abuse of public assistance and medical care funding programs.
In total, it is impossible to quantify the precise economic costs of white collar crime, but it is certainly in the hundreds of billions of dollars, representing direct monetary losses as well as the cost of developing, implementing and maintaining security programs and procedures to prevent future and recurrent crimes of this nature. The indirect economic costs of white collar crime are not limited to its specific victims, but affect society by draining public resources, increasing taxes, raising all forms of insurance against crime-related losses, and undermining the stability of mortgage and financial investment industries (Hendrie, 2006).
Throughout most of the 20th Century, organized crime accounted for a tremendous economic costs passed along to consumers, particularly (but hardly exclusively) in large cities like New York, and Chicago, among many others. Originally formed in this country during the Prohibition years in the 1920s, the criminal enterprises that exploited the black market for illegal liquor subsequently branched out to infiltrate other large industries, such as construction, food and liquor distribution, interstate trucking, waste disposal, and the garment industry.
Primarily by penetrating into the leadership organization of unionized industries, organized crime managed to siphon off public funds, “skim” illegal profits from large corporations, and control entire otherwise legitimate industries through intimidation, including labor strikes initiated via its control of labor unions. The result increased the cost of almost everything sold to consumers in the form of goods and services throughout much of the country. In recent years, increased federal law enforcement attention has been devoted to eradicating major organized crime, with mixed levels of success in different industries and in different parts of the country (Hendrie, 2006).
Computer Crime and Identity Theft:
In the first part of the 21st Century, the increased computerization of society inspired a tremendous increase in computer crimes. In some cases, this represented merely new methods of perpetrating traditional crimes, but the growth of global communications and the Internet as a business medium also provided a conduit for entirely new types of crimes.
In addition to using computer technology and access to corporate networks by criminal methods, the latest generation of computer crimes have focused on identity theft, for the dual purpose of concealing the genuine identity of criminals and specifically, to commit additional crimes in the name of another. The indirect costs of computer crimes are already incorporated into the economic costs of the crimes perpetrated thereby, but the direct costs of computer crime are those borne individuals who must clear their names of criminal association, restore their credit, and monitor all credit-related activity in their names for the foreseeable future, also amounting to many billions of dollars in the U.S.
A annually (Ballezza, 2007).
Ballezza, R. (2007) the Social Security Card Application Process: Identity and Credit Card Fraud Issues; FBI Law Enforcement Journal, Vol. 76 No. 5, May/07
Hendrie, E. (2006) Breaking the Bank; FBI Law Enforcement Journal, Vol. 75
No. 7, Jul/06
U.S. Department of Justice (2007) Uniform Crime Reports. Federal Bureau of Investigation Homepage. Accessed October 23, 2007, at

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