From pecan pralines to ‘dots’ as currency: how the prison economy works
Excerpt: There are broader lessons from this currency invention. Many policymakers regard the rise of online banking as a way to tackle illicit trade and money-laundering, because banking digitally leaves a trace. This should mean that digital economies are easier to police than cash-based ones. Some countries are even considering banning paper money entirely as a way to clean up their economies. Yet an understanding of how currency innovation works suggests these hopes are credulous: from remote islands to high-security prisons, money invention is informal, organic and – as Louisiana’s prisons show – can now be untraceable. The new digital “dot” currency is reportedly already being used to launder cash across national borders. [In several of his novels, Robert Heinlein speculated on alternative ways to conceal wealth and make purchases with it. In real life, we all understand that there are many economic activities that have to remain hidden (illegal products and/or services, bribes, et cetera). Virtually none of the economic measurements we see in the news include these “underground” transactions. In some very corrupt countries, the “underground” economy is actually larger than the official one. In others, the amount of activity is debatable, but undeniably large. Best estimates here in the USA are that about 20% to 25% of ALL economic activity is underground. That includes things like traffic in stolen goods, illegal sex work, illegal gambling, drug traffic, people working under the table, and neighbors who swap things and/or services. Honest, free people can–and do–use cash for many legal payments, but how do you conceal a bribe paid by check or credit card? The method mentioned in this article is clear, clean, simple, and virtually untraceable. And, if it’s already common in prisons, it’s a guaranteed bet it’s already wide spread in the underground economy, too. Ron P.]
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