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I was just reading an article regarding the increasing incidence of Internet crime and I started to contemplate the overall cost of crime worldwide. Now I have a strong inclination towards international aid being effective and it has always concerned me about how we can do it better, how we can minimize the unfortunate corruption that goes with it, how we can turn the tide on worldwide poverty. I am often met with resistance to the effect that aid should be for relief only, that aid is being abused and that market forces should aid development not handouts, that all the aid is wasted yet when I consider it, the amount that the say the World Bank applies to world aid by way of loans in a year, reportedly about 30 billion US dollars, it is dwarfed by the magnitude of defense spending on one hand and crime on another.

The British Home office in the UK estimated in 2000 that the cost of crime prevention and prosecution in the UK alone exceeded 60 billion dollars without discussing the proceeds from crime in the economy. In another recent report from Italy, looking at the proceeds, the Mafia is reputedly the biggest business in the country with a turnover of 127 billion dollars annually or 7% of their national GDP without taking into account the extra billions of dollars in the cost of policing, prosecuting, public damage, prisons or the personal costs that accompany the theft of valuables.

In Afghanistan, the production of illicit drugs now accounts for an estimated 50% of the national GDP or 3 billion dollars while that other rogue state Myanmar produces most of the other 8%.

In the US the cost of crime is reaching outlandish and ridiculous proportions. Quoting from an article from the Journal of Law and Economics , the cost of crime in the US now exceeds a staggering 1 trillion dollars annually. By way of explaining how that figure is arrived at and quoting from the article
The effects of crime (and their resulting costs) can be grouped into the following categories:
Crime-Induced Production - the allocation of resources to the drug trade or operation of correctional facilities - accounts for $400 billion annually.
Opportunity Costs - which reflect the loss of active criminals' and inmates' potential productivity and the cost of crime prevention - are about $130.3 billion annually.
Risks to Life and Health because of violent crime represents a burden of $574 billion annually.
Transfers due to fraud and unpaid taxes account for another $603 billion of losses to the economy due to criminal activity.
This amount is close to 30% of the national US budget in 2007 that was posted at 2.9 trillion dollars or again around 8% of the US GDP of 11 trillion dollars. The US now has almost 1/3 of the total prisoner population in the world with 2 million people behind bars.

At an annual international GDP around 39 trillion dollars, if that same ratio of 8% is extended across the economies of the rest of the world, we are looking at a staggering 3 trillion dollars being the cost of crime, I will say that again, three trillion or three thousand billion, being the annual economic component of crime in the world today. That is more than the whole US national budget.

The divide between rich and poor would seem to be having an extreme effect on the world economics, slanting it in an almost impossible direction.

In its context and although the figures above are rubbery as the true cost of crime may never be completely known, it makes the annual budget applied by the World Bank to remedy the world's poverty that only accounts for 1% of that total amount look completely insignificant by comparison.

Learn more about this author, Steve Hutcheson.
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