Much has been discussed (sometimes in the form of political propaganda, but discussed nonetheless) in recent years about the link between the black market and fanatical terrorist-like organizations. The trail of money from the sale of things like knock-off handbags, bootleg DVD's, drugs, and the like can easily be seen leading back to criminal organizations, generally with some political bent.
While it's hard to argue the money trail (who do you think sells this stuff?), as well the "effect" portion of the theory (terrorism isn't good) - the "cause" seems to have been relegated to the arena of moral and political propaganda. Terrorists are evil-doers, thus so are pot smokers and bootleg DVD collectors. Patrons of the knock-off Prada handbag peddler in New York City? That's right: evil-doers.
Maybe this suffices for the simplicity necessary nowadays to market a political and moral agenda. Unfortunately, real-world cause-and-effect isn't so black and white. When we look at the issue under the microscope of socio-economic reality, the real causes involve players in our own capitalist economy: the companies that supply goods, and the consumers who want them.
The issue is of serious concern. Sure, it certainly may be difficult to take it seriously for most people, when the only interface to the issue is Reefer Madness-style public service announcements during the Super Bowl, somehow drawing a line from a teenager's desire to experiment with marijuana to Islamic fundamentalists flying planes into buildings. However, with the rapid globalization of the economy, combined with the fact that terrorist attacks are now a threat within the borders of nearly every nation - the issue of the supply and demand of the black market should be a primary matter in the War on Terror.
Sometimes it helps to skip over the moral arguments and move right into the universe of Economics 101 (in that morality is often made up, and economics is real). Black markets often exist because of a gap between the value of a product and the demand for it. This gap is often caused by some artificial effect on the current value of the product, because unaltered supply and demand should create a value for a product that generally works for everyone that needs it. We all complain about the price of gas and groceries, but there is a reason that there isn't a thriving black market for it.
There is, however, a black market for what our culture considers high-end luxury items. A select few people with relatively massive expendable income have valued, for example, certain purses or watches thousands of times higher than their normal, mass-market counterparts. I'm not about to condemn this on some "higher moral ground"- free market economics safely allows for value to be placed on items for purely intangible, vanity reasons. If you can easily afford a $1000 watch, go nuts.
The problem occurs when the mass culture — not just the ones who have nothing better to do than buy $1000 watches — ascribes a need for or entitlement to the same irrational types of products, disregarding the economic means of quenching this need. It works like this: A purse, for instance, is recognized as a need. The fulfillment of this need is valued at $1000 (a $20 purse will just not do!) The means to fulfill this need is, say, $20 (the person can reasonably afford a $20 purse). Thus, the perfect environment for a black market: $20 knock-offs of $1000 purses.
Now, will our desire for designer handbags bring about the end of Western Civilization? Most likely, no. At least not all that quickly. However, when you look at it conceptually, from above, one begins to see the connection between rampant consumerism and the destructive factions of our global culture. Gluttony and irrational consumerism — for this and many other reasons — certainly aren't helping the security and progress of our civilization.
When we take a look at other areas of the black market problem, the socio-economic causes play out slightly differently. That is to say, the corporations supplying the legal versions of these products aren't necessarily free of fault, either.
The digital age has turned the entertainment industry on its head. The economics of the entertainment industry have always been very different than, say, manufacturing; the value of the end product — what is essentially intangible "content" — is mostly fueled by perception. For decades there was rarely — if ever — a price war in terms of the cost of a CD or VHS/DVD movie. Even though the tangible, base product (essentially a bunch of zeros and ones on plastic) was of little actual value, the ethereal "meaning" of the product (songs, words, and/or images) had a high relative value in the market. Of course, having a monopoly on the distribution of said product helped inflate that value.
As the Internet became widely adopted, an interesting change occurred with the perceived value of entertainment content. It sank to next to nothing. The masses were easily — albeit illegally — able to obtain the same product for free. And they did. This is in stark contrast to the economics of the $1000 designer purse, where people clamor to value the intangible characteristics of a product well beyond the cost of its parts and distribution. Simply put, the masses told the entertainment industry that they wanted to consume massive quantities of their product, but they wanted it dirt cheap.
The industry responded not by quickly changing the way they sell their product, but by the rather curious move of criminalizing and suing their own customers in bulk. One would think that a normal market response would be for one or two record companies — for instance — to respond to the realities of the market and maybe to give away the songs as a leader into making money off concerts, t-shirts, and the like.
The irony in all of this is that the aforementioned changes in the demand were a result of the expense of distributing the supply truthfully becoming dirt cheap - a situation most industries beg for. However, the entertainment industry seems to be sticking by an inflated value for its product. At the same time, criminal organizations certainly don't mind selling bootleg CDs and DVDs at a price the market will bear. Yet again, an irrational concept of value creates a black market- this time on the supply side.
The black market is unlike any other illicit and criminal environment in that it directly exposes — and exploits — irrationality in the counterpart legal environment it mimics our economy. And the black market is no small affair - by some counts it is twenty to thirty percent of the entire global economy. That's actually not such a big problem until we see where this money is going.
As we evolve into a global economy, this black market is stretching far beyond the simple desire of an individual to make a quick-and-easy buck. The bad guys are no longer a few derelicts on a street corner peddling fake watches from a trench coat. Rather, the bad guys are now extremist political organizations — terrorists — many bent on disrupting or destroying capitalism itself.
One may take this as an indictment on the general concept of capitalism. Certainly, as we've seen, the forces primarily at fault for the rise in the black market are the players in the game of capitalism: suppliers and consumers. However it is not quite that simple. The problem is not capitalism, but rather the inability of the said players to responsibly participate in capitalism.
The variables here that cause the irrational flaws in the market — which, in turn, feed criminal interests — are very much cultural, even psychological. We are a culture that increasingly devalues true logical thinking. It's perfectly accepted for a consumer to value a purse at $1000. It's perfectly understandable for an industry to try to cling on to a business model based on inflated perceived value.
Terrorism is not funded simply by "evil doers" doing evil things. It is funded by illogical thinking and irrational consumerism. That, in the end, may be the toughest war to fight.
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The Value Chasm: Fake Prada Handbags and Terrorism
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