David R. Henderson  

Malcolm X and the Economics of Crime

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Co-blogger Bryan has done a good job so far of persuading me that my attraction to Malcolm X when I was 26 years old was unjustified. I'm not complaining. It's always good to realize when one's old thinking was wrong, no matter how sentimental one was in thinking that way.

I want to add two thoughts, one of which I had when I first read the autobiography in 1977 and a new one that Bryan's second post made me think of.

1. News you can use. Malcolm X talks at one point in the book--I can't find the page offhand and there's no index--about how he would never break into a house that had the bathroom light on. Why the bathroom light? Because, he explained, if, say, the living room or kitchen light were on, that was probably just to ward off crooks; but if the bathroom light was on, it was plausible that someone was up sick in the middle of the night or just up to use the bathroom and, as Bryan noted, Malcolm X didn't want to confront someone.

I'm a slow learner and it took 2 burglaries--the first in Rochester in 1978 and the second in Oakland in 1979--before I started following Malcolm X's advice.

2. The "numbers" racket. In the early 1960s, I was a big fan of The Untouchables, a show about Eliot Ness that starred Robert Stack. I loved the music, the grim scenery, Eliot Ness as hero, Walter Winchell's voice (he narrated it), etc. When Eliot Ness's staff would give him background info on a hoodlum, you would often learn that he got his start in "Numbers.'' But they never explained what "numbers" was. I learned only about 25 years ago. Commenter Matt C gives a good explanation. Essentially, it was a lottery. Of course, if they had explained that in the show, some viewers might have said, "What's the big deal? It's gambling. Why should that be illegal?" And, of course, today, with so many state governments having a lottery, it would be hard to argue that the government should make gambling illegal while the government runs its own numbers operation.

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CATEGORIES: Economics of Crime

COMMENTS (12 to date)
Brandon Berg writes:

One argument against legalizing private gambling is that competition would impair the government's ability to raise money through monopoly gambling operations.

As long as we accept that government does need to raise some revenue, monopolizing gambling seems like a comparatively benign way to do so. Unlike income taxation, it tends to divert money away from consumption rather than from investment.

Granted, in practice government probably doesn't actually offset lottery revenues by lowering income taxes. And it would probably be better to tax private casinos and lotteries rather than giving the government a monopoly.

liberty writes:

Actually, it would be - and is - the only truly voluntary tax that has so far raised a decent amount of money--I think it's way better than just taxing private gambling outfits. It currently funds the arts, cancer research, and much more in the UK, and presumably funds state government in the US. The only downside is it tends to tax the poor the most--its regressive--but at least its voluntary.

Norman Pfyster writes:

The argument against organized gambling is that it is essentially organized fraud (in the long run, the house always wins). The other, more historical, explanation is that enforcement of collections tended to involve significant violence or threats thereof.

Philo writes:

You started following Malcolm’s advice . . . so, you stopped burglarizing homes where the bathroom light was on?

Ken B writes:

"my attraction to Malcolm X [around 1977]"

Wow. Sometimes we do improve with age. I'd be tempted to mock you David had I not a worse skeleton in my closet. I supported Carter in 1976.

Matt C writes:

> Co-blogger Bryan has done a good job so far of persuading me that my attraction to Malcolm X when I was 26 years old was unjustified.

There's much to admire about Malcolm X. He had an extraordinary amount of courage. He had integrity (not flawless, but more than most people). He devoted himself passionately toward what he believed. His advocacy (not always consistent) for blacks to be self reliant and independent was appealing.

Of course much of his thinking was flat out wrong and unreasonable. He was consumed with resentment and anger. As a quasi-revolutionary, I suspect he was involved in much uglier and worse things than the autobiography lets on.

I think you can admire the man without doing so uncritically.

> And, of course, today, with so many state governments having a lottery, it would be hard to argue that the government should make gambling illegal while the government runs its own numbers operation.

The Harlem numbers racket had a truly awful payout ratio of 60%, far less than what you'd get at a casino. It was about the same as a modern state lottery, though.

If the states did not claim a monopoly on lotteries, the casinos would destroy them in competition.

gwern writes:

Philo: drat you for beating me to that joke.

Daniel Artz writes:

Liberty, just why do you think that running a state sanctioned lottery, where the odds against the player and the total return to players are infinitely worse than the old numbers games run by the mobs or anything (even Keno) offered in any private casino, is so much better than taxing privately run gambling. Without the monopoly on gambling, state run lotteries would have to start competing by offering better returns to players. Those poor people who play the state run lottos, where the odds against a jackpot are on the order of 174,000,000:1 against, and the prize payout pool is only about 50% of revenues, would now have the choice to play privately run lottos offering much better odds and better payouts (60% or 70% of the betting pool is VERY prifitable for the house, and gives the bettors a significantly better return). And Norman, if organized gambling is just organized fraud, how can state-run lotteries in which the House (i.e., the State) keeps twice as much, be any better? If the potential for violence on collections is a problem, simply outlaw gambling on credit; no bet may be accepted unless cash is put up in the amount of the wager, and gambling debts are legally unenforceable.

Arthur_500 writes:

Daniel Artz writes: Daniel, I actually think we might have a bit better society if "Guido" were ready to collect outstanding debts. I think the foreclosure mess would have been cleaned up by now.

Brandon Berg writes: Brandon, I appreciate your insight into the idea that gambling is simply another form of consumption, rather than investment.

Everyone complains that the "poor" shoulder the burden of gambling. I think the "poor" shoulder the burden of their poor life choices (and bad luck). Why is it OK to purchase a $175 basketball jersey and wear $200 sneakers while standing in a free food line and take a picture of Mr. Obama serving food with your $500 camera that has a $125/month fee?

This a good choice for the "poor" but throwing down $5 for a chance at having a chance number appear in the newspaper is wrong. Maybe we need to increase the size of the bets so we aren't exploiting the poor.

Ken B writes:

@gwern: It was a joke?


Come to think of it, I do recall David talking about needing to support himself in college ...

@liberty: But the mechanism itself will if you look at it closely prove inefficient. Private operators would earn from running the things, and pay for doctors etc.

Shane L writes:

If I remember from my own reading of the autobiography many years ago, Malcolm X went through two major changes.

1) From irreligious apolitical criminality to devout, highly political Nation of Islam. X became an anti-white racist and abandoned all his substance abuse.

2) From Nation of Islam racist extremism to Sunni Islam and a general softening of his political views. He became sceptical of the Nation of Islam and of his former anti-white racism. His trip to Mecca was eye-opening, as he saw white, black, Asian Muslims all praying together.

So there are positive aspects of this story. I have used Malcolm X as an example in discussions with some anti-religious friends as an example of someone whose behaviour and views were improved by a religious conversion. We might not like many of his beliefs but sadly his life was cut short and we don't know how they would have changed in time. He seemed to have shifted away from his racism towards the end of his life, and religion played a role in that, and in his abandonment of parasitical criminality.

liberty writes:

Daniel &etc,

It's not a fraud - at least in the UK - because most people who play realize that they have little chance of winning, and that the state raises money (hence the payout is much less than they take in). They see it as a way to support things they like (the arts, cancer research, etc) while also getting something for themselves -- the chance of winning and the occasional win. Also, only the massive jackpots have that small a chance of winning, there are generally a series of smaller jackpots with a much higher chance of winning, on the order of 10,000:1, 1000:1, 100:1, etc.

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