Economic Gangsters

Economic Gangsters: Corruption, Violence, and the Poverty of Nations

Raymond Fisman
Edward Miguel
Copyright Date: 2008
Pages: 256
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  • Book Info
    Economic Gangsters
    Book Description:

    Meet the economic gangster. He's the United Nations diplomat who double-parks his Mercedes on New York City streets at rush hour because the cops can't touch him--he has diplomatic immunity. He's the Chinese smuggler who dodges tariffs by magically transforming frozen chickens into frozen turkeys. The dictator, the warlord, the unscrupulous bureaucrat who bilks the developing world of billions in aid. The calculating crook who views stealing and murder as just another part of his business strategy. And, in the wrong set of circumstances, he might just be you.

    InEconomic Gangsters, Raymond Fisman and Edward Miguel take readers into the secretive, chaotic, and brutal worlds inhabited by these lawless and violent thugs. Join these two sleuthing economists as they follow the foreign aid money trail into the grasping hands of corrupt governments and shady underworld characters. Spend time with ingenious black marketeers as they game the international system. Follow the steep rise and fall of stock prices of companies with unseemly connections to Indonesia's former dictator. See for yourself what rainfall has to do with witch killings in Tanzania--and more.

    Fisman and Miguel use economics to get inside the heads of these "gangsters," and propose solutions that can make a difference to the world's poor--including cash infusions to defuse violence in times of drought, and steering the World Bank away from aid programs most susceptible to corruption.

    In a new postscript, the authors look at how economists might use new tools to better understand, and fight back against, corruption and violence in the aftermath of the 2008 financial crisis. Take an entertaining walk on the dark side of global economic development withEconomic Gangsters.

    eISBN: 978-1-4008-3479-2
    Subjects: Business, Sociology

Table of Contents

  1. Front Matter
    (pp. [i]-[vi])
  2. Table of Contents
    (pp. [vii]-[x])
  3. Chapter One Fighting for Economic Development
    (pp. 1-21)

    In the summer of 2004, world-renowned Kenyan novelist Ngugi Wa Thiong’o returned to his homeland after twentytwo years in exile. He flew to Nairobi to launch his new novel,Wizard of the Crow, his first in over a decade. Ngugi’s earlier works—a dozen or so novels and collections of stories, which he began publishing just after Kenyan independence in 1963—had been wildly successful, not only in Kenya but throughout the world. Through his carefully wrought characters and achingly familiar plots of loss and suffering, Ngugi captured the bewildering contradictions left behind in the wake of European colonialism.


  4. Chapter Two Suharto, Inc.
    (pp. 22-52)

    What’s it worth to be the president’s son? Ask the average Indonesian and he’ll tell you it’s worth a lot—a whole lot. Based on what he saw under former President Suharto, it was enough for Suharto’s son, Mandala Putra Suharto, to pay for multimillion dollar vacation homes scattered about the globe, a fleet of fancy cars, and other playboy indulgences. The exploits of Tommy, as he’s known, were standard fare in local tabloids and provided everyday Indonesians with a window into the privileged lives of their First Family. Tommy driving around Jakarta in his Rolls Royce; Tommy attending a...

  5. Chapter Three The Smuggling Gap
    (pp. 53-75)

    The story of Lai Changxing is a classic rags-to-riches tale of success in the exuberant capitalism of modern China. The son of illiterate, penniless farmers, Mr. Lai, along with countless others, sought his fortune in the Fujian provincial capital of Xiamen. He arrived in the mid-1980s, just as the Chinese government was beginning to loosen its chokehold on private enterprise. Mr. Lai came with no money and no connections, unable to read and write. By 1990 he was a millionaire. By 1999 he was a billionaire. He had a finger in all of Fujian’s economic pies, from sports teams to...

  6. Chapter Four Nature or Nurture? Understanding the Culture of Corruption
    (pp. 76-110)

    In October 1994, Antanas Mockus, a professor of philosophy and mathematics, was elected mayor of Bogotá, Colombia, by a landslide. Bogotá was still reeling from the legacy of Pablo Escobar and the drug wars of the previous decade. Crime was rampant—the city held the dubious distinction of being the murder capital of the world, with over 4,200 homicides in 1993 alone—and the municipal government was notoriously corrupt. Bogotanos were fed up and Mockus, an “antipolitician” by his own account, who had never held public office, was charged with the seemingly impossible task of creating order amidst chaos.


  7. Chapter Five No Water, No Peace
    (pp. 111-135)

    Lake Chad has disappeared. The lake, which had nurtured the land-locked people of Chad in the Sahel region of central Africa for all of recorded time—providing its surrounding inhabitants with fresh fish, water for drinking and irrigation, and a waterway for regional trade—vanished in a matter of decades. In the 1950s Lake Chad, at 25,000 square kilometers, was the sixth largest lake in the world, the size of Lake Erie or Lake Ontario. Today Lake Chad is more of a muddy pond than a real lake, expanding and receding with the rains, teasing locals who remember and long...

  8. Chapter Six Death by a Thousand Small Cuts
    (pp. 136-158)

    Murders, kidnappings, and car-jackings are part of daily life in the sprawling megacities of the developing world, causing the rich and privileged to retreat to lives behind high, barbed wire-topped walls. Kenya’s capital got the nickname “Nairobbery” for a reason. While civil war is violence played out on a grand and tragic scale, countries spared large-scale conflict can still suffer death by a thousand small cuts in the form of violent crime.

    Some of these personal tragedies have obvious economic underpinnings—the hungry and destitute naturally covet their neighbors’ possessions. The fight for survival among slum dwellers drives urban crime....

  9. Chapter Seven The Road Back from War
    (pp. 159-185)

    The Vietnam National Army Museum in Hanoi isn’t your typical tourist destination. There aren’t snack bars or fancy gift shops. Instead, in room after room the museum displays tons (literally) of guns, grenades, shells, and other armaments used by the Vietnamese and their recent war adversaries. The only sculpture is the twisted metal frame of a downed U.S. fighter plane. The museum commemorates Vietnam’s proud military history: some of the world’s mightiest armies—including those of the United States, China, Japan, and France—fought and lost wars in Vietnam during the twentieth century, a point the Vietnamese are eager to...

  10. Chapter Eight Learning to Fight Economic Gangsters
    (pp. 186-206)

    Crooked politicians and contractors have been siphoning off cash from road-building projects for as long as there have been roads—maybe even longer. Road construction requires materials, like sand and stones, and lots of manual labor, all purchased locally by contractors. The Tony Sopranos of the world have figured out that there’s good money to be made by overinvoicing these contracts: double the budget for building supplies, buy some cheap concrete, and split the leftover cash with your cronies in the roads ministry.

    Kenyans blame this age-old problem for the potholed, traffic-clogged streets in their capital, Nairobi. Only 14 percent...

  11. Epilogue Doing Better this Time
    (pp. 207-210)

    We come full circle to where we started this book. Forty years ago, people throughout the developing world contemplated their futures with a sense of hope and anticipation. Since then there have been countries that have made the great leap forward to prosperity—South Korea, Malaysia, Taiwan, and now China. India may be next. But we’ve found that in all too many parts of the world, people in the village—and increasingly cities—are scarcely better off than their grandparents were half a century ago. Poverty in Africa and parts of Asia seems more deeply rooted than ever. We’ve tried...

  12. Postscript to the Paperback Edition
    (pp. 211-214)

    We scholars of violence and corruption unfortunately don’t have to worry that we’ll be out of a job anytime soon. Since the hardcover edition of our book appeared, a whole new crop of economic gangsters have provided us with a lot of fresh material. There have been headline-grabbing stories of corruption—Illinois governor Rod Blagojevich’s attempted sale of a U.S. Senate seat; corporate bribery scandals at the multinational giants Alstom and Siemens; and of course the unchecked greed that seems to have permeated financial markets around the world, embodied in Bernard Madoff and his multi-billion-dollar Ponzi scheme. At the same...

  13. Acknowledgments
    (pp. 215-218)
  14. Notes
    (pp. 219-238)
  15. Index
    (pp. 239-244)