Wednesday, January 11, 2012

mob rule

The headlines will go to the sound bite: "the Mafia is Italy's No. 1 bank." But read the fine print: the mob works hand-in-glove with the 1 percent. Reuters has the details.

"The classic neighborhood or street loan shark is on the way out, giving way to organised loan-sharking that is well connected with professional circles and operates with the connivance of high-level professionals," a report by the anti-crime group SOS Impresa said. Old style gangsters handing out cash in bars and pool halls have been replaced by respectable bankers, lawyers or notaries. SOS Impresa calls this "Extortion with a clean face" whose victims typically are "are usually people in traditional retail sectors like food, greengrocers, clothes or shoe shops, florists or furniture shops."

This is one kind of informal economy we don't need--but it's also an indictment of the formal system. If merchant-led credit and investment cooperatives could aid small businesses, they wouldn't have to resort to loan sharks for cash. If it was easier for street markets to operate, they wouldn't have to pay protection money to crime syndicates. The Mafia used to be somewhat communitarian. Now it simply finds ways to exploit needs that the formal system doesn't meet.

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