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Question
How does mafia influence the society?
Answer
Name of Student
Name of Professor
English 101 Paper
17 February 2015
Contents
Introduction
The influence of mafia on society has increased tremendously in recent times. The Mafia was not as resilient in the past as they are today, and neither was their influence on society as far-reaching as it is today. Today, mafia exert massive influence on society, specifically the economy, government, banks, and criminal activities. To begin with, their influence was being felt on the economic front. With time, the influence started spreading to the government. In recent years, mafia networks have slowly been penetrating into other departments. The mafia’s hands hold the majority of the funds in the economy, they try to engage in terrorist attacks and collect a lot of money through threats, extortion, protection rackets, and other illegal activities.
The aim of this paper is to explain the several ways in which the mafia influence society, specifically the economy, government, loans, and crime. The thesis of the paper is that initially not as resilient as they are now, the mafia have grown in terms of presence to a point where they threaten the safety of people’s lives, thus affecting their normal way of life.
Economy
The activities of mafia fall within the realm of organized crime. Organized crime has had profound consequences on the economies of many countries in the modern world. Mafia bring about massive socio-psychological costs to society. They also engage in extreme, deadly forms of violence that cause massive loss of lives, thereby destroying part of the human and physical capital stock. When mafia infiltrate official economy, the economic consequences can be even more debilitating. All these outcomes increase uncertainty in a country’s business environment. They also increase the level of business risk both nationally and internationally. In the long run, the activities of mafia can lead to the slowing down of the rate of economic growth in a country.
In some countries and regions, mafia are widely regarded as the leading obstacle to economic development. For example, Italy has for decades struggled to rein in on the Sicilian mafia, which has grown in strength and stature to the point of overwhelming authorities in terms of its ability to disrupt the official economy and potentially sabotaging the government. The activities of mafia also continue to hinder development in Latin America, specifically Colombia and Mexico. Another example is that of two former Russian republics: Russia and Albania, where mafia have a strong effect on local economic activities (Goldman 41).
The mafia problem in Italy stands out because it has a long history that spans more than one and a half centuries and its economic effect was at one time so far-reaching as to be felt in other countries, including the United States and Germany. Moreover, the Italian mafia survived many stages of economic development, an indication of the massive economic power that the organized crime network exhibited. Evidently, the mafia has greatly affected the Italian economy in a negative way throughout its existence. It has done this by acquiring strong economic interests locally and spreading its tentacles into the international economy. Moreover, many mafias have copied the model of the Sicilian mafia to establish themselves in other parts of the world, for example, the Yakuza mafia in Japan.
In many countries, an upsurge in the activities of mafia is normally accompanied by a slowdown in the level of economic development (Santino 215). Two things can be deduced from this observation. First, it is possible that many people tend to be driven into engaging in mafia activities whenever there is an economic crisis. Secondly, it is possible that the activities of mafia ultimate lead to a sudden economic slowdown. Either way, mafia do not contribute in any positive way to economic development in times of economic recession. On the contrary, their illegal activities greatly contribute to the worsening of the prevailing conditions. In many cases, those activities may even trigger an economic turmoil because of the resulting increase in business risk and uncertainty.
In Russia, the Russian mafia has greatly contributed to the country’s economic problems over the years. It is unfortunate that not many mafia dealings are reported to the Russian government or international organizations. This situation makes it difficult for analysts to analyze the effect of the mafia on the economy. For this reason, researchers, policy analysts, and government officials only rely on estimates to determine the extent to which the mafia has caused destruction to the Russian economy. This situation has led to growing fears that the mafia will continue to amass more power in Russia, thereby causing further destruction on the country’s economy.
The Russian mafia has continued to generate a lot of money through illegal activities particularly after the fall of communism. These activities have been said to contribute to the numerous problems that have continued to affect the Russian economy ever since, including a rapid decline in Gross Domestic Product (GDP), rampant inflation, growing trade deficit, and growing debt. A decline in GDP can be attributed to, among other things, the activities of the mafia because the incomes that they rake in through illegal activities go unreported in national economic indices.
Similarly, the unreported earnings go untaxed, thereby denying the Russian government the revenue it desperately needs to rein in on its growing debt. This problem is so serious in Russia that the mafia are estimated to control about 40 percent of the country’s economy (Makova 17). By sending their enormous earnings out of the country in efforts to evade detection by law-enforcement agencies, the mafia have led to the emergence of a devastating economic problem of capital flight, whereby a lot of money is being channeled out of the country’s economy.
In many countries, mafia also disrupt the smooth running of the economy by using their immense power to offer “protection” to businesses. Businesses operating in areas that are under the control of mafia are required to pay regular protection fees to mafia. Failure to pay those fees leads to harassment and increased exposure to insecurity meted by mafia members as well as less powerful criminal gangs. Without protection, businesses that operate in mafia-infested areas end up collapsing. In many countries with very high tax regimes, the mafia tend to step in by charging less for protection, thereby hiding enormous incomes from government revenue authorities. By sidestepping governments, mafia end up crippling the affected countries’ agencies and by extension the entire economy.
Government
Mafia affect government in a very significant way. This is because they step in to offer protection where government seems to have abdicated its responsibility to citizens. In essence, the mafia often seek to take the position of government in areas where their power and influence is tremendous. This move dramatically weakens the government, thereby rendering it incapable of restoring law and order in the affected areas. Such situations normally occur in areas that have been neglected by government for a long time. This neglect is normally attributed to various reasons, including collapse of state institutions, social and geographic distance, and ethnic factors. Regardless of the reason for the neglect, the takeover of mafia reflects a growing need among local populations for an existing power vacuum to be filled. Thus, mafia are normally welcome in those areas, thereby putting a serious dent on the legitimacy of the government.
In some cases, the hierarchical organization of mafia and gangs tend to mirror those of government. Although the practices of mafia do not boast of the high level of efficiency that characterizes modern governance, they provide local people with a viable alternative to legitimate government structures, albeit at a higher economic cost. Governments tend to be affected in a negative way because of this turn of events because of the drastic reduction in their power and influence in the affected parts of the country. Once mafia takes over a city, neighborhood, suburb or village, government agencies become weakened because their power over the economic activities being undertaken in those areas is drastically curtailed.
Mafia belong to the category of organized crime, which is extremely difficult for any government to eliminate. Despite this impossibility, governments the world over continue to channel enormous financial resources in the fight against mafia. These efforts tend to steer governments from implementing other important projects, thereby weakening their mandate to the citizens. Thus, governments operating in countries where the problem of mafia is rife tend to face numerous difficulties in their attempt to remain in control of various governance and administrative functions. The struggle tends to be worse because of the mafia’s never-ending struggle to take over government functions in the parts of the country where they operate.
Sicilian mafia, for example, has continue to thrive since the nineteenth century because of the vibrancy of the private protection business. If government security agencies were working effectively, the need for such protection would not arise, meaning that the cartels would be pushed out of business. However, once the mafia take over this security function, government agencies jolt into action. Unfortunately, whatever measures that these governments put in place in response to the mafia threat tend to be coming too little too late because of the swift takeover by the mafia and the putting in place of new business and residential protection structures. Since many mafia groups tend to be extremely powerful, governments fail to unseat them from their spheres of influence.
Governments have also been facing a major setback because of the tendency by mafia to collude with various governmental authorities including the police. Police officers may face serious challenges in their efforts to get in between warring organized criminal gangs and mafia groups. To get leverage, they opt to take sides with one of the mafia groups, understandably the most powerful one in the region. This not only contributes to a massive loss of confidence in the police service by citizens but also weakens the position of the police officers as law enforcers. With time, it becomes difficult for citizens of the affected areas to distinguish between the activities of mafia and those of police officers. This phenomenon is common with the Sicilian mafia as well as the Colombian and Mexican mafia.
A case in point explaining how mafia can affect government is the American mafia during the 1920s. The mafia controlled numerous labor unions, which they used to venture into different businesses. It could even buy up entire police departments and influence the outcomes of electoral processes. The American mafia was preoccupied with maintaining and enforcing cartels in various industries. However, its attention shifted to participation in illegal activities such as bookmaking, loansharking during the 1960s. The mafia delivered on threats with so much precision that it was frequently relied on by many entrepreneurs to provide dispute settlement and contract insurance services. All of a sudden, entrepreneurs started a once-dreaded criminal organization as a principal asset. This example goes a long way to show the impact mafia can have on government operations.
Loans
Like other types of crime, mafia activities have an adverse effect on access to credit. People residing in areas dominated by mafia have been found to pay higher rates of interest on loans in addition to pledging more collateral. As a consequence, they tend to shy away from asset-backed loans in preference for revolving credit lines. The loan market tends to be affected adversely by the mafia activities that dramatically increase firm fragility such as organized crime, money laundering, and extortion (Di Patti 12). Moreover, mafia make it difficult for people in poorer areas to access public funds through loans by grabbing public funds that have been assigned to those areas by government. This practice ends up undermining investment as well as economic growth and development.
Mafia activities affect accessibility to credit by causing social disruption. In the absence of legitimate government authorities to enforce the law, bank operators feel that they have no adequate policy, legal, and structural frameworks to oversee the operations of their business. In a region that is run by mafia, one would expect the rate of crime to be high and the level of business activities to be erratic at best. The resulting fluctuations in business trends makes it increasingly difficult for investors to accumulate wealth, thereby increasingly the possibility of loan defaults (Di Patti 18). To safeguard themselves from such risk, banks make it increasingly difficult for individuals and businesses to access credit by raising their interest rates.
Mafia activities also lead to an increase in the operating costs of banks. For example, they have to keep enhancing the existing security measures in response to rising crime in mafia-dominated neighborhoods. For these banks to continue making profit in such an operating environment, they are compelled to pass on these costs to their customers, in most cases through higher interest rates on loans. Similarly, banks operating in mafia-controlled regions are always wary of lending out money to mafia groups. For this reason, they end up introducing very stringent measures that qualified borrowers.
In some countries such as Russia, the influence of mafia is so strong that it is being felt through their continued control over banks. This problem affects loan-giving trends by the World Bank and the International Monetary Fund (IMF) in the country. Over the years, both the World Bank and the IMF have lamented that some of the money it loans out to Russia end up being wasted through corruption and Mafia activities (Makova 44). The level of corruption and control by mafia in Russian banks is so entrenched that it is widely thought that the best way of straightening things out is by renationalizing all privately-owned banks. This phenomenon has greatly contributed to Russia’s negative image as the world’s biggest mafia state Makova 44). Today, most mafia groups tend to achieve tremendous success in their quest to manipulate credit operations by banks through their unique sophistication as well as their understanding of governance systems using powerbrokers such as major accounting firms, political law firms, political lobbyists, and investment banks.
Crime
All over the world, mafia are associated with crime. In fact, mafia are widely regarded as a form of organized crime. Like organized criminal gangs, mafia operate through sophisticated criminal networks that engage in illegal activities such as illegal forms of gambling, drug trafficking, human trafficking, extortion, insurance fraud, tax evasion, and murder. The activities of mafia tend to be shroud in secrecy, thereby creating an ideal environment for the commission of crimes. Not only do mafia engage in drug trafficking, they seek to monopolize the drug trade. This is an indication that they are an embodiment of an extreme form of crime.
One of the tools that mafia groups use to assert their power, authority, and influence is violence. In the absence of institutions through which they can legitimately enforce compliance and submission within their areas of control, mafia groups use violence. Consequently, frightened citizens are compelled to oblige to the demands of mafia leaders. The most depressing thing about mafia-like activities is that they are likely to occur even in the most orderly societies, right under the noses of law enforcement agencies. For example, in Australia, the Ndrangheta mafia networks have continued to perpetuate criminal activities and routinely suborning law enforcement officers (Bottom 12). Despite the fact that the Australian political environment is not permissive to mafia-like activities, the Ndrangheta mafia networks have continued to attract membership from corrupt public officials, who end up infiltrating state institutions (Bottom 15). Thus, the activities of mafia groups normally lead to an increase in the level of crime.
Conclusion
Mafia influence in many ways, leading to a change in the status quo. This paper has examined four ways in which this influence manifests itself: economy, government, loan, and crime. From the discussion presented in this research paper, it is evident that mafia first and foremost affects the economy, followed by government, before slowly infiltrating government departments. Mafia hold enormous funds, thereby taking control of the economy to the extent where they gain the power to engage in extortion, issuance of threats, operation of protection rackets, and other illegal activities.
Mafia have been found to have the power to cripple entire economies, with classical examples being the Mexican mafia, Colombian mafia, and Sicilian mafia. Mafia networks also seek to fill in the vacuum that is left by government enforcement agencies such as the provision of security in far-flung areas. A good example of this phenomenon is the Sicilian Mafia, which has gained notoriety for its control over Sicily. In some countries, the manner in which banks disburse loans is subject to the influence of mafia. For example, mafia activities in Russia have greatly contributed to the imposition of restrictive measures on loan applicants and increased interest rates on loans, and disappearance of loan money sourced from international financial institutions. Finally, mafia is synonymous with crime in most societies, including those that are not permissive to criminal activities. In conclusion, this paper confirms the thesis that the presence of mafia has threatened the safety of people’s lives, thus affecting their normal life.
Works Cited
Bottom, Bob. Connections II: Crime Rackets and Networks of Influence in Australia. Sun Books Pty Ltd: Melbourne, 1987. Print.
Di Patti, Emilia. “Weak institutions and credit availability: The impact of crime on bank loans.” Questioni di Economia e Finanza, 52 (2009): 5-30.
Goldman, Marshall. “Why Is the Mafia So Dominant in Russia?” Challenge, 39.1 (1996): 39-47.
Makova, Elmira. Role of the World Bank and IMF in Issuing Loans to Russia: Responsibility, Tricks, Corruption, Mafia, and Important Use of Legal Enforcement. University of Georgia School of Law, LLM Theses and Essays, Paper 31, (2005): 1-89.
Santino, Umberto. “The financial mafia: The illegal accumulation of wealth and the financial-industrial complex.” Contemporary Crises, 12.3 (1988): 203-243.
