I heard... that in northern Tanzania they are using cellphone credits in lieu of traditional money. If you want to pay for something, just make a call to the provider and transfer cellphone credits to the other trader’s account. Why should those credits be any less liquid than currency? They are easier to store and transfer and just about everybody uses them. Monetary economics in Africa is very, very difficult. It must start with the presumption that money is the asset with the highest carrying costs, if only because your relatives find it so easy to take (it) away from you.
Don Corleone and the economics of the Mafia
Nicolai (Foss) tells me The Sopranos is the most popular show among Danish libertarians. I bet they like the Godfather trilogy as well. What libertarian can resist this classic exchange between Michael Corleone and Kay Adams in the first film:
Michael: My father is no different than any powerful man, any man with power, like a president or senator.
Kay: Do you know how naive you sound, Michael? Presidents and senators don’t have men killed.
Michael: Oh. Who’s being naive, Kay?
The films are terrific, but the original novel by Mario Puzo is even better. One of Puzo’s themes, which isn’t emphasized so much in the movies (aside from the opening scene in the first film), is how the Mafia functioned as a kind of private government, providing protection for people, primarily poor immigrants, who were refused protection from the inefficient and corrupt formal legal authorities.
I was reminded of this by some recent posts on the Volokh Conspiracy. Notes Ilya Somin:
Everyone remembers Don Corleone’s famous saying that he’s going to make “an offer you can’t refuse.” But for some reason, people forget that the Don also said that “a lawyer with his briefcase can steal more than a hundred men with guns”. One of the recurring themes of the novel is that people turn to the Mafia for help because of the corrupt and self-serving nature of many political and legal institutions that systematically allowed elites to plunder the politically weak. Puzo recognized, as sociologist Diego Gambetta explained more systematically, that the Sicilian Mafia flourished because it provided better “protection” against crime and violations of property and contract rights than did the official authorities, who generally protected only the politically powerful elite.
Murray Rothbard put it this way, with his characteristic flair: “The key to The Godfathers and to success in the Mafia genre is the realization and dramatic portrayal of the fact that the Mafia, although leading a life outside the law, is, at its best, simply entrepreneurs and businessmen supplying the consumers with goods and services of which they have been unaccountably deprived by a Puritan WASP culture.” Right on!
Moreover: The unforgettable images of mob violence juxtaposed with solemn Church rites were not meant, as left-liberals would have it, to show the hypocrisy of evil men. For these Mafiosi, as mainly Italian Catholics, are indeed deeply religious; they represent one important way in which Italian Catholics were able to cope with, and make, their way in a totally alien world dominated by... insistence that a whole range of products eagerly sought by consumers be outlawed.
Henry Hill, as portrayed in Martin Scorsese’s Goodfellas, describes a similar protection scheme, though limited to members of the Mafia families themselves: “All they [the mob members] got from Paulie [the Don] was protection from other guys looking to rip them off. That’s what it’s all about. That’s what the FBI can never understand—that what Paulie and the organization offer is protection for the kinds of guys who can’t go to the cops. They’re like the police department for wiseguys.”