Perfecting Criminal Markets

By: David Michael Jaros


From illicit drugs to human smuggling to prostitution, legislators may actually perfect the very criminal markets they seek to destroy. Criminal laws often create new dangers and new criminal opportunities. Criminalizing drugs creates opportunities to sell fake drugs. Raising penalties for facilitating illegal immigration increases the risk that smugglers will rely on dangerous methods that can injure or kill their human cargo. Banning prostitution increases the underground spread of sexually transmitted disease. Lawmakers traditionally respond to these “second-order” problems with new waves of criminalization that impose additional penalties on fake-drug dealers, dangerous human smugglers, and HIV-positive prostitutes.
But the criminalization of second-order activities also improves the criminal markets that gave them birth. Criminalizing the sale of fake cocaine strengthens the market for genuine drugs. When the law increases penalties for dangerous human smuggling, those contemplating illegal immigration may pay more for assistance across the border. The total quantity of prostitution will rise when the law makes sex for hire safer. In sum, efforts to criminalize and punish second-order crimes may inadvertently bolster the very criminal markets that legislatures originally sought to eradicate.
This Article suggests that the perfection of criminal markets is not just a quirky economic irony. The dynamic relationship between first- and second-order crimes is relevant to the formation of sound criminal justice policy, and it can help explain the rapid expansion of the criminal code. Moreover, acknowledging that criminal laws may facilitate antisocial activity can destigmatize alternative policies that improve public welfare by making illegal activity safer.


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