Tyler Cowen passes along a Federal Reserve Bank of Richmond interview with Thomas Schelling, where Schelling answers a number of interesting questions about his work in economics and game theory — such as, Why do some types of criminal activity become organized while others do not?:
Part of this is semantic. Let’s say you have a group of automobile thieves. They may be organized, but we don’t call that ‘organized crime.’ Instead, when we use that term we are almost always referring to a small group of activities: gambling, prostitution, and drugs are the big ones. My question was: What is it that characterizes those things we call ‘organized crime’? The answer is that they all exist as monopolies. There is strong demand for each of the activities I mentioned before, but each of them is illegal. So the people who work in those markets are relatively easy to extort because they cannot turn to the police. As a result, it is possible to gain something approaching monopoly power in those markets. So the bookmakers, prostitutes, and drug dealers are not really the perpetrators of organized crime. They are the victims.
So the bookmakers, prostitutes, and drug dealers are not really the perpetrators of organized crime. They are the victims.