The other kind of crime


In the aftermath of the financial crisis, Robert Nielson looks at the real costs of white-collar crime

When most people picture crime, they see a man hiding in an alleyway ready to jump out and steal your wallet, or perhaps a burglar who sneaks into your house at night to steal your television, or maybe someone who breaks into your car and steals it because you parked it in a bad area.

But there is a type of crime that is greater than all of these combined. A crime not committed by poor minorities, but by wealthy professionals in offices of big businesses. A crime committed not by a desperate underclass, but by the elites of society. A crime that costs society more than all other thefts combined, yet rarely results in prosecution. This is, of course, white-collar crime.

White-collar crime costs an estimated $600-750 billion dollars in America annually, or roughly 5% of GDP. A single fraud could cost millions of dollars. This costs more than all other crimes combined. White-collar crime does more damage to society than all forms of stealing and violence combined.

Contrary to the common perception, the most dangerous criminal is not a youth in a hoody, but a middle-aged man in a suit. The biggest hot spots for crime are not the ghettoes, but the financial districts. It is not in council estates, but commercial offices that most criminals spend their time.

Not only does this type of crime deprive ordinary people of their money, but is also linked to harm to the environment and lax workplace safety regulations, showing that there is also a physical cost. For instance, companies can get away with negligent homicide through exposure to chemicals such as asbestos.

There are three reasons why white-collar crime gets so little attention from either the media or the justice system. Firstly, unlike other crimes, it is relatively unseen. No physical force is used and no one physically takes money out of the victims’ pockets.

It is nowhere near as visible as muggings or shoplifting, even if far more money is involved. Often the victims don’t even know they have been robbed. It is extremely difficult to find evidence and prove someone is guilty of white-collar crime.

The second is due to the type of people who commit white-collar crime. They are not poor minorities, but rather wealthy professionals in well connected corporations. They are the elite and use their influence to divert attention. The poor on the other hand have no such protection, and so it is far easier to penalise burglars and petty thieves than corporations and their army of lawyers.

Thirdly, people tend to be indifferent to business crime, or even sympathise with the offenders who have been caught. Because these crimes occur within the workplace, there is the perception that this is just how business operates.

A major feature of white-collar crime is the low reporting of it. It was estimated that 88% of white-collar crime is not reported to the police. Most of the time people do not even realise that they are a victim. In this sense, white-collar crime is a silent danger.

Even when people realise they have been scammed, many do not report it, as they are afraid they will be ridiculed or blamed for their gullibility. Instead, victims believe it was their own fault they were tricked and have no one to blame but themselves. As white-collar crime is not as straight forward as street crime, people are unclear over where they stand with the law and fail to prosecute even when it is in within their rights.

There is a notable disparity between punishment of street crime and white-collar crime. A street robbery of a couple hundred dollars from a corner shop carries the same sentence of 18 months to two years as that of a million dollar scam. Were someone to rob one million dollars in an armed robbery, they would get ten years.

Huge resources are poured into tackling highly visible crimes involving low amounts of money, like muggings, while far less attention is paid to hidden crimes that net millions of dollars. This leads to a dual justice system where crimes that are equally damaging to society receive vastly disproportionate punishments.

This leads to complaints, even by judges, that there is one law for the rich and one for the poor. As the famous saying goes, the rich get richer, the poor get prison. White-collar criminals can afford better lawyers than street criminals, which partly explains how they receive far more lenient sentences.

Getting tough on crime is a promise that is regularly made by politicians. It is usually interpreted to mean more police in the ghetto, more harassment of youths and even racial profiling. This misses the shark beneath the water.

The financial crisis gave us a glimpse of the extent of fraud and theft committed by respected elites that by far dwarfed the pickings of a street corner gang. If we really wanted to get tough on crime, we would send the police to the banks and commercial centres where the big money crime happens.

We should no longer be distracted by the visible street crimes involving small amounts of money. Instead, we need to focus on the other kind of crime, the one committed by middle class men in suits. They are not the stereotypical criminals, but then again, things are rarely as they first appear.