Occasionally, theft is economically efficient, leaving society better off than if it had not occurred. That was not the case when someone broke into our car last Monday. The cost to us — and to society, through the intermediary of our insurance company — must outweigh any benefits to the thief.
That is usually true. All the thief got was a cell phone, the service for which was suspended in less than an hour. Besides losing the phone, we got a broken window and side mirror, and damage to the electric window controls.
The total cost, largely paid by society through insurance premiums, was a few hundred dollars. The benefit to society, largely enjoyed by the thief, amounted to a few free phone calls, a near-useless phone and perhaps the brief psychological satisfaction of having done something forbidden. The social costs clearly outweighed the benefits. That is usually the case with crime. The losses to the victims outweigh the gains to the perpetrator.
This is not always true, however. When I was working in Bulgaria in 1993, our driver stopped at a “Russian market,” the term for a black-market open-air bazaar. He found a small Czech arc welder he wanted, at a reasonable price. But it came without cables, a ground clamp or an electrode holder.
“George, what use is a welder without cables?” I asked. “Ni problemyi,” he replied. “We have welders like this where I work. I’ll privatize the cables next week.”
I asked why he didn’t “privatize” the welder itself. He replied that one could tuck cables under one’s coat, but not an entire welder!
Such theft of state assets was commonplace in the 1990s, as communist regimes disintegrated. In most cases, the stolen assets produced substantially more for society than if they had stayed in government hands. Society had more goods and services because of the theft than if it had not taken place.
While petty theft was common, many people in Russia and other “transition economies” were outraged when a few individuals managed to seize control of large reserves of natural resources and major industrial concerns. Such “oligarchs” brought about some gains in physical productivity, but those gains must be offset by the psychological cost of perceived injustice and abuse inflicted. Still, on balance, the “theft” of government property in such countries probably made society as a whole there better off.
A friend was an adolescent in Europe during the terrible winter of 1945-1946 after Germany’s surrender. It was bitter cold and food was short. Thousands starved. My friend’s father had not yet returned from serving as a forced laborer in southern Germany. His mother was seriously ill. At age 13, he became a skilled thief, repeatedly breaking into a British Army supply depot.
The stolen cans of condensed milk and corned beef added far more to the well-being of his mother and six siblings than they cost the British. Society as a whole was improved by his crime.
So theft is not always economically inefficient. But the cases where it benefits society are few and far between.
© 2005 Edward Lotterman
Chanarambie Consulting, Inc.