Whence a threat really comes

 

 

The financial crisis has taught a lesson which is not new: politicians and the public are easily aroused by fear, particularly of crime. Fear creates an incantation market for policy makers and researchers, invariably confirming these fears. One of these marketed fears concerns the dreaded tsunami of crime-money and the laundering thereof. This is most successfully marketed crime fear products of the past two decades. What happened: a dense global control regime was established, requiring massive investments of the financial industry. Inside and outside the financial institutions a huge anti-money laundering service industry infolded: jobs for tens of thousands ‘watchdogs’, consultants and experts for organising courses and seminars. All to keep the financial system clean and safe. After the ‘war on drugs’ one of the most successful criminal job employment projects. Did it succeed in stemming the dreaded tsunami of the trillions of crime-money defiling our financial system? No, most of the crime-money still lands in the industrialised world.

     What happened while these watchdogs were barking at the money-laundering threat? Other watchdogs tasked to supervise the licit financial industry did not bark, and if they barked, it was so soft that nobody took notice. Then we learned that the financial industry was threatened not by crime-money, but by greed and negligence of the captains of the financial industry. That was 2008. When that was painfully settled somewhat, Europe was hit by a second shock: Greece proved to cook the books, though for insiders not really new. A state as a mega fraudster. A new crisis emerged: mistrusted states.

     Meanwhile we have got used to tens of trillions of Euros needed to keep a few rotten states financially afloat. And how does that compare with the laundering threat? The latter must look like a mosquito pricking an elephant. Indeed, all the crime-monies in the world would insufficient to alleviate this crisis. Should we therefore economise on the anti-laundering industry and shift funds to the supervision of the licit sector, from where the real threat has come? From economic point of view we should. But that would neglect the socio-economy of fear. While the anti-laundering industry is pretty quiet at the moment, it will not allow jobs to be taken away. It will immediately react by rekindling fears with wild and threatening estimates.

     Lesson to be refreshed: do not institutionalise a fear policy with job creation (or only a very modest one). Once you have fallen into that trap, you never get out of it.

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