Economic impact of illegal activities in the US

The United States of America’s economy is the largest in the world. It is coveted by many individuals as well as many groups of people and nations due to its large market and promising economic environment. The political stability of the country, live alone the freedom that the citizens are guaranteed are other captivators to the illegal masterminds in the country. The political system is a parliamentary democracy that institutes respect for individuals and personality, and thus, it is admired by many. This paper seeks to examine the economic effects of illegal activities in the United States of America.

As the global illicit trade and global illegal economy expands day by day, the United States has not been spared. Illegal immigrants, smuggling of humans, trafficking of illegal drugs, trade in stolen and counterfeit goods, money laundering and smuggling. The list is endless: the economy is leaking.

It is estimated that the global illegal economy accounts for some 8 to 15% of the world’s GDP, and this too, has its share of global economic impacts. It leads to deterioration of social conditions, conflicts, reduction of legitimate business revenues and distortion of local economies among others.It is alarming to find that the legal economy is feeding the illegal economy in the United States (Luna, 2012) observes that narcotics kingpins and illegal arm brokers are in the economic epicenter practicing as venture capitalists and CEOs. This leads to loss of revenues to the government especially in evasion of taxes. The conduct of illicit markets in the streets, as well as high-tech corrupting of illicit markets has led to massive loss in productivity.it has further led to big losses in research and development, not to mention denying and reducing channels for investor-incentives. Illegal markets of the United States have led to contamination of the economic environment leading to loss of investor confidence. This is mainly due to investor conning costing them losses in billions of US dollars.

The sector of health too has not been spared by illegal activities in the US market. Fake and illegal drugs are being imported through cartels, even with the involvement of corrupt government officials, and they have flooded the market. The drugs are usually sold at throw away price. Having been attracted by these prices, customers usually rush for these drugs but the bad side of it is that they do not get the value for their money. Legal drugs then expire in stores costing the government and the legitimate businesses a lot of money. The health of the people is also affected. Human resource is the most important resource in the economy. People’s health is their wealth. With the deterioration of people’s health, the economy loses greatly. According to Luna (2012), counterfeit drugs have robbed the economy of the human capital. Not drugs alone, but processing of fake certificates, and to make matters worse, fake certificates in the health sector. Loss of living is uncountable in terms of money and should be prevented by all means possible.

Kleber et al (2008) asserts that the loss in heroin alone to the addict and the society are hard for the economy. Their cost estimates in loss in productivity, medical care, social welfare and crime to be about US$ 21.9 billion in the year 1996. This big loss imposes a great economic burden to the US government which is in essence directed to the people in the form of tax. Worse still, the same government that collects tax ,loses it through cartels in the system through its corrupt officials. Meeting the costs of the economic burden may create a vicious cycle if the illegal cartels are not checked and eliminated. The loss in productivity means a loss that is not recoverable as time lapses.

Illegal immigrants in the United States have posed a great threat to the US economy. The big impact of illegal immigration has been a challenge to the economy of the United states since 1996 (Economic research Council, 1997). A review of the policy replaced the quotas for immigrants to be based not on their national origins but to be primarily based, on the unification of the family. Even to a lesser extent, occupational skills qualify one to migrate to the US. The labor market has been one of the greatest hit sectors of the economy due to usage of the loopholes in the law to sneak people illegally in the US. Economic and Research Council (1997) records that the less-skilled natural-born US citizens have been displaced in the job market by the immigrants leading to massive unemployment. Illegal immigration has also affected investor immigration from the prosperous nations of Western Europe to favor the developing countries of Asia, Latin and South America.

The Economic Research Council (1997), further states that, in the year 1994, there were between 200,000 and 300,000 illegal immigrants in the United States. This distorts the plans of the US government as it plans for its population and the legal migrants. Some of the immigrants enter the country legally as worker of international companies, but they overstay, overburdening the US economy.

Hanson (2007) observes that the number of illegal immigrants had risen from five million to twelve million in 10 years proceeding the year 2007. Unauthorized entry in the United States has led to concern over public wage bill as well as to an increase in public debt. Security threats being experienced in most corners of the country can also be attributed to illegal immigrants. This has made the US congress increase on funding for border protection so as to protect on a probable drain on the US economy if the problem is not mitigated.

Illegal activities of criminal gangs also impacts negatively to the domestic economy of the United States. Finklea (2010) observes that illegal gangs operating within the country have in one time, or another penetrated the important sectors of the economy. The most sensitive sectors have been targets to these criminal activities. They have penetrated the energy sector and robbed the country of billions of shillings. They have cooperated with terrorists and helped them coordinate their activities in the country. The gangs have also engaged in activities of smuggling people in the country, people who are later used to propagate the illegal activities of terrorists. This has had a great negative impact to the US economy.

Illegal entry of unauthorized peoples in the US has had a great impact in its security system. These people conduct activities of seeking corrupt government officials so as to make cartels with them and cooperate with them in propagating crime. Flanklea (2010) notes that activities of organized crime hit the economy hard with illegal activities like evasion of taxes and cigarette trafficking. When people evade paying of taxes, the government loses a lot, and the economy loses too.

The housing and financial markets have been hit not once. Domains of strategic commodities have been the targets of illegal activities such as in the banking sector, investments, securities and insurance. An illegal activity in these sectors leads to big losses on the part of investors, consumers and the government. When these groups lose, the economy loses. Money laundering is an illegal activity that has been noted in the US. Ii involves concealing the ownership, or the location, or further the source of money. Flankklea (2010), laments that such monies may be put into a further illegal activity. For many years, the money launders have been using banks, casinos, businesses and shell companies to devise ways of justifying their wealth. The propagation of this illegal activity is becoming a challenge for the government to handle due to globalization and development of technology.The illegal activity of smuggling of cigarette has led to the loss of tax-payers money through evasion of taxes. When taxes are lost, government may compensate by increasing taxes thus impacting heavily on the economy. The businesses too may compensate their losses by increasing taxesand influencing the consumers heavily.

According to Faneli (2013), corporate illegal activities inclusive of bribery and corruption have increased in the US due to expansion of the global market. In this kind of illegal activity, companies engage in bribery acts with government officials and falsify their annual reports as they file them with the Securities and Exchange Commission. In such cases f bribery, taxpayers money ends up in the pockets if few individuals. This has a great impact in terms of loss of government revenue and increase in taxes raising the cost of living.

Globalization has, in addition to its innumerable advantages, assisted in the propagation of illegal activities in the US, and the world over. Advanced technology is being employed in the conduct of illegal activities. The illegal activities can be traced in most of the sectors of the economy. Every illegal activity has far reaching negative implications to the economy. Illegal activities in the financial sector lead to massive losses of investor money and the economy is impacted negatively. The government enforces legislation to curb the illegal activities tough loopholes in the system scuttle government efforts.

References

Economic Research Council. (1997). The new Americans: Economic Demographics and Fiscal Effects of Immigration. Washington DC: National Academy Press.

Faneli, L.A. (2013). Illegal corporate activities and their effect on financial statement disclosures: How financial accountants can help. New York: PACE University Press.

Finklea, M.K. (2010). Organized crime in the United States. New York: Congressional Research Service.

Hanson, H.G. (2007). The economic logic of illegal immigration. San Diego: Council on Foreign Relations.

Kebler, D.H., Mark, L.M., Woody, E.G., & Juday, T. (2008). The economic costs of heroin in the United States. Science Direct, 16 (2), 195-206

Luna, M.D. (2012). The destructive impact of illicit trade and the illegal economy on economic growth, sustainable development, and global security. New York: US Department of State

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