Political Enforcement of Law and Organized Crime

Transcription

1 Political Enforcement of Law and Organized Crime Paolo Vanin Ph.D. in Economics European Doctorate in Law and Economics University of Bologna January 2018

2 Questions What are the economic origins and effects of organized crime and terrorism? Can criminal organizations corrupt and threaten public officials (politicians, the judiciary) who should fight them? Can they control citizens vote?

3 Origins and effects of organized crime Theory Organized crime, corruption and violence: Kugler, Verdier, Zenou 2005 JPubE, Dal Bó, Dal Bó, Di Tella 2006 APSR, Acemoglu, Robinson, Santos 2013 JEEA, Piccolo, Immordino 2017 EJ Empirics: Mafia s economic origins: Buonanno et al EJ, Acemoglu, De Feo, De Luca 2017 NBER WP Mafia s economic effects: Pinotti 2015 EJ, Barone and Narciso 2015 JUE Mafia and politics: Daniele, Geys 2015 EJ, Buonanno, Prarolo, Vanin 2016 EJPE, De Feo, De Luca 2017 AEJEP Terrorism and politics: Rehman, Vanin 2017 JDE

4 1. Theory

5 Kugler, Verdier, Zenou (2005) JPubE Organized crime, corruption & punishment Where corruption costs are low, higher p (detection prob) and f (punishment intensity) may increase crime Criminal organizations may react by increasing corruption and lowering conviction prob Once organized crime and corruption are established, they are hard to remove

6 Dal Bó, Dal Bó, Di Tella (2006) APSR Plata o plomo? Two stage game Citizens split between private sector (chosen by the most skilled) and public office (where all politicians earn the same, although the more skilled produce more public goods and govern with higher probability) Pressure group may use bribes and threats to obtain a resource from public officials Equilibrium Threats reduce the quality (skills) of politicians Improved law enforcement (making either plata or plomo more costly for pressure groups) reduces the number of active pressure groups Making plomo more costly reduces punishment, and raises bribes used by (fewer) active groups, raising the quality of politicians Making plata more costly reduces bribes, and raises punishment used by (fewer) active groups, with ambiguous effects on quality Political discretion over resources raises corruption and violence, and lowers the quality of politicians

7 Acemoglu, Robinson, Santos (2013) JEEA Armed groups and citizens vote Theory Probabilistic voting model (Lindbeck, Weibull, 1987 PC) with paramilitaries Armed groups bring votes to politicians with prefereces close to their own Politicians tolerate armed groups because they benefit from the additional electoral base Evidence Data from Colombia Support for the model

8 Piccolo, Immordino (2017) EJ Organised Crime, Information and Leniency Leniency with low-rank criminals who turn informants Raises conviction prob for their bosses (it is always desirable ex post) Makes soldiers cheaper to hire in the first place and can thus foster organized crime It is desirable ex ante to restrict access to the leniency program, without exploiting all of its potential Informant protection and harsher sanctions for bosses reduce the need for such restrictions and allow exploiting more fully the potential of justice collaborators

9 2. Empirics

10 Buonanno, Durante, Prarolo, Vanin (2015) EJ Resource curse in mafia origins Hypothesis: under poor institutions, a boom in the value of lootable natural resources fosters mafia-type organizations Higher demand for protection and extortion opportunities Inadequate state response Natural experiment: exogenous shock to the value of unevenly distributed natural resources Sulfur in XIX century Sicily: rise in international demand Municipality-level data on sulfur mines and early mafia Result: sulfur mines significantly associated to early mafia presence And even to today s mafia presence

11 Acemoglu, De Feo, De Luca 2017 NBER WP Weak states Hypothesis: mafia s expansion in Sicily as a response to the rise of socialist peasant movements starting in 1893 Drought and crises set out protest Landlords turned to mafia to counter socialist movements Municipality-level data on rainfall and drought intensity Drought intensity in 1983 as instrument for mafia to assess its long-run effects

12 Pinotti 2015 EJ Economic cost of organized crime Synthetic control (Abadie, Gardeazabal 2003 AER) for Apulia and Basilicata (in Southern Italy) Where organized crime rised since the 70 s (due to new tobacco smuggling routes) Based on Abruzzo and Molise (neighboring regions without organized crime, endogenously selected) Relative to control, 16% GDP drop over 30 years Confirmed by electricity consumption Driven by fall in private investment and in productivity of public investment (distortion and corruption in public procrurement) Matched by a substantial rise in homicide rate

13 Barone and Narciso 2015 JUE Organized crime and firm subsidies Firms in mafia municipalities in Sicily Are 64% more likely to attract public funds for development Obtain more funds by over one standard deviation IV: determinants of historical land value Rainfall shocks in 1850 s, altitude, slope Valid? Correlated with firm presence 3SLS: today s mafia on historical mafia on instruments Channels of public funds distraction Creation of fake firms Corruption of public officials

14 Daniele, Geys 2015 EJ Organized crime and political quality Test of Dal Bó et al 2006 APSR (Plata o plomo) Making plomo more costly reduces punishment and raises bribes, raising the quality of politicians But making plata more costly has ambiguous effects (lower bribes are offered by more pressure groups, which can also use plomo) Empirical strategy Data on Southern Italian municipalities Since 1991 the Italian government can dissolve municipality councils for mafia infiltration (new elections after 1 or 2 years) Diff-in-diff on politicians human capital in dissolved relative to non-dissolved municipalities, before and after dissolution Result Improved enforcement (dissolution) raises politicians human capital, especially for mayors and aldermen It weakens the negative effect of organized crime on the quality of politicians

15 Buonanno, Prarolo, Vanin (2016) EJPE Mafia and electoral outcomes Mafia may persists in democracies, despite its socially undersirable effects, by Conditioning electoral outcomes (this paper) Conditioning elected politicians and public officials (other papers) Focus Vote shares (VS) at Italian parliamentary elections, Disaggregated info on mafia presence and VS in Sicilian municipalities IV based on determinants of mafia s early distribution Results Forza Italia (Silvio Berlusconi s party) obtained significantly higher vote shares in mafia-plagued municipalities IV: mafia s presence causally raised Forza Italia s vote shares Mafia s intervention in the market for votes or political preferences?

16 De Feo, De Luca (2017) AEJEP Mafia in the ballot box Theory: probabilistic voting model with mafia Mafia supports the incumbent party The votes moved by mafia and the price of its support increase in the degree of electoral competition Empirics Vote shares (VS) at Italian parliamentary elections, Disaggregated info on mafia presence and VS in Sicilian municipalities Interaction mafia * electoral competition (VS DC VS PCI in the rest of Italy) Results: when electoral competition increased Christian Democrats (incumbent party) obtained significantly higher vote shares in mafia-plagued municipalities Construction activities significantly increased in mafia municipalities

17 Rehman, Vanin (2017) JDE Terrorism and democratic preferences Does terrorism reduce support for democratic institutions? Evidence from Pakistan Individual level data on attitudes towards democracy in 2009 District level data on terrorist attacks and violence, IV: distance from Pak-Afghan border and religious fractionalization Results Support for democracy is negatively associated to exposure to terrorism and violence Interpretation: individuals trade off security for democratic rights