012 The freakonomics of crack dealing 2004
You'll be happy to know that I'll be talking not about my own tragedy, but other people's tragedy. It's a lot easier to be lighthearted about other people's tragedy than your own, and I want to keep it in the spirit of the conference.
So, if you believe the media accounts, being a drug dealer in the height of the crack cocaine epidemic was a very glamorous life, in the words of Virginia Postrel. There was money, there was drugs, guns, women, you know, you name it -- jewelry, bling-bling -- it had it all.
What I'm going to tell you today is that, in fact, bad on 10 years of rearch, a unique opportunity to go inside a gang -- to e the actual books, the financial records of the gang -- that the answer turns out not to be that being in the gang was a glamorous life. But I think, more realistically, that being in a gang -- lling drugs for a gang -- is perhaps the worst job in all of America. And that's what I'd like to convince you of today.
So there are three things I want to do. First, I want to explain how and why crack cocaine had such a profound influence on inner-city gangs. Secondly, I want to tell you how somebody like me came to be able to e the inner workings of a gang. It's an interesting story, I think. And then third, I want to tell yo
u, in a very superficial way, about some of the things we found when we actually got to look at the financial records -- the books -- of the gang.
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So before I do that, just one warning, which is that this prentation has been rated 'R' by the Motion Picture Association of America. It contains adult themes, adult language. Given who is up on the stage, you'll be delighted to know that in fact there'll be no nudity, barring a -- (Laughter) -- unexpected wardrobe malfunctions aside. (Laughter)
So let me start by talking about crack cocaine, and how it transformed the gang. And to do that, you have to actually go back to a time before crack cocaine, in the early '80s, and look at it from the perspective of a gang leader. So being a gang leader in the inner city wasn't such a bad deal in the mid-'80s. In the early '80s, some would say.
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Now, you had a lot of power, and you got to beat people up -- you got a lot of prestige, a lot of respect. But there was no money in it, OK? The gang had no way to make money. And you couldn't
charge dues to the people in the gang, becau the people in the gang didn't have any money. You couldn't really make any money lling marijuana. Marijuana's too cheap, it turns out. You can't get rich lling marijuana. You couldn't ll cocaine. You know, cocaine's a great product -- powdered cocaine -- but you've got to know rich white people. And most of the inner-city gang members didn't know any rich white people -- they couldn't ll to that market. You couldn't really do petty crime, either. It turns out, petty crime's a terrible way to make a living.
So, as a result, as a gang leader, you had, you know, power -- it's a pretty good life -- but the thing was, in the end, you were living at home with your mother. And so it wasn't really a career. It was something that -- it's just there were limits to how powerful and important you could be if you had to live at home with your mother.
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Then along comes crack cocaine. And in the words of Malcolm Gladwell, crack cocaine was the extra-chunky version of tomato sauce for the inner city. (Laughter) Becau crack cocaine was an unbelievable innovation. I don't have time to talk about it today. But if you think about it, I would say that in the last twenty-five years, of every invention or innovation that's occurred in this country, the b
iggest one, in terms of impact on the well-being of people who live in the inner city, was crack cocaine. And for the wor -- not for the better, but for the wor. It had a huge impact on life.
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So what was it about crack cocaine? It was a brilliant way of getting the brain high. Becau you could smoke crack cocaine -- you can't smoke powdered cocaine -- and smoking is a much more efficient mechanism at delivering a high than is snorting it. And it turned out, there was this audience that didn't know it wanted crack cocaine, but, when it came, it really did. And it was a perfect drug. You could ll for -- buy the cocaine that went into it for a dollar, ll it for five dollars. Highly addictive -- the high was very short. So for fifteen minutes, you get this great high. And then, when you come down, all you want to do is get high again.
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It created a wonderful market. And for the people who were there running the gang, it was a great way, emingly, to make a lot of money. At least for the people in the top.
So this is where we enter the picture. Not really me -- I'm really a bit player in all this. My co-author,
Sudhir Venkatesh, is the main character. So he was a math major in college who had a good heart, and decided he wanted to get a sociology Ph.D., came to the University of Chicago. Now, the three months before he came to Chicago, he had spent following the Grateful Dead. And, in his own words, he "looked like a freak." He's a South Asian -- very dark-skinned South Asian. Big man, and he had hair, in his words, "down to his ass." Defied all kinds of boundaries: Was he black or white? Was he man or woman? He was really a curious sight to be en.
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网易云骑电动车So he showed up at the University of Chicago. And the famous sociologist, William Julius Wilson, was doing a book that involved surveying people all across Chicago. And he took one look at Sudhir, who was going to go do some surveys for him, and decided he knew exactly the place to nd him -- which was to one of the toughest, most notorious housing projects. And not just in Chicago, but in the entire United States.
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So Sudhir -- the suburban boy who had never really been in the inner city -- dutifully took his clipboard and, you know, walked down to this housing project. Gets to the first building. The first buil
ding? Well, there's nobody there. But he hears some voices up in the stairwell, so he climbs up the stairwell. And he comes around the corner -- finds a group of young African-American men playing dice.
This is about 1990 -- peak of the crack epidemic. This is a very dangerous job, being in a gang -- you don't like to be surprid. You don't like to be surprid by people who come around the corner. And the mantra was: shoot first; ask questions later. Now, Sudhir was lucky. He was such a freak -- and that clipboard probably saved his life, becau they figured no other rival gang member would be coming up to shoot at them with a clipboard. (Laughter)
So his greeting was not particularly warm, but they did say, well, OK -- let's hear your questions on your survey. So, I kid you not, the first question on the survey that he was nt to ask was, "How do you feel about being poor and black in America?" (Laughter) Makes you wonder about academics, OK? (Laughter)
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So the choice of answers were: very good, good, bad and very bad. What Sudhir found out is, in fact, that the real answer was the following -- (Laughter) The survey was not, in the end, going to be
what got Sudhir off the hook. He was held hostage overnight in the stairwell. There was a lot of gunfire; there were a lot of philosophical discussions he had with the gang members. By morning, the gang leader arrived, checked out Sudhir, decided he was no threat and they let him go home. So Sudhir went home. Took a shower, took a nap.
And you and I, probably, faced with the situation, would think, well, I guess I'm going to write my disrtation on The Grateful Dead. I've been following them for the last three months. (Laughter)
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Sudhir, on the other hand, got right back -- walked down to the housing project. Went up to the
floor, the cond floor, and said: "Hey, guys. I had so much fun hanging out with you last night, I wonder if I could do it again tonight." And that was the beginning of what turned out to be a beautiful relationship that involved Sudhir living in the housing project on and off for 10 years: hanging out in crack hous, going to jail with the gang members, having the car-windows shot out of his car, having the police break into his apartment and steal his computer disks -- you name it. But ultimately, the story has a happy ending for Sudhir, who became one of the most respected sociologists in the country. And especially for me, as I sat in my office with my Excel spreadsheet op
en, waiting for Sudhir to come and deliver to me the latest load of data that he would get from the gang. It was one of the most unequal co-authoring relationships ever -- (Laughter) -- but I was glad to be the beneficiary of it.
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坚毅的眼神So what do we find? What do we find in the gang? Well, let me say one thing. We really got access to everybody in the gang. We got an inside look at the gang, from the very bottom up to the very top. They trusted Sudhir -- in ways that really no academic has ever -- or really anybody, any outsider -- has ever earned the trust of the gangs, to the point where they actually opened up what was most interesting for me: their books, their financial records that they kept. And they made them available to us. And we not only could study them, but we could ask them questions about what was in them.
So if I have to kind of summarize very quickly in the short time I have what the sort of bottom line of what I take away from the gang is, is that if I had to draw a parallel between the gang and any other organization, it would be that the gang is just like McDonald's. In a lot of different respects -- the restaurant McDonald's.
宪法的概念So first, in one way -- which isn't maybe the most interesting way, but it's a good way to start -- is in t
he way it's organized -- the hierarchy of the gang, the way it looks. So here's what the org chart of the gang looks like. I don't know if any of you know very much about org charts, but if you were to assign a stripped-down and simplified McDonald's org chart, this is exactly what the org chart
would look like. Now, it's amazing, but the top level of the gang, they actually call themlves the "board of directors." (Laughter)
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And Sudhir says it's not like the guys had a very sophisticated kind of view of like, what happened in American corporate life. But they had en movies like "Wall Street," and they kind of had learned a little bit about what it was like to be in the real world. Now, below that board of directors, you've got esntially what are regional VPs -- people who control, say, the south side of Chicago, or the west side of Chicago.
Now, Sudhir got to know very well the guy who had the unfortunate assignment of trying to take the Iowa franchi. (Laughter) Which, it turned out, for this black gang, was not one of the more brilliant financial endeavors that they undertook. (Laughter)
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But the thing that really makes the gang em like McDonald's is its franchies. That the guys who are running, you know, the local gangs -- the four-square-block by four-square-block areas -- they're just like the guys, in some n, who are running the McDonald's. They are the entrepreneurs. They get the exclusive property rights to control the drug-lling. They get the name of the gang behind them, for merchandising and marketing. And they're the ones who basically make the profit or lo a profit, depending on how good they are at running the business.
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Now, the group I really want you to think about, though, are the ones at the bottom, the foot soldiers. The are the teenagers, typically, who'd be standing out on the street corner, lling the drugs. Extremely dangerous work. And important to note that almost all of the weight, all of the people in this organization are at the bottom. OK, just like McDonald's. So in some n, the foot soldiers are a lot like the people who are taking your order at McDonald's. And indeed, it's not just by chance that they're like them. In fact, in the neighborhoods, they'd be the same people. So the same kids who are working in the gang were actually -- at the very same time, they would typically be working part-time at a place like McDonald's. Which already, I think, foreshadows the main result that I've talked about, about what a crappy job it was being in the gang. Becau obviously, if being in the gang wer
e such a wonderful, lucrative job, why in the world would the guys moonlight at McDonald's?
So what do the wages look like? So you might be surprid. But bad on the actual -- you know, being able to talk to them, and to e their records, this is what it looks like in terms of the wages. The hourly wage the foot soldiers were earning was $3.50 in an hour. It was below the minimum wage, OK? And this is well documented. It's easy to e, by the patterns of consumption they have. It really is not fiction -- it's fact. There was very little money in the gang, especially at the bottom.
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Now if you managed to ri up -- say, and be that local leader, the guy who's the equivalent of the McDonald's franchie -- you'd be making 100,000 dollars a year. And that, in some ways, was the best job you could hope to get if you were growing up in one of the neighborhoods as a young
black male. If you managed to ri to the very top, 200,000 or 400,000 dollars a year is what you'd hope to make. Truly, you would be a great success story.
And one of the sad parts of this is that indeed, among the many other ramifications of crack cocaine is that the most talented individuals in the communities -- this is what they were striving for. They
weren't trying to make it in legitimate ways, becau there were no legitimate channels out. This was the best way out. And it actually was the right choice, probably, to try to make it out -- this way. You look at this --
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the relationship to McDonald's breaks down here. The money looks about the same. Why is it such a bad job? Well, the reason it's such a bad job is that there's somebody shooting at you a lot of the time. So, with shooting at you, what are the death rates? We found in our gang -- and, admittedly, this was not really sort of a standard situation; this was a time of inten violence -- of a lot of gang wars -- as this gang actually became quite successful. But there were costs. And so the death rate -- not to mention the rate of being arrested, nt to prison, being wounded -- the death rate in our sample was ven percent per person per year. You're in the gang for four years; you expect to die with about a 25 percent likelihood. That is about as high as you can get.
So for comparison's purpos, let's think about some other walk of life where you may expect might be extremely risky. Like let's say that you were a murderer and you were convicted of murder, and you're nt to death row. It turns out, the death rates on death row -- from all caus, including execu
tion -- two percent a year. (Laughter) So it's a lot safer being on death row than it is lling drugs out on the street.
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That makes you pau -- gives you some pau -- tho of you who believe that a death penalty's going to have an enormous deterrent effect on crime. Now to give you a n of just how bad the inner city was during crack -- and I'm not really focusing on the negatives, but really, there's another story to tell you there -- if you look at the death rates -- just of random, young black males growing up in the inner city in the United States -- the death rates during crack were about one percent. That's extremely high. And this is violent death -- it's unbelievable, in some n.
To put it into perspective, if you compare this to the soldiers in Iraq, for instance, right now fighting the war: 0.5 percent. So in some very literal way, the young black men who were growing up in this country were living in a war zone, very much in the n of the way that the soldiers over in Iraq are fighting in a war.
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So why in the world, you might ask, would anybody be willing to stand out on a street corner lling drugs for $3.50 an hour, with a 25 percent chance of dying over the next four years? Why would they do that? And I think there are a couple answers.
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I think the first one is that they got fooled by history. It ud to be the gang was a rite of passage. That the young people controlled the gang -- that, as you got older, you dropped out of the gang. So what happened was, the people who happened to be in the right place at the right time -- the people who happened to be leading the gang in the mid- to late '80s -- became very, very wealthy.
