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Date: April 30, 2024 Tue
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Results for economics of crime (u.s.)
1 results foundAuthor: Institute for Economics and Peace Title: Violence Containment Spending in the Untied States: A New Methodology to Categorize and Account for the Economic Activity Related to Violence Summary: It has been well established that violence has a marked effect on economic activity with many studies demonstrating the negative economic impacts of crime, incarceration, insurgencies and especially war. However, there have been no studies to systematically aggregate the economic costs of all forms of violence, including the costs of prevention and protection, to understand how much of an economy is captured by violence and violence containment. For the purposes of classification, this form of economic activity has been defined as the violence containment industry (VCI). Aggregated as an industry sector it would be the single largest in the United States. The Institute for Economics and Peace (IEP) has developed a new methodology to quantify the cost of violence and the economic gains associated with peace for the U.S. economy. All expenditure that is related to violence containment, whether performed by the military on the international stage or domestically through the provision of services to fight crime, has been classified together as the Violence Containment Industry or alternately, as violence containment spending. This provides a framework to classify and better understand a substantial part of the U.S. economy as well as providing a platform for future research. Given the sheer size of the U.S. economy that is dedicated to containing violence, quantifying the expenditure as a discrete industry creates a unique basis for further analysis and debate. IEP defines violence containment spending as economic activity that is related to the consequences or prevention of violence where the violence is directed against people or property. This includes all expenditures related to violence, including but not limited to medical expenses, incarceration, police, the military, insurance, and the private security industry. It is divided into local, state, and federal government expenditure as well as private spending by corporations, households, and individuals. While expenditures on containing violence are an important and necessary public good, the less a nation spends on violence related functions the more resources a nation can allocate to other, more productive areas of economic activity. Expenditure on violence containment is economically efficient when it effectively prevents violence for the least amount of outlay. However, money that is spent on surplus violence containment, or money that is spent on inefficient programs has the potential to constrain a nations’ economic growth. This is simply because much of this type of expenditure is fundamentally unproductive, and if redirected toward productive pursuits, would improve government balance sheets, company profits and ultimately, the productivity and wellbeing of society. The research presented in this report shows that in 2010, VCI accounted for $2.16 trillion or around 15% of U.S. gross domestic product. This figure is considered conservative due to the difficulties of accounting for all private and public sector spending. Having not conducted an analysis of the size of the violence containment spending in other countries it is difficult to assess independently how the U.S. fares compared to other countries. Given the size of its defense and associated homeland security spending, the final size of the VCI in the U.S. is likely higher than other developed nations. THE KEY FINDINGS OF THE STUDY ARE: • Violence Containment spending in the U.S. amounted to $2.16 trillion in 2010 equivalent to just over $15,000 for each taxpayer or $7,000 per year for every man, woman and child.¹ • If violence containment spending was represented as a discrete industry, it would be the largest industry in the United States economy, larger than construction, real estate, professional services or manufacturing. • If violence containment spending was represented as a discrete national economic entity, it would be the seventh largest economy in the world - only slightly smaller than the UK economy. • Violence containment spending is four times higher than the national defense budget. • Public sector spending on VCI accounts for 10.8% of GDP while private sector spending is 4.2% of GDP.² • If U.S. federal violence containment spending was reduced by $326 billion or 25%, i.e. to the same relative levels as in 2001, then in one year the saved funds would be sufficient to entirely update the energy grid, rebuild all levies and renew the nation’s school infrastructure. Violence containment spending has been broken down into both the public and private sectors, and is represented in terms of net value added.³ It shows that the Federal Government spends over $1.3 trillion or approximately 9% of GDP on violence containment. This is more than was spent on pensions and more than double what was spent on infrastructure in 2010. National defense spending includes the Department of Defense, Homeland Security, Veterans Affairs and the debt servicing on these expenditures which is based on the proportion of military related government expenditure.4 Private sector spending on violence containment is conservatively estimated to be $605 billion or 4.2% of 2010 GDP. The remaining amount is spent by state and local government on police, justice, corrections and other security related measures. The approach presented in this report enables a new and novel approach to understanding the international economic competitiveness of a nation, based on calculating the percentage of GDP spent on violence containment. The less a nation spends on violence containment, providing it is also more peaceful, then the more competitive the economy should be, due to the ability to deploy its resources more efficiently. This evidently is only one dimension of national competitiveness, but a uniquely original and important one. For business, higher violence containment spending can result in unaccounted costs such as higher taxes, increased sunken costs and increased ancillary costs such as investing in security systems, security guards or even higher insurance premiums. Additionally, the higher the level of violence in a corporation’s area of operations then the more management time is devoted to responding to security rather than market development or competitive issues. This represents ‘lost’ opportunity which could be transferred into developing capital and expanding profits. Given the enormity of the number of items that needed to be counted in this exercise, it is inevitable many much smaller items were excluded given the difficulty of obtaining data on the true value-added figure. As an illustrative example some of the more meaningful items excluded have been included on page ten. The sheer size of spending on the Violence Containment Industries very clearly illustrates the enormous benefits of investing in the prevention of violence. If policymakers clearly understood the economic burden of non-productive violence containment then improving the levels of peacefulness would be seen as central to long term structural reforms. Details: New York: Institute for Economics and Peace, 2012. 48p. Source: Internet Resource: Accessed January 17, 2013 at: http://www.visionofhumanity.org/wp-content/uploads/2012/09/Violence-Containment-in-the-US-Report.pdf Year: 2012 Country: United States URL: http://www.visionofhumanity.org/wp-content/uploads/2012/09/Violence-Containment-in-the-US-Report.pdf Shelf Number: 127342 Keywords: Costs of CrimeCosts of Criminal JusticeEconomics of Crime (U.S.)ViolenceViolent Crime |