Youth gangs as pseudo-governments: implications for violent crime.

• Author: Sobel, Russell S.

1. Introduction

   In the early 1970s, fewer than 300 cities cited having problems with youth gangs. (1) Since then, gangs have been identified in all 50 states, with over 2500 cities reporting problems by the late 1990s. (2) Anecdotal evidence, along with casual empiricism, has led many people to hold a strong belief that youth gangs are a serious problem because areas with more gang activity also tend to have higher rates of violent crime committed by youths. Simply put, the commonly accepted wisdom is that gangs cause violence.

   In this paper, we propose and test a hypothesis suggesting that the causal relationship between youth violence and gang activity might flow in the exact opposite direction of what is commonly accepted. We propose that the failure of government to protect the rights of individuals from violence committed by youths has led to the formation of gangs as protective agencies among those populations who are most victimized by unpunished juvenile offenders in areas with high preexisting rates of violent crime. By banding together under the threat of mutual retaliation, potential victims of youth violence can secure increased safety. This same phenomenon also explains the widespread prevalence of gangs within prisons, where the rights of individuals are largely unenforced. While gangs, like governments, use coercion and violence to enforce their rules through retaliation, the net impact of gangs (like governments) is likely to lower the overall amount of violence. (3) Generally, for an equilibrium to exist in which gang-type agencies prevail, the deterrence effect must reduce violence by more than the amount of violence used by the enforcement agency. (4)

   Our analysis is solidly founded in the economic literature on the formation and evolution of "governments" from a situation of anarchy developed by Nozick (1974) and Buchanan (1975). (5) These authors, particularly Nozick, explain how and why infant governments evolve as protection firms in the anarchistic "Hobbesian jungle," (6) characterized by violence and theft. Assuming that protection firms already exist, Sutter (1995) uses a game-theoretic model to address the behavior of and relations between individual protection firms and their respective clients when there are varying levels of symmetry between the former and the latter. While other authors, such as Bandiera (2003), have previously applied this theoretical framework to the evolution of specific protection firms, like the Sicilian mafia, very little has been done on applying this model to youth gangs, with the exception of a purely theoretical model by Skaperdas and Syropoulos (1995). Our analysis of youth gangs also relies on several recent theories developed in the literature on anarchy and whether it is welfare improving relative to a predatory state (for example, Moselle and Polak 2001; Leeson 2006).

   In this paper, we develop this youth gang application of government evolution and anarchy theory to a much greater extent than has previously been done in the literature, and then conduct empirical testing. Our hypothesis--that gangs form in areas where there is a high rate of preexisting violence as a protection agency substituting for the lack of government enforcement of rights--is an alternative explanation for the well-documented cross-sectional correlation between gang activity and violent crime. In particular we show that our model predicts an exactly opposite direction of causality between youth gang activity and the rate of violent crime from what is commonly accepted. Because our hypothesis relies on the causality flowing from crime to gang membership rather than vice versa, we use empirical causality models to test our hypothesis. We indeed find a one-way causal relationship that violent crime causes gang membership, and we can reject the hypothesis that gang membership causes violent crime.

   Our results have significant implications for government policy directed toward youth gangs. Just as the overthrowing or dissolving of a government in a geographic area might result in more violence because of a lack of rights enforcement in the resulting anarchy, government policy aimed at dissolving youth gangs will not be successful in reducing violent crime, and may in fact increase it. (7) By failing to adequately punish youth offenders when they violate the rights of other individuals, the current government legal system has created an environment where there is a significant demand for these private protective agencies (youth gangs). While gangs do use violence to enforce their rules and protect the rights of their members, the net result of gangs, according to our results, is to reduce the amount of violent crime because of mutual deterrence. Because there will always be a market for private protection when government fails to protect individual rights, the implications are clear for how public policy reform can reduce gang activity: more effective enforcement of laws that protect the rights of individuals from violent crimes committed by youthful offenders. Breaking up and destabilizing gangs within our model is violence increasing, rather than violence reducing.

   Our findings suggest policy implications that are sometimes contrary to the existing deterrence literature. The older theoretical literature on the deterrence effect indicates that stricter law enforcement is less effective than better detection (Davis 1988; Leung 1995). These models, however, deal with single offenders and not gangs. Garoupa (2007), on the other hand, actually addresses punishment as it relates to gangs. The author finds that government may actually increase the criminal effectiveness of gangs by using stricter enforcement measures. Also, Garoupa (2000) stipulates that government should impose less severe punishment on relatively nonviolent gangs because those gangs are likely more efficient in controlling criminal activity than is government. Government should instead focus its efforts on controlling violent gangs that use "costly extortion." The results of this paper suggest that Garoupa's (2000) solution is indeed the appropriate policy response to gang activity.

   This does not mean to say that all gang activity is explained by these differentials in enforcement. Sociological explanations and other factors surely play a major role. We also note that in some other countries with softer juvenile punishments, gangs are less prevalent. However, the fact that many gang members report joining a gang for protection, both among prison and youth gangs, suggests that the effect we examine is important nonetheless. What is important for deterring crime is whether the individual committing the crime is punished. When offenders go unpunished by the formal legal system, informal gangs help to fill this role, providing protection for those who would be potential victims of the unpunished offenders.

2. The Traditional View of Gangs

   Sociologists and criminologists have weighed in most heavily on the debates regarding gang formation. Spergel et al. (1996a) theorize that youth gang problems are brought about by several community-level factors, including a lack of both social opportunities and social organization, institutional racism, and failures of social policy. They claim that, especially in black neighborhoods, the street gang provides control and employment opportunities that are not provided by legally recognized institutions. The popular perception is that gangs, like the infamous Bloods and Crips, seek out new markets in which to franchise their names. However, the empirical literature has found results that reject this hypothesis. For example, Spergel et al. (1996b) note that most new gangs are not franchises. This is later reaffirmed by Maxson (1998).

   Other authors have hypothesized that gangs are little more than organized drug-dealing firms, and that the main reason for gang existence is the fact that drugs are illegal. This claim is widely made by law enforcement officials. While it is true that some gangs use the drug trade to help finance their activities, the empirical literature has uniformly provided results that reject the view that drug activity is the main reason for gang formation and existence. Maxson (1995) tests the connection between street gangs, illicit drug sales, and violence and finds that street gangs are far less likely to be involved in the illegal drug trade and the associated violence than the law enforcement literature suggests. The author finds that only a few gangs seemed to specialize in drug sales. Levitt and Venkatesh (2000) describe the inner workings of a gang that, in fact, does sell drugs. However, the gang charges an additional membership lee for those who wish to sell drugs.

   One reason to be very skeptical of these claims by law enforcement officials of the gang relationship with the drug trade is because if law enforcement exaggerates the extent to which gangs are involved in drug trade, they are more likely to get bigger budgets. The fact that budgetary considerations play a major role in the decisions and actions of police departments is now widely demonstrated in the literature by authors such as Rasmussen and Benson (1994).

   That gang activity is present to a greater extent in areas with higher rates of violent crime has been well demonstrated in the cross section. Based on this strong correlation, it is widely accepted that the way to reduce violent crime is to reduce gang activity. Inherent in this statement is an underlying assumption about the direction of causation between violent crime and gang activity. An intervention that reduces gang activity will only reduce violent crime if gangs cause violent crime. All protection firms and organizations, from the mafia to private security to traditional governments, use coercion, retaliatory violence, and predatory violence to enforce certain rules of conduct and to enforce and protect the rights of...