Job Creation? A Counter-Cyclical Business? How About The Mafia?

(MoneyWatch)  I'm trying to be ironic, of course; I would never suggest anyone take up crime. But an association of Italian businesses, SOS Impresa, has released its latest annual commentary, and finds that the mob, at least the Italian arm, has fared pretty well in the downturn, making up about seven percent of GDP, and probably creating a lot of new jobs.

News of the report comes from the Financial Times. (You can download SOS Impresa's study, although you will need to know some Italian to make any sense of it.) SOS Impresa was started about 20 years ago by a group of businessmen in Palermo, Sicily, trying to resist the forces of organized crime and helping its victims.

The Mafia's four main businesses -- drugs, loan-sharking and protection, ecomafia (waste disposal) and attivit?  imprenditoriale ("entrepreneurial activities" such as gambling and forgery) -- brought in ?135 billion last year (about $190 billion), up about four percent, against a five percent drop in the Italian economy. And after paying for salaries, hideouts, guns and such, SOS Impresa estimates a profit margin of 60 percent! See for yourself:


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The secret is the mafia's apparent great reserves of cash:

In periodi di crisi - sostiene il rapporto SOS impresa - i soldi delle mafie, la loro grande liquidit? , benché "sporchi" fanno gola. E il settore maggiormente in crescita appare, in tempi di crisi economica e di difficolt?  di accesso al credito proprio l'usura che nel 2009 ha toccato un vero e proprio boom: oltre 200 mila commercianti colpiti con un giro di affari dattorno ai 20 miliardi di euro (ma le posizioni debitorie ammontano a circa 600 mila, indice di indebitamenti con più strozzini). (Emphasis in the original.)

If I've got it right, they're saying that as in the U.S., small business loans are hard to come by, and loan-sharking was booming in 2009: 200,000 additional businesses went to the mob for operating cash, for a total of 600,000.

" 'With the ?24bn turnover of racket and usury activities alone, 200,000 jobs could be created,' [chairman Marco Venturi] said,..." the Financial Times conveniently translates.

At least it keeps small businesses going. More than we can say for the banks.