Question: Wouldn’t Organized Crime just go right on using the currencies of other nations?
Answer: I am confident that they will certainly try. So let’s imagine that we are a criminal organization. Our product is something that we need to sell to a mass market. This is not something that we can pursue successfully unless we can sell to a large number of people. So which of the various products currently available from organized crime shall we use? I am going to use gambling which is legal in several states in various forms and which is considered by most people to be a minor crime.
Our criminal organization has a long list of clients who bet with us on all sorts of events. We would like to keep them betting. What can we collect from them when they lose? They have no foreign currency. They have, in a few cases, some U.S. currency but the accounts computers do not recognize that as money.
We can keep books on their bets. When they gamble with us we can keep a record of their wins and losses. But how do we settle those debts? How do we collect? If they have some of the non-POM in their accounts, they are physically unable to transfer that money to us. Perhaps we could have them buy luxuries and give them to us. Jewelry has a value which we can convert to money in other nations who still use POM. But the jewelry they buy will belong to them. In order for us to own that jewelry, we will have to require that they transfer ownership of it to us, or some one of us. That provides a trail that links us to the bettor. If they do not transfer ownership, then we are in possession of presumably stolen property. Also, to make it worthwhile, we will have to wait until the bettor has run up a considerable debt before settling up.
But we might be able to struggle through doing business with only the more wealthy of our clients. Only, why would they gamble with us? What could we give them if they won? We could not give them the non-POM so we would have to give them some foreign currency. (We will leave aside the problem of what that currency would be worth as POMs change in value over time.) But they could hardly spend that without leaving the country. So the foreign currency would not be very attractive. This would cost us more customers.
But we still have a few wealthy, jet-set types who like to gamble and who travel abroad frequently enough to want the currency of other nations. Will that be enough? Perhaps, but there are more problems to face.
We have a bureaucracy which does the accounting and the strong arm work. How do we pay them? They aren’t jet setters. They really won’t want traceable jewelry or other goods. They want to be paid in money they can spend. If they are arrested by the police, how do we bribe the police or the criminal justice system? How do we get them a good lawyer? Unless we can pay them, what hold do we have on them? Why would they keep working for the organization if they can get more money in other ways without the risk of arrest and imprisonment? (Not to mention maiming and/or death)
But we have another problem, perhaps the greatest problem of all. We can’t run a mass-marketing business without lots of people knowing about us. That means that any of them can report us to the authorities. They would be paid for doing so. All it takes is a few upset, money-hungry, losing bettors to identify and convict members of the organization. That is, if anyone really cares. (Gambling cannot destroy lives and families in a non-POM economy.)
Other organized crime products such as drugs and prostitution also become quite unprofitable and the organization becomes unmanageable. Why would a prostitute need a pimp? Why would a woman need to turn to prostitution? How can you be paid? How do you pay the criminal bureaucracy?