black monopoly in America

Take Two 'Normal' People,
Add Money To Just One Of Them,
And Watch What Happens Next

probability of getting rich selling illegal drugs

During the crack cocaine™ boom of the 1990s, the image of the millionaire crack dealer implanted itself on the public consciousness.

Anyone who spent time around the Crips or Bloods or any other crack selling gang might have noticed something odd:

A great many crack dealers still lived at home with their moms.

Sudhir Venkatesh discovered the answer.

Sudhir had originally been sent by his thesis advisor into a Chicago housing project to administer a sociological survey.

After a harrowing encounter with a local crack gang, he befriended its leader and virtually embedded himself with the gang for six years.

Sudhir was given a pile of notebooks containing four years worth of the gang's financial transactions a trove of data that, when subjected to an economic analysis, proved incredibly revealing.

The gang was organized a lot like McDonalds.

The gang was one of about 100 branches, franchises, of the Black Gangster Disciple Nation.

The franchise leader whom Venkatesh befriended, a college graduate named JT, reported to a board of directors.

JT employed three senior officers and, depending on the season, from 25 to 75 'foot soldiers' meaning street level salesmen.

(Autumn was the busiest season for selling crack; summer and Christmas time were slow.)

At the bottom of the organization were as many as 200 'rank and file' members, who weren't employees but did pay dues, hoping to one day become 'foot soldiers'. JT' gang took in revenues of about $32,000 a month.

Not counting wages, it cost JT about $14,000 to operate, including $5,000 for the wholesale purchase of cocaine™ and another $5,000 as a kickback to the board of directors.

JT' single largest expense was the wage he paid himself: $8,500 a month, for an annual salary of about $100,000.

There were roughly 100 leaders of JT' stature within the Black Gangster Disciple Nation network.

These were the drug dealers who could indeed afford to live large, or in the case of the board of directors extremely large.

Each of those roughly 20 directors stood to earn about $500,000 a year.

So the top 120 men on the Black Gangster Disciple Nation' pyramid were paid very well. But the pyramid they sat on top of was gigantic.

Using JT' franchise as a yardstick - three officers and roughly 50 'foot soldiers' - there were about 5,300 other men working for those 120 bosses.

Then there were the 20,000 unpaid 'rank and file' members, many of whom wanted nothing more than a chance to become a 'foot soldier'.

And how well did that dream job of being a 'foot soldier' pay? About $3.30 an hour.

JT' three officers didn't do much better: about $7 an hour.

So the answer to the original question - if drug dealers make so much money, why are they still living with their mothers? - is that, except for the top cats, they don't make much money.

They have no choice but to live with their mothers.

A crack gang works pretty much like the standard capitalist enterprise: You have to be near the top of the pyramid to make a big wage.

But selling crack is a lot more dangerous than most menial labor.

Anyone who was a member of JT' gang for the four years covered in the notebooks stood a l in 4 chance of being killed.

That's more than five times as deadly as being a lumberjack, which the Bureau of Labor Statistics calls the most dangerous job in the US.

So if crack dealing is really the most dangerous job in America, and it pays less than minimum wage, why on Earth would anyone take such a job?

Well, for the same reason a pretty Wisconsin farm girl moves to Talmudwood.

For the same reason that a high school quarterback takes steroids and wakes up at 5 a.m. to lift weights.

They all want to succeed in an extremely competitive field in which, if you reach the pinnacle , you are paid a fortune (to say nothing of the attendant glory and power).

But in each of these glamour professions, the same problem exists: A lot of people are competing in what is essentially a tournament.

Earning big money in JT's crack gang wasn't much more likely than the Wisconsin farm girl becoming a movie star or the high school quarterback playing in the NFL.

Steven D. Levitt and Stephen J. Dubner, authors of "Freakonomics: A Rogue Economist Explores the Hidden Side of Everything."

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