smugglers' blues
Cigarette and Freon smuggling.
Hassan Makki and Mohamad A. Hariri were detained earlier this week by federal authorities as part of an eleven person ring of cigarette smugglers. Makki and Hariri's group bought cigarettes in North Carolina (cigarette tax: 50 cents per carton) and on the Cattaraugus Indian Reservation in New York (cigarette tax: zero) and resold them in Michigan (cigarette tax: $12.50 per carton.)
Government manipulation of the market through taxation or prohibition always encourages a black market if the profit to be made outweighs the risk of being caught violating the law. Black market smuggling has given rise to two cancers on American society that still plague us: inner city gangs and the Kennedy dynasty. In this case, the profit opportunity in cigarette smuggling threatens America's national security. Makki is a self-described member of terrorist group Hezbollah and was previously linked with Islamic Amal, an organization with ties to Syria and Iran. Mohammed Hammoud, leader of a Hezbollah cell in North Carolina convicted of cigarette smuggling last June, has also been linked to this smuggling ring.
This problem's solution is simple enough: lower cigarette taxes! These "sin" taxes raise little revenue, and serve primarily as a tool for anti-smoking social engineering. Cigarette smokers have little reason to quit, however, if cheaper smokes can be had in the underground economy - even when that underground economy is funneling cash to American enemies.
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More smuggling of note: there's a thriving traffic of CFC 12 across the U.S. - Mexican border, and U.S. Department of Justice and Mexican environmental officials met last week to coordinate efforts to curtail it. CFC 12, a.k.a. Freon, was banned by international agreement in developed countries in 1987, taking effect by 1995. Its replacements are less efficient, and in some cases toxic, and conversion to the new coolants has cost the American economy several billion dollars. Putting aside the fact that the theory of CFCs as an ozone layer destroyer are based as much on media hype as substantiated science, the ban itself is not working. 20 million American automobiles, built before 1995, contain CFC 12 based air conditioners. Keeping these cars stocked with the coolant they require has fueled a booming smuggling business. Contraband Freon, manufactured and sold legally in Mexico, ships across the border "in backpacks, hidden from border inspectors in the cavities of cars, and shipped north by the ton concealed in 18-wheel tractor-trailers" according to the Associated Press.
Eventually the attrition of older vehicles and other machinery that uses Freon will cause this market to evaporate. In the meantime, though, the black market provides consumers with what government regulation denies, carried on the backs and in the trucks of the "frío banditos."
14.02.2003 © ljr