FREAKONOMICS

Freakonomics and its sequel Superfreakonomics are books written by economist Steven Levitt and Journalist Stephen Dubner.

The book works off the concept that people have perceptions of how they believe the world to work, and then the study of economics shows them how the world actually operates.

Questions explored include: (lifted from the book itself)
Which is more dangerous a gun or a swimming pool?
What do school teachers and sumo wrestlers have in common?
Why do drug dealers live with their moms?
How is the Ku Klux Klan like a group of real estate agents?
How much do parents really matter?
and quite controversially:
How did the legalization of abortion affect the rate of violent crime?


For the sake of time(as this is actually an oral presentation masquerading as a blog post)I'll show some intriguing statistics from Freakonomics and after that explore one issue in some depth

First, the statistics:

This is a partial list of compensated pay schedule the state of Connecticut(embedded in the essay concerning abortion and crime rates) uses for work related injuries

First Lost Finger: 36 weeks of pay. Second: 29 Third: 21

For arms, hands, and thumbs it depends on which arm, right or left.

master hand: 168 weeks other hand: 155

Your Big toe is apparently worth nearly 30 weeks of pay, whereas as those other little spuds merit 9 weeks.





Crack Dealers Operate like Fast Food Franchises


Background: A graduate student in Sociology, Sudhir Venkatesh, was sent against his will by a professor into Chicago's poorest black neighborhood to collect responses to a question. That question:

How do you feel about being black and poor?
a. Very bad
b. bad
c. neither bad nor good
d. Somewhat good
e. very good

After gathering some responses Venkatesh realized that answer option "f" should be added to the survey:

f. Fuck You

At one point Venkatesh happened upon some teens playing dice. He was taken hostage by the teens who were low level drug dealers and were suspicious of Venkatesh and feared he was a cop or a rival gang spy. Long story short, after 24 hours of playing dice, having his survey questions ridiculed, and being offered "one last beer" after another he was allowed to leave.

Venkatesh was intrigued by the experience and armed with new questions sought out the the leader of the "Black Disciples". A man by the name of J.T.

J.T. happened to be a college graduate. He bad been a business major and held a legitimate job for a short time after college selling office equipment. However J.T. described the experience as having felt like "a white man working at Afro Sheen headquarters". He quit and moved into the drug business.

J.T. applied his business education to being the leader of a crack gang. He knew the importance of collecting data and was "always on the lookout for better management strategies.

Venkatesh was granted access. He lived with and studied the people in the area and the operations of the gang."


At one point Venkatesh received a holy grail of information from a member of the gang who wanted the details of the crack business to be known. "Booty" provided Venkatesh with four years worth of the gang's financial transactions contained in spiral notebooks. That's right. Crack Dealers keep ledgers.

HOW DID THE GANG FUNCTION?

According to freakonomics "An awful lot like most American businesses but perhaps none more so than McDonald's."

The gang Venketesh studied was one of about 100 branches. Essentially each gang was a franchise of the larger Crack Corporation which J.T. reported to. These higher-ups referred to themselves as "The Board of Directors." No joke.

J.T. paid the board of directors 20% of his revenues for the right to operate a crack franchise in a designated 12 block area.


J.T. had 3 assistant managers. A treasurer, who watched the gang's liquid assets, a runner who transported drugs and money to and from the supplier(Hmmm, sounds like a logistics man), and an enforcer. (security)

The rest of the gang's employees consisted of 25-30 "foot soldiers" who hoped to someday be promoted to an assistant management position. About 200 other men were attempting to get a job as a foot soldier. This was kind of like going to college or taking apprenticeship classes in an attempt to beef up their "resumes".

The gang's official business model centered around crack. However, one could sell heroin if they paid a "fixed licensing fee". Members of the gang also paid dues. Officers and Upper Management excluded of course.

The "franchise owner", J.T., made about 100,000 dollars a year. Untaxed.

Also, according the freakonomics, the crack gang worked like the standard capitalist enterprise. The average gang members wages were skewed in comparison to upper level members like burger flippers at McDonald's or shelf stockers at Wal-Mart wages compared to their corporate managers.

"The top 120 men in the Black Disciples Gang represented 2.2 percent of the members but took home over 50% of the profits."

THE DOWNSIDE

1.A street level crack dealer had a higher chance of death in a given year than an individual on death row in Texas.

2. J.T. was promoted to the Board of Directors. He was sent to prison soon thereafter.