Economic Costs of White-Collar Crime
Published 12 May 2017
The pervasiveness of white-collar crime has produced economic costs that may be seen from the individual level and extends until the national level. The costs may be defined in both monetary and non-monetary levels. Giving a short definition of white-collar crime, Vito, Maahs, and Holmes cited Professor Edwin Sutherland that the said term is “a crime committed by a person of respectability and high social status in the course of his occupation” (p. 411).
In a strategic plan prepared by the Federal Bureau of Investigation, it has been mentioned that the organization is in the process of investigating 189 cases and 18 of which have costs, in the form of losses, of over $1 billion (Kouri). The financial losses of individuals, private organizations, and the society, in general, due to white collar crime have become significant that it eats up a considerable amount of money. For example, identity theft has resulted to losses of over $50 billion annually and the average loss per victim is $4800 (Vito, Maahs, & Holmes 412). Likewise, information provided by the US General Accounting Office shows that healthcare frauds has amounted to 100 billion annually or 10% of the total budget (Vito, Maahs, & Holmes 412). On the other hand, losses due to internet fraud and check fraud are pegged at $14 million in 2002 and $10 billion annually, respectively (Vito, Maahs, & Holmes 412). In addition to all these, the costs of litigation are practically of the same amount that renders the whole process a very costly one (Salinger 108). These significant amounts of money constitute the monetary aspect of the economic costs brought about by white-collar crime. Likewise, the estimated cost lost due to white collar crime is estimated to be about 15 times than that of street crime (Salinger 195).
On the other side of the fence, the non-monetary costs could be seen which are equal to, if not far greater than, the monetary costs. First, lives are lost due to these white-collar crimes that result to a reduction of the quantity
and quality of the work force. The number of lives lost every year because of a mix of industrial and medical reasons to be around 364,000 lives (Vito, Maahs, & Holmes 412). This extends its impact to the human capital of the nation as there are implications for work efficiency lost due to these deaths. Second, the doubts and decrease in the confidence of people because of the uncertainties posed by the commission of white-collar crime would lead to negative impacts for the different sectors of the US economy (Kouri). The uncertainty that people and organizations perceive over the threats posed by white-collar crime would caution them to feel otherwise in investing their money in certain portions of the economy. This is because of the wider impact of white-collar crime where it could reach hundreds or thousands of victims (Salinger 196). Likewise, their confidence would affect the point of view of outsiders to the economy of the country. Third, losses incurred by the government would also have its impact on their performance especially with regard to social services rendered to people. Though it might not be significant in such a way that the presence of such would lead to the complete dysfunctional terms for the social welfare services of the government, the losses and the difference it could make could not be disregarded. Fourth, the impact to the reputation of companies and people are considerable, too (Salinger 108).
- Kouri, Jim. “White Collar Crime is Not Victimless.” Renew America. 6 December 2005. RenewAmerica.us.
- Salinger, Lawrence. Encyclopedia of White-Collar and Corporate Crime. USA: Sage Publications.
- Vito, Gennaro, Maahs, Jeffrey, & Holmes, Ronald. (2006). Criminology: Theory, Research, and Policy. 2nd Ed. USA: Jones and Bartlett Publishers.