The Global Implications of White Collar Crimes

The Global Implications of White Collar Crimes

White collar crimes are an extensive challenge that does not receive a lot of attention compared to the blue collar crimes (McFayden, 2010). Many individuals do not understand whAt white collar crime is since it is not as dramatic or interesting to talk about. Considering the blue collar crimes such as murder, rape or robberies, these events are able to evoke emotional outbursts among people from all sort of ages and classes. However, the white collar crimes will not receive the same kind of attention. It actually makes the people who have heard about it more confused. Notably, the fact that the crime is not well understood especially in the public arena is one of the reasons for its continued existence.
Nonetheless, even with the little focus accorded to white collar crimes, these have huge ripple effects whenever they occur. These effects include the loss of economic opportunities, decline in stock prices, increased prices of commodities, the actual price for the crime among others. The costs associated with each white collar crime are extremely high and even scholars are still researching on how to fully account for the total costs of the crime. This paper is intended to illustrate the global implications of white collar crimes on the affected individuals, the economy and the society. The full impact of white collar crime is massive and calls for substantial and proportional strategy in resource allocation so as to deal with it.
Background of the Problem
According to the sociologist, Edwin H Sutherland, white collar crime is a crime done by an individual in a respectability position or is in a higher social status in line of his or her occupational duties (Shapiro, 1980). Over time, there has been divergent views on defining white collar crime through the contemporary perspective. Currently, the most contemporary definition is that it is a crime that has been committed by professionals in business and industrial settings, involves no forms of violence and has a sole intention of achieving individual financial gains for the perpetrators. While this definition does try to encompass the whole concept, it does fail to account for some aspects (McFayden, 2010). For instance, the same crime is committed by criminals who do not work in particular industries which are both non-violent and are focussed on individual financial gains. It also does not account for the ones who commit the crimes in an industry which they do not work for at the time of the crime. Therefore, while seeking to come close to the best definition of white collar crimes, this research paper will consider it the series of crimes committed by persons working or not working in particular industries which will not involve any forms of violence and whose primary objective is personal financial gains.
According to the United Nations Millennium Project data, white collar crimes are estimated to cost the global economy over $1 trillion in revenues annually. This estimate is a conservative one considering that crime generally is a prevalent issue in every nation and region globally. Each industry is vulnerable to crime and its exploits. As long as an industry is keen to make revenues, criminals are at bay seeking ways to exploit the weakness in these organizations for their individual gains. The hundreds of millions of dollars that are gained from white collar crimes are said to be redirected into secret bank accounts in different countries annually. It becomes very hard to trace these gains.
The Global Implications of White collar Crimes
White collar crimes cause an array of implications in the global space and to further understand them, illustrations would be effective. First, the economic implications that arise from white collar crimes will impede any economic growth and development (Siompsons, 2013). If an institution has experienced an extensive breach of security that it breached the public domain, it will find it difficult to gain back the trust accorded to them by its clients. The declining trust id compounded by the loss of client’s personal information which could be putting the client at a vulnerable position. The higher the level in which the crime occurs, the greater its ri[ppple effects in the economy.
One of the highly publicized white collar crimes in the business world was Enron. Its downfall did shock many considering it was one of the most admired companies for its innovation and phenomenal growth rates (Stanislawska, 2018). It was an energy multinational that had revenues surpassing 100 billion. Nonetheless, illegal accounting procedures approved by the Arthur Anderson Auditors Company would cause its downfall. This company had to deal with exorbitant litigation expenses tring to clear out its name, extensive drop in stock prices and loss of shareholders’ equity. The company falling down meant that the people that depended on it for their livelihood lost an income stream (Reurink, 2016). The more unemployed individuals are the more the rates of crime.
White collar crimes will have consumers paying high prices across different sectors. For instance in the health care sector, its respective costs have increased by the day due to insurance fraud. The FBI has estimated that health care fraud amounts to about 10% of healthcare spending that equals $68 billion (Graham, 2012). The higher the fraud in this sector, the higher the premiums that consumers will have to pay to get access to this essential service. This also increases the potential of people losing lives and savings trying to sustain the criminal operations happening in the organizations. This is distinct from the losses investors accrue from investing in the stock market. The investor has intentionally chosen to invest so understands that his money is at risk, however, in areas such as the health care sector, the crime is making it impossible for individuals to gain access to the services due to its high premiums.
Prior to the market crash that occurred in 2008, the housing market had experienced a series of horrific scandals that led to higher home costs. For instance, the Beazer Homes was prosecuted for mortgage fraud. The company was prosecuted for offering lower mortgage rates for buyers who paid extra fees but would later on not give them the lower rates (Graham, 2012). The company would end up paying back the consumers and the government. Nonetheless, one would wonder how many consumers across the globe are paying exorbitant costs for mortgages yet they are just sustaining crime ongoing in the company.
The extensive loss of employment opportunities due to ehite collar crime cannot be underscored. Unfortunately, it is mostly the innocent employees in lower positions that lose their income streams (Healy & Serafeim, 2016). One example of the crime was in WorldCom which declared bankruptcy in June 2002 after being found for operating fraudulently. The actions of the company left 33000 employees jobless at a go. Furthermore, this company was a telecommunications company whose actions would have ripple effects to all the parties that were associated with it. Companies such as AT&T were sent out of business for WorldCom’s low. This led to over 300000 employees losing jobs in the telecommunications sector (Graham, 2012). It is impossible to account for the devastating costs that arose from this scandal but one thing that was sure is that it was in billions. Job losses are inevitable toi companies that are found to engage in white collar crimes leading to the affected individuals suffering economically.
White collar crimes also cause social implications especially in the poor and developing nations. These countries typically have limited opportunities to cater for any upward mobility either socially or economically (McFayden, 2010). This is also the same for individuals living in developed countries but have little incomes. Sociologists have also indicated that the environment does affect the inhabitants. To this effect, for the areas where white collar crime is pervasive and tolerated, thenn the crimes are considered a means to better lives becoming difficult to mitigate. Young individuals grow knowing that one will need to engage in some sort of crime if they are to succeed in life. Unfortunately, the crime will persist even to future generations and a cycle of white collar crime is created.
The crime also contributes to negative social conditions through the reduction of resources (McFayden, 2010). A country that is focussed and fights white collar crimes aggressively needs to have resources for the respective activities. The funds are needed in deterrence, detection and prosecution processes against the crime. If the government will have minimal resources, other social programs are jeopardized to facilitate the crimes. Subsequently, adverse impacts will be felt in the adoption and implementation of other social programs impeding their process to achieve maximal benefits.
The political implications that accrue from white collar crimes include governments always being at a vulnerable position of being attacked. It becomes difficult for investors to invest in certain countries if no proper resources are directed towards protecting one from the crimes (McFayden, 2010). The more the crimes, the more funds are directed to warlords and anti-government regimes thus increasing the capacities for criminal organizations compared to the governments and law enforcement agencies in a country. White collar crimes in private organizations will also cause a reduction in investment, reduce the number of people employed, generate minimal tax revenues and could lead to the closure of some of them. Therefore, white collar crime affects countries in a holistic nature.
These grievous implications illustrate the need for key stakeholders to research, develop and adequately implement strategies that will see white collar crimes reduced extensively. The strategies need to be measures which will detect any crimes at earlier stages to avoid severe damage. They need to incorporate severe punishments for any perpetrators which will easily deter others from engaging in the crime. Additionally, the society should look into having enough resources for each individual so that they are not lured into engaging in the crimes.
Conclusion
It is evident that white collar crimes exist in the corporate world. Its im,plications across the globe are grievous whether economic, political, or even social. The people who end up suffering are those found in the lower hierarchy levels. It is only prudent that mitigation measures are enforced across the board in fighting the crime and its impact.
References
Graham, M. (2012). White Collar Crime and the United States’ Economy.
Healy, P. M., & Serafeim, G. (2016). Who Pays for White-Collar Crime?. Harvard Business School working paper series# 16-148.
McFayden, E. (2010). Global Implications of White Collar Crime. Available at SSRN 1530685.
Reurink, A. (2016). From elite lawbreaking to financial crime: The evolution of the concept of white-collar crime (No. 16/10). MPIfG Discussion Paper.
Shapiro, S. P. (1980). Thinking about white collar crime: Matters of conceptualization and research (p. 1). Washington, DC: US Department of Justice, National Institute of Justice.
Simpson, S. S. (2013). White-collar crime: A review of recent developments and promising directions for future research. Annual Review of Sociology, 39, 309-331.
Stanislawska, M. (2018). White-collar Crime As Economic Crime In The Aspect Of Globalization.