Scarfacenomics

Capitalism and trade according to Toni Montana – “first jou gotta get the money, then jou get the power, then jou get the..”..ahhh..can’t publish that line here but rest assured it is something man has always strived to attain..and always shall struggle to!

Our iconic American dream anti-hero-Montana expressed a bewilderingly efficient entrepreneurial flair and killer instinct for spotting a gap in the market and filling it quite gladly with Yeyo (aka Cocaine - for those that maybe have never watched the likely most-quoted movie of all time), generating copious amounts of wealth for himself and those around him…it appears there are a great number of equally successful pharmaceutically inclined Europe-based entrepreneurs around to generate a buzz that is superlatively controversial, to say the least, in its lifting of national GDP. Latest EU regulations (now ESA rules require a number of illegal trading activities including narcotics, cigarettes and prostitution - where both sides willingly comply - to be included in EU member states’ calculations to provide a “clearer” picture of actual GDP and economic activity) have potentially inflated some countries’ GDP by as much as 5% (Sweden, Finland) and assisted other indebted nations (Italy) to more easily reach the imposed 3% Debt-to-GDP limit..increasing Italy’s GDP by 1.3% thanks to the omnipresent Mafia and incredibly fun-looking Bunga Bunga parties, makes keeping to the debt limit slightly easier for them this year..bene! Special thanks no doubt should be extended to supreme GDP contributor Berlusconi..even out of power, the jet-black-dyed-fox is still influencing the country’s political machinations..possibly single-handedly!

The UK would also handsomely benefit from the ESA change, with a potential 3%-4% bump in GDP, when all those nightclubs and celebrity restaurants’ true nocturnal activity behind the toilet doors are taken into account – not for nothing is there an urban myth that 95% of UK notes in circulation have traces of illegal substances. Does all of this really come as a surprise though? Most people living in such cities have a good understanding of what happens around them, how it happens and that is an accepted facet of society. After all, governments over time have decreed what actually constitutes this black market activity and the ingredients of such limitations to what one can get away with…errm..meant to say trade….vary from nation to nation..one man’s illegal cannabis distribution ring in Frankfurt is another’s “coffee shop” in Amsterdam (legal recordable revenue in the Netherlands). Interesting, as most illicit activity eventually works its way to supercar dealerships and restaurants anyway..doesnt it? The UK’s VAT and other indirect taxation methods should normally slurp up this excess. Judging by the blacked out vehicles that swiftly careen through the streets of the worlds greatest “tax-friendly” cities, bodyguards in tow, the thriving market often described as black but more colourful than many would give credit for, strengthens and underpins a great number of economic factors. Historical quirks and past venal corporate lobbying resulted in plenty of the current “illegal” landscape..some argue the only reason the ubiquitous coffee drinker is not risking a lengthy prison sentence is down to some powerful lobbying from self-interested growers in the late 1800s, whereas the hemp plant suffered ignominious defeat on the back of trumped up medical charges. Wherever you stand on the issue, the subjective nature of one man’s legal drug or activity leads to the very existence of the so called grey-side of the market and the reason there is room for Scarfacenomics.

We must also consider other nations that do not so honestly divulge the extent of industries that have forever existed and significantly contributed to not only the enjoyment of many its population but also the efficacy and size of its output. If we look at where most global corporate profit is generated it is normally from the addictive substances - drugs, alcohol, coffee and even these days an unhealthy addiction to the internet and the prevailing and time-shifting sin of vanity - people Tweet because they want others to see what they are doing (a reason people have made the DailyMail the world’s most visited online tabloid). It becomes compulsive, addictive and overall generally destructive. Is it really that terrible though that such large swathes of the Western population take joy out of something as simple as Rihanna’s barely-there dress..?..could think of worse things to be looking at. The truth remains that Scarfacenomics may be closer to the reality of doing business than we comfortably admit. Witness the furore surrounding the alleged corrupt practices of the future World Cup to be held (for now) in Qatar in 2022. Are we simply gawking at the unsavoury practice of “facilitation payments” considered the norm in the Middle East with envious bafflement that others did not think (or afford) to do the same, or genuinely incensed that such activity actually takes place – even though most are fully aware this is how large swathes of business gets done. These activities belie a greater problem..but just because we do not always see them does not mean they do not prolifically exist.

The general level of GDP attributed to such illicit activity is astounding on the surface but exceptionally difficult to truly calculate. Sarface’s protagonist would snort-for-joy, proud of the recognition and credit afforded to his business-building skills. He, like others before him, although rooted in reality rather than larger-than-life fictional characters, have long contributed to such global trade and value. We would likely have some of the world’s largest economies in some unsuspected destinations - lest you be a cognisant travelling businessman covering certain markets that is..especially such lovely and warm places of culture as the GCC (a little sarcasm), alongside certain Asian cities that spring to mind, where the level of extra-curricular activity is so densely concentrated in a few blocks that they may well constitute mini-superpower states on their own! The Middle East in particular would witness incredible skews in certain economic output were they to first even acknowledge the existence of some of their greatest illicit activities – spent any decent amount of time in a Dubai hotel lobby?..then you know what we’re talking about here..the level of hypocrisy that exists there boggles the mind.

One man’s crime is another man’s pay-check. Crime doesn’t pay, or at least that’s what teachers, parents and police forces around the world instil into most children from a very young age, repeating the mantra that there is no substitute for hard-work and honest, moral effort resulting in just rewards. Anyone taking a simple look around the streets of London, Monaco, Hong Kong and other hot-beds of welcoming banking systems and tax-havens will possibly hesitate mid sentence thrilled by the sounds of a passing super-car, engine revving at full scream (complete with requisite as-if-dealer-option-supplied peroxide blonde passenger with vacuous stare..also screaming), almost stumbling at the surprise and shock of realising the driver is barely old enough to legally drink (oh the irony) and wonder where exactly the black market punishment for such crimes is hitting hardest. We all know most people do work hard and live within the confines of the law. Fascination and near obsession with the criminal aspect of humanity though, with the glorification of such activity through books, movies and now slickly produced TV-series’, maintains an almost endearing affair and slightly sycophantic admiration for those on, seemingly, the wrong side of the law.

Rationalise the above with a report this week that Generation Z (16-25 year olds) is potentially the saviour of our economic malaise through clean living. Toni Montana would be appalled! Apparently less alcohol is being consumed and a significant fall in recreational drug-use is being witnessed. This may well be simply because there is not enough disposal income amongst the newer generation for frivolous spending and so many are quite concerned (obsessed) with how they look, bringing a certain narcissistic, yet medically welcome, result. Lack of job security and a greater negative stigma from viral social media also factors at play here.

Institutionalised corruption and preferentially legalised activity indubitably contribute significantly to the greater world economy. The other side of the legal divide, is simply a truth of the way we do business and what much of the population enjoy. Even great global tech firms like Apple and the late Steve Jobs display traits akin to Toni Montana’s insatiable appetite for success. Both would not have been able to realise the pinnacle of the American Dream without a little “creative thinking”. Apple’s latest announcements this week are timely reminders of the difficulty in maintaining a position atop a cut-throat competitive pyramid. If it wasn’t for the rather oblique working conditions that used to exist at Apple’s outsourced factory in China, it may not have been able to generate the massive mountain of cash that sits behind it and prohibits many would-be competitors from ever summoning the courage to take it on. Would proud US law-makers ever admit to such practices being tolerated..of course not. 

In a world of Scarfacenomics where mountains of cash are replaced with mountains of other substances, the Montana tag-line that echoes and prevails as a perfectly consistent reminder of the oblique nature of capitalist profit before morality…“I always tell the truth, even when I lie.”