The issue may be raised as to the “legality” of the mob. It may be argued that they cannot be considered a government as they are “criminal”. What is it that distinguishes the mob as criminal? Is it the services provided by the mob, which the “real” government has deemed illegal? Obviously the argument over legalization of certain enterprises is too great to be discussed fully here, but consider that underprovision of a good by traditional, and of course legal, markets is often one of the rationales for government intervention. All in all, restricting the mob from classification as a government due to some arbitrary moral judgement is a normative stance, not truly a positive economic one. Another argument against considering the mob as a government may be that it operates in the profit maximizing manner of a firm. This should not be considered a limting factor as many agencies, normally considered governments, in the United States follow the same criteria. That the Mafia is concerned with profit only makes for an argument as to the relative efficiency of the institution. It is in the best interests of the Mafia to provide stability for life and productive enterprises, and further to promote the most productive and profitable of said enterprises. As in the classic example of a schoolyard bully, money must be available to the “victims” for the bully to take any. Further, more earnings by those being taxed by the government leads to possible greater revenues for the government. And from a societal welfare perspective, may well represent a pareto superior move. “Aha! Legitimate government agents don’t take home a ‘piece of the action’!” may be the next objection raised. This is true, but is it a detriment? Allowing agents to profit from efficiency in operations improves incentive compatability for proper performance of their duties, perhaps improvin...
