Outsourcing and insourcing crime: The political economy of globalized criminal activity

Vanderbilt Law Review

Volumn 62, Issue 3, 2009, Pages 793-848

  Broude, Tomer ^a   Teichman, Doron ^a  

^a HEBREW UNIVERSITY OF JERUSALEM   (Israel)

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EID: 67651027609     PISSN: 00422533     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (300)

1. City's Blitz is Pushing Crime into the County, NOTTINGHAM EVENING POST (Eng.), July 3, 2007, at 10.
2. Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, Apr. 15, 1994, 33 I.L.M. 1125, 1144-53 (1994) [hereinafter Final Act].
3. For analysis of the political economy of the WTO, see KYLE BGWELL & ROBERT W. STAIGERS, THE ECONOMICS OF THE WORLD TRADING SYSTEM (2005);
4. MICHAEL J. TREBILCOCK & ROBERT L. HOWSE, THE REGULATION OF INTERNATIONAL TRADE (3d ed. 2005).
5. For a report on the proliferation of RTAs, see Roberto V. Fiorentino, Luis Verdeja & Christelle Toqueboeuf, The Changing Landscape of Regional Trade Agreements: 2006 Update (WTO Discussion Paper No. 12, 2007), available at http://www.wto.org/english/res-e/booksp-e/discussion- papersl2a-e.pdf.
6. On the increase in the number of BITs over the last few decades and analyses of their economic effects, see Eric Neumayer & Laura Spess, Do Bilateral Investment Treaties Increase Foreign Direct Investment to Developing Countries'?, 33 WORLD DEV. 1567, 1568-71 (2005);
7. Zachary Elkins, Andrew T. Guzman & Beth A. Simmons, Competing for Capital: The Diffusion of Bilateral Investment Treaties, 1960-2000, 60 INT'L ORG. 811 (2006).
8. United Nations Convention Against Transnational Organized Crime art. 3(2), opened for signature Nov. 15, 2000, entered into force Sept. 29, 2003, G.A. Res. 25, U.N. GAOR, 55th Sess., Supp. No. 49, U.N. Doc. A/45/49 [hereinafter CATOC]. The CATOC defines an offense as "transnational" if: (a) It is committed in more than one State; (b) It is committed in one State but a substantial part of its preparation, planning, direction or control takes place in another State;
9. (c) It is committed in one State but involves an organized criminal group that engages in criminal activities in more than one State;
10. or (d) It is committed in one State but has substantial effects in another State. Id. The juridical significance of this definition is limited to the purpose of delimiting the CATOC's scope of application; the relevance of its different elements to our analysis varies, but it is, in any case, a useful starting point.
11. As will be evident below we do not restrict our analysis to activities that are universally defined as criminal. Indeed, it is the very existence of different national approaches that enables the dynamic theory we present. Thus, it may be sufficient for a given profit-driven activity to be criminalized, or de-criminalized (either de jure or de facto), in a single national jurisdiction to trigger transnational crime shifting and the subsequent dynamic policy responses by other jurisdictions.
12. The CATOC does not list the types of crimes that may be regarded as "transnational." Generally it applies to serious crimes "punishable by a maximum deprivation of liberty of at least four years or a more serious penalty." CATOC, supra note 6, art. 2(b). The Fourth United Nations Survey of Crime Trends and Operations of Criminal Justice Systems listed the following categories of transnational crime: money laundering, terrorist activities, theft of art and cultural objects, theft of intellectual property, illicit trafficking in arms, aircraft hijacking, sea piracy, land hijacking, insurance fraud, computer crime, environmental crime, trafficking in persons, trade in human body parts, illicit drug trafficking, fraudulent bankruptcy, infiltration of legal business, corruption and bribery of public officials or party officials and elected representatives, and other offenses committed by organized criminal groups. U.N. Doc. A/CONF.169/15/Add.l (Apr. 4, 1995).
13. See, e.g., Patrick Forde & Andrew Patterson, Paedophile Internet Activity, AUSTL. INST. CRIMINOLOGY: TRENDS & ISSUES IN CRIME & CRIM. JUSTICE, Nov. 1998, at 2-3, available at http://www.hawaii.edu/ hivandaids/Paedophile%20Internet%20Activity.pdf (charting the transformation of child pornography by new technologies, with an emphasis on the transnational dimension);
14. Anna Grant, Fiona David & Peter Grabosky, Child Pornography in the Digital Age, 3 TRANSNAT'L ORGANIZED CRIME 171 (1997) (same).
15. See, e.g., Kal Raustiala, Free Trade Pact a Boon to Drug Dealers, UCLA TODAY, May 22, 2001, available at http://www.today.ucla.edu/portal/ut/010522freetrade.aspx (last visited Apr. 7, 2009) (suggesting that economic liberalization can fuel international trade in drugs).
16. Melvin Levitsky, The Dark Side of Globalization, 5 INT'L STUD. REV. 253, 253-54 (2003). Arguably, there are other "dark sides" to globalization, such as the negative distributional effects of global trade liberalization. See Tomer Broude, The Rule(s) of Trade and the Rhetos of Development: Reflections on the Functional and Aspirational Legitimacy of the World Trade Organization, 45 COLUM. J. TRANSNAT'L L. 221, 246-59 (2006) (discussing areas of the WTO where the dissonance between "function and aspiration is most acute").
17. Global crime control is not an entirely new area - the International Criminal Police Organization, better know as Interpol, dates back to 1923, but was ineffective during World War II when it fell under Nazi control, remaining moribund until its reestablishment in 1956. For a history of Interpol, see Interpol History, http://www.interpol.int/Public/icpo/governance/sg/history.asp (last visited Apr. 7, 2009). Moreover, international governmental activity in the field has gained considerable momentum since the 1990s, as attested by the young age of the CATOC and other international arrangements such as the Forty Recommendations of the Financial Action Task Force on Money Laundering ("FATF"), originally agreed upon in 1990, but significantly updated in 2003 and 2004. FIN. ACTION TASK FORCE ON MONEY LAUNDERING, THE FORTY RECOMMENDATIONS (2004), available at http://www.fatf-gafi.org/ dataoecd/7/40/34849567.PDF.
18. For an evaluation of the FATF, see Jackie Johnson & Y.C. Desmond Lim, Money Laundering: Has the Financial Action Task Force Made a Difference?, 10 J. FIN. CRIME 7 (2003).
19. PETER ANDREAS & MARTIN NADELMANN, POLICING THE GLOBE: CRIMINALIZATION AND CRIME CONTROL IN INTERNATIONAL RELATIONS, at v (2006).
20. See Michael Woodiwiss, Transnational Organised Crime: The Global Reach of an American Concept, in TRANSNATIONAL ORGANISED CRIME: PERSPECTIVES ON GLOBAL SECURITY 13, 13-27 (Adam Edwards & Peter Gill eds., 2003) (arguing that the United States has successfully exported its analysis of organized crime problems despite evidence of its inadequacy).
21. ANDREAS & NADELMANN, supra note 13, at 22.
22. Id. at vii.
23. The analogy between criminal and legal economic activity has its caveats (e.g., the use of violence against competitors is more common in the former), but, in general, "illegal markets are governed by the normal economic forces." See Pino Arlacchi, The Dynamics of Illegal Markets, in COMBATING TRANSNATIONAL CRIME: CONCEPTS, ACTIVITIES AND RESPONSES 7, 7 (Phil Williams & Dimitri Vlassis eds., 2001) (defining illegal markets and their nature in comparison with legal markets).
24. This conforms to some extent to the strong, though non-exclusive, association of transnational crime with profit-based organized crime, although the theory presented in this Article does not rest on such an association. The CATOC, for example, criminalizes agreements among people aimed at committing serious crimes "relating directly or indirectly to the obtaining of a financial or other material benefit." CATOC, supra note 6, at art. 5(l)(a)(i). Also, we should note that costs are not the only determinant of crime location; clearly, the potential for gain is also important. Profit-driven criminal activity will only occur where it can profit. When asked why he robbed banks, the famous 1930s bank robber "Slick" Willie Sutton replied, "Because that's where the money is." Fed. Bureau of Investigation, FBI History, Famous Cases: Willie Sutton, http://www.fbi.gov/libref/historic/ famcases/sutton/sutton.htm (last visited Apr. 7, 2009);
25. see also WILLIE SUTTON & EDWARD LINN, WHERE THE MONEY WAS (1976).
26. To be sure, the terms outsourcing and insourcing do not describe the phenomena we deal with perfectly because usually "outsourcing" refers to shifting production activity while consumption activity remains static. In our context, the displacement of crime will in some cases shift both the production and the consumption activities. Nonetheless, we choose to use these terms in order to emphasize the connection between our framework and the vast literature dealing with the mobility of legal economic activities.
27. For an analysis of related questions in the realm of domestic law, see Doron Teichman, The Market for Criminal Justice: Federalism, Crime Control, and Jurisdictional Competition, 103 MICH. L. REV. 1831 (2005).
28. For a discussion of the theory and further refinements, see Rachel E. Barkow, The Political Market for Criminal Justice, 104 MICH. L. REV. 1713 (2006);
29. Samuel R. Gross, Jurisdictional Competition in Criminal Justice: How Much Does it Really Happen?, 104 MICH. L. REV. 1725 (2006);
30. Wayne A. Logan, Crime, Criminals, and Competitive Crime Control, 104 MICH. L. REV. 1733 (2006);
31. Doron Teichman, Decentralizing Crime Control: The Political Economy Perspective, 104 MICH. L. REV. 1749 (2006).
32. For early contributions to this literature, see Thomas A. Reppetto, Crime Prevention and the Displacement Phenomenon, 22 CRIME & DELINQ. 166 (1976);
33. Simon Hakim et al., Interjurisdictional Spillover of Crime and Police Expenditures, 55 LAND ECON. 200 (1979).
34. For later reviews of the topic, see CRIME DISPLACEMENT (Robert P. McNamara ed., 1994);
35. CRIME SPILLOVER (Simon Hakim & George F. Rengert eds., 1981);
36. RATIONAL CHOICE AND SITUATIONAL CRIME PREVENTION (Grame Newman, Ronald V. Clarke & S. Giora Shoham eds., 1997).
37. Note that following traditional models of deterrence and crime control, a rise in the expected sanction can be achieved either by raising the sanction attached to a crime, or by raising the probability of detection. See Gary S. Becker, Crime and Punishment: An Economic Approach, 76 J. POL. ECON. 169, 207 (1968) (describing this model and using economics to find optimal policies for combating crime).
38. For a non-technical introduction to public choice theory, see ROBERT D. COOTER, THE STRATEGIC CONSTITUTION (2000).
39. For a recent comprehensive discussion on the relation between public choice theory and the law, see Symposium, Getting Beyond Cynicism: New Theories of the Regulatory State, 87 CORNELL L. REV. 267 (2002).
40. Charles Tiebout, A Pure Theory of Local Expenditures, 64 J. POL. ECON. 416 (1956).
41. See, e.g., Lucian A. Bebchuk, Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law, 105 HARV. L. REV. 1435 (1992) (corporate law);
42. Jennifer Gerarda Brown, Competitive Federalism and the Legislative Incentives to Recognize Same-Sex Marriage, 68 S. CAL. L. REV. 745 (1995) (family law);
43. Louis Kaplow, Fiscal Federalism and the Deductibility of State and Local Taxes Under the Federal Income Tax, 82 VA. L. REV. 413, 458-61 (1996) (taxation);
44. Lynn M. LoPucki & Sara D. Kalin, The Failure of Public Company Bankruptcies in Delaware and New York: Empirical Evidence of a "Race to the Bottom," 54 VAND. L. REV. 231 (2001) (bankruptcy law);
45. Richard L. Revesz, Rehabilitating Interstate Competition: Rethinking the "Race-to-the-Bottom" Rationale for Federal Environmental Regulation, 67 N.Y.U. L. REV. 1210 (1992) (environmental regulation);
46. Stewart E. Sterk, Asset Protection Trusts: Trust Law's Race to the Bottom?, 85 CORNELL L. REV. 1035 (2000) (trust law).
47. For some examples of this literature, see Rachel E. Barkow & Kathleen M. O'Neill, Delegating Punitive Power: The Political Economy of Sentencing Commission and Guideline Formation, 84 TEX. L. REV. 1973 (2006);
48. Harry A. Chernoff et al., The Politics of Crime, 33 HARV. J. LEGIS. 527 (1996);
49. William J. Stuntz, The Pathological Politics of Criminal Law, 100 MICH. L. REV. 505 (2001);
50. Teichman, supra note 20.
51. For primers on the use of IR theories in the study of international law, see Kenneth W. Abbott, Modern International Relations Theory: A Prospectus for International Lawyers, 14 YALE J. INT'L L. 335 (1989);
52. Anne-Marie Slaughter Burley, International Law and International Relations Theory: A Dual Agenda, 87 AM. J. INT'L L. 205 (1993);
53. Anne-Marie Slaughter et al., International Law and International Relations: A New Generation of Interdisciplinary Scholarship, 92 AM. J. INT'L L. 367 (1998).
54. See, e.g., COOPERATION UNDER ANARCHY (Kenneth Oye ed., 1986) (reviewing game theory and applying it to security and economic affairs);
55. James Morrow, Modeling the Forms of International Cooperation: Distribution Versus Information, 48 INT'L ORG. 387 (1994) (modeling coordination under uncertainty and evaluating forms of coordination);
56. Duncan Snidal, Coordination Versus Prisoners' Dilemma: Implications for International Cooperation, 79 AM. POL. SCI. REV. 923 (1985) ("relaxing traditional prisoners' dilemma assumptions and developing an alternate model of the coordination game").
57. See PQETER DICKEN, GLOBAL SHIFT: TRANSFORMING THE WORLD ECONOMY 27 (1998).
58. Id. at 28-29.
59. Id. at 283-315.
60. See ADAM SMITH, AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS, bk. IV.ii, at 456 (1776): [B]y directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.... By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.
61. See DAVID RICARDO, ON THE PRINCIPLES OF POLITICAL ECONOMY AND TAXATION ch. 7 (1817) (explaining the concept of comparative advantage using wine and cloth made in Portugal and England).
62. For an engaging account of transnational production and distribution chains, see PIETRA RIVOLI, THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY (2005) (analyzing the interrelated cotton, textile, retail, and second-hand clothing sectors that span the globe).
63. See PAUL DAVIES, WHAT'S THIS INDIA BUSINESS? OFFSHORING, OUTSOURCING AND THE GLOBAL SERVICES REVOLUTION (2004);
64. Srilata Zaheer & Radhika Rajan, Creativity Under Constraint: Technological Imprinting and the Migration of Indian Business to the New Economy, in THE GLOBAL INTERNET ECONOMY 191, 192-93 (Bruce Kogut ed., 2003) (discussing the "evolution" of the Indian economy and factors that "influence the migration of Indian businesses to the new economy").
65. The WTO General Agreement on Trade in Services ("GATS") covers twelve general service sectors: Business, Communication, Construction and Engineering, Distribution, Education, Environment, Financial, Health, Tourism and Travel, Recreation, Culture and Sporting, Transport, and the catch-all Other, that are further divided into sub-sectors. Final Act, supra note 2, at 1168.
66. For an introduction to the GATS, see WTO, A HANDBOOK ON THE GATS AGREEMENT (2005).
67. On the importance of input mobility in the growth of international trade, see RONALD W. JONES, GLOBALIZATION AND THE THEORY OF INPUT TRADE (2000).
68. Technological advances have been key in increasing international trade in services, perhaps even more than legal deregulation. For a prescient analysis of the potential geographical effects of technological change in international services provision, see D.G. PRICE & A.M. BLAIR, THE CHANGING GEOGRAPHY OF THE SERVICE SECTOR chs. 6, 8 (1989).
69. See THOMAS L. FRIEDMAN, THE WORLD IS FLAT: A BRIEF HISTORY OF THE TWENTY-FIRST CENTURY (2005) (a popular and influential depiction of the technological and economic changes of globalization).
70. We allude to the Heckscher-Ohlin "factor-proportions hypothesis," whereby states will tend to export products that use factors of production in which they are abundant, and import products that use factors in which they are poor. For the original formulations of the Heckscher-Ohlin theorem from 1919 and 1924, see ELI F. HECKSCHER & BERTIL OHLIN, HECKSCHER-OHLIN TRADE THEORY (Harry Flam & M. June Flanders eds., trans., 1991).
71. The literature on location and transportation costs is vast and highly sector-specific. For basic generalized discussions, see Maurice Fulton & L. Clinton Hoch, Transportation Factors Affecting Locational Decisions, 35 ECON. GEOGRAPHY 51 (1959) (discussing transportation and economic theory);
72. Aneel Karnani, The Trade-Off Between Production and Transportation Costs in Determining Optimal Plant Size, 4 STRATEGIC MGMT. J. 45 (1983) (presenting a model for analyzing the trade-off between a large plant that enhances economies of scale and a small plant that decreases transportation costs).
73. See INTERNATIONAL TAXATION AND MULTINATIONAL ACTIVITY (James R. Hines, Jr., ed., 2001) (analyzing the effect of tax policies on the activities of multinational firms);
74. Reuven S. AviYonah, Bridging the North/South Divide: International Redistribution and Tax Competition, 26 MICH. J. INT'L L. 371 (2004) (explaining the distributive effects of tax competition in the context of international development).
75. See PAUL SWEENEY, THE CELTIC TAIGER: IRELAND'S CONTINUING ECONOMIC MIRACLE (2000) (providing various explanations for Irish growth with a focus on tax policy and surveying the effects of tax-induced investment on production and trade);
76. Sean Dorgan, How Ireland Became the Celtic Tiger (The Heritage Foundation, Backgrounder No. 1945, 2006), available at http://www.heritage.org/Research/WorldwideFreedom/bgl945.cfm (discussing Ireland's economic revival).
77. See Brian Roach, A Primer on Multinational Corporations, in LEVIATHANS: MULTINATIONAL CORPORATIONS AND THE NEW GLOBAL HISTORY 19 (Alfred D. Chandler & Bruce Mazlish eds., 2005) (reviewing the growth of multinational corporations and explanations for their success).
78. See MICHAEL J. MARQUARDT, THE GLOBAL ADVANTAGE: HOW WORLD-CLASS ORGANIZATIONS IMPROVE PERFORMANCE THROUGH GLOBALIZATION (1999) (providing a business literature perspective on the globalization of business operations by Multinational Corporations).
79. See, e.g., Becker, supra note 22, at 176-79 (analyzing the supply of crime);
80. Isaac Ehrlich, Crime, Punishment, and the Market for Offenses, 10 J. ECON. PERSP. 43, 44 (1996) (identifying, as one of the key assumptions underlying the economic model of crime, that criminals "behave in accordance with the rules of optimizing behavior").
81. Arlacchi supra note 17, at 8.
82. Significant criticism has been brought against the traditional economic model of crime control. See, e.g., Gross, supra note 20 (expressing disagreement with the scope of Teichman's argument that states can export crime);
83. Paul H. Robinson & John M. Darley, Does Criminal Law Deter? A Behavioural Science Investigation, 24 OXFORD J. LEGAL STUD. 173 (2004) (arguing that laws do not deter criminals, in part because criminals do not know the law and/or are not capable of acting rationally in the economic sense). In a nut shell, these criticisms view crime as a complex social phenomenon and argue that criminals do not behave in the way economic models predict. While this literature makes legitimate criticisms, we find it less relevant to our project because our analysis deals mostly with transnational profit-driven crimes.
84. E.g., Joseph Deutsch, Simon Hakim & J. Weinblatt, A Micro Model of the Criminal's Location Choice, 22 J. URB. ECON. 198 (1987) (modeling the spatial decision of criminals);
85. Scott Freeman, The Spatial Concentration of Crime, 40 J. URBAN ECON. 216 (1996) (modeling the spatial concentration of crime);
86. Koo Hui-wen & I.P.L. Png, Private Security: Deterrent or Diversion?, 14 INT'L REV. L. & ECON. 87 (1994) (modeling crime displacement);
87. Steven Shavell, Individual Precautions to Prevent Theft: Private Versus Socially Optimal Behavior, 11 INT'L REV. L. & ECON. 123 (1991) (evaluating the precaution decision that potential crime victims make).
88. See generally sources cited supra note 21 (surveying crime displacement literature).
89. Stephen L. Mehay, Burglary Spillover in Los Angeles, in CRIME SPILLOVER, supra note 21, at 67.
90. Chrisban Grandjean, Bank Robberies and Physical Security in Switzerland: A Case Study of the Esealabon and Displacement Phenomena, 1 SECURITY J. 155 (1990). But see Anthony A. Braga et al., Problem Oriented Policing in Violent Crime Places: A Randomized Controlled Experiment, 37 CRIMINOLOGY 541, 567-69 (1999) (reporting that "[r]obbery calls ... were not displaced").
91. Rick Curtis & Michele Sviridoff, The Social Organization of Street-Level Drug Markets and Its Impact on the Displacement Effect, in CRIME DISPLACEMENT, supra note 21, at 155 (studying the displacement of drug dealers in Brooklyn);
92. John E. Eck, The Threat of Crime Displacement, in CRIME DISPLACEMENT, supra note 21, at 103, 111-12 (Robert P. McNamara ed., 1994) (reviewing the literature on displacement and drug enforcement). But see Braga et al., supra note 52, at 567 (reporting that "drug offense calls and arrests ... were not displaced").
93. John R. Fuller & James R. O'Malley, Enforcement and Displacement: The Case of Marijuana Growing, in CRIME DISPLACEMENT, supra note 21, at 137.
94. Phil Hubbard, Community Action and the Displacement of Street Prostitution: Evidence from British Cities, 29 GEOFORUM 269 (1998);
95. J. Lowman, Prostitution in Vancouver: Some Notes on the Genesis of a Social Problem, 28 CANADIAN J. CRIMINOLOGY 1 (1986);
96. Roger Mathews, Developing More Effective Strategies for Curbing Prostitution, 1 SECURITY J. 182 (1990);
97. Robert P. McNamara, Crime Displacement and Male Prostitution in Times Square, in CRIME DISPLACEMENT, supra note 21, at 121.
98. Teichman, supra note 20, at 1847-48.
99. Doron Teichman, The Geography of Crime: Jurisdictional Competition and Crime Control Policies, MISHPATIM (forthcoming 2010) (manuscript on file with the Vanderbilt Law Review).
100. See Teichman, supra note 20, at 1843-47 (describing how auto thieves migrated between states).
101. In the regulatory competition literature this phenomenon is known as "market share competition." See DALE D. MURPHY, THE STRUCTURE OF REGULATORY COMPETITION 7 (2004).
102. For examples of barriers to displacement on the local level, see René Hesseling, Theft from Cars: Reduced or Displaced?, 3 EURO. J. ON CRIM. PLO'Y & RES. 79, 87-88 (1995) (finding that reluctance to move to unfamiliar areas or to move away from known suppliers or customers can prevent displacement);
103. Reppetto, supra note 21, at 175.
104. See, e.g., William J. Stuntz, Local Policing After the Terror, 111 YALE L.J. 2137, 2178-79 (2002) (pointing out the role of ethnic ties in crime organizations).
105. One could view the argument in the text as a form of informal vertical integration that creates barriers to entry into the market. See generally ROGER D. BLAIR & DAVID L. KASERMAN, LAW AND ECONOMICS OF VERTICAL INTEGRATION AND CONTROL (1983).
106. See, e.g., John P. Mclver, Criminal Mobility, in CRIME SPILLOVER, supra note 21, at 20, 36 (pointing out that crimes of passion tend not to be displaced).
107. Mark A. Cohen, Pain, Suffering, and Jury Awards: A Study of the Cost of Crime to Victims, 22 LAW & SOC'Y REV. 537, 539 (1988).
108. See, e.g., U.N. OFFICB ON DRUGS & CRIME & LATIN AM. & CARIBBEAN REGION OF WORLD BANK, CRIME, VIOLENCE, AND DEVELOPMENT: TRENDS, COSTS, AND POLICY OPTIONS IN THE CARIBBEAN 49 (2007), available at http://siteresources.worldbank.org/INTHAITI/Resources/ Crimeandviolenceinthecaribbeanfullreport.pdf (showing that a majority of firms in the Dominican Republic cite crime as "a major obstacle to investment" and reported that their access to financing had declined due to crime, even though only a small portion of the same firms had been direct victims of crime);
109. Kenyan Crime Puts Off Investment, BBC NEWS, Mar. 21, 2006, http://news.bbc.co.Uk/2/hi/business/4828070.stm (reporting that rising crime rates in Kenya have significantly reduced levels of Foreign Direct Investment ("FDI") in comparison to safer neighboring states such as Uganda and Tanzania);
110. U.N.: Urban Crime Drives Away Investment, USA TODAY, Oct. 1, 2007, http://www.usatoday.com/news/world/2007-10-01-urban-crime-N.htm (describing U.N. report finding a correlation between insecurity caused by crime and low investment).
111. See Sam Kiley, Mbeki's Crime Busters, TIMES (Eng.), July 16, 1999, at 16;
112. see also George R.G. Clarke et al., South Africa: An Assessment of the Investment Climate 90-97 (Africa Private Sector Group, World Bank 2005), available at http://www.info.gov.za/otherdocs/2005/dti-ica.pdf (demonstrating strong influences of crime rates on investment).
113. G.A. Res. 56/120, at 1, U.N. Doc. A/RES/56/120 (Jan. 23, 2002).
114. For an analysis of the political forces driving criminal legislation in the United States, see Barkow, supra note 20, at 1720-23.
115. OFFICE OF THE ATTY GEN., CAL. DEP'T OF JUSTICE, "THREE-STRIKES AND YOU'RE OUT": IT'S IMPLICATIONS ON THE CALIFORNIA CRIMINAL JUSTICE SYSTEM AFTER FOUR YEARS 10 (1998) (describing the displacement caused by the local three strike law as an "unintended but positive consequence").
116. David LaCourse, Editorial, Viewpoint: '3 Strikes, You're Out' Law Proving to Be Efficient Crime Fighter, NEWS TRIB. (Tacoma, Wash.), Apr. 3, 1997, at A9.
117. For example, the liberal policy towards drug use in the Netherlands has been explained as the outcome of a general liberal and non-paternalistic Dutch approach to law-enforcement known as "Gedogen", whereby only social cost-imposing law violations are repressed through law enforcement. Justus Uitermark, The Origins and Future of the Dutch Approach Towards Drugs, 34 J. DRUG ISSUES 511 (2004).
118. See Fanny Vong Chuk Kwan, Gambling Attitudes and Gambling Behavior of Residents of Macao: The Monte Carlo of the Orient, 42 J. TRAVEL RES. 271 (2004) (noting that fifty percent of Macao's tax revenue in the 1990s came from gambling, and discussing the future of Macao's economy in the face of local ambivalence towards gambling practices).
119. On the complexity of the effects of narcotics farming in source states, see Richard B. Craig, Illicit Drug Traffic: Implications for South American Source States, 29 J. INTERAMERICAN STUD. & WORLD AFF. 1 (1987) (analyzing these effects for Bolivia, Peru, and Columbia).
120. To be more precise, this is the case with respect to crimes that serve interest groups or the regime itself. Crimes that are not regulated only because of diverse beliefs about wrongfulness are not expected to generate a race towards leniency.
121. See Ana Arana, How the Street Gangs Took Central America, 84 FOREIGN AFF., May/June 2005, at 98, 98 ("Ultraviolent youth gangs, spawned in the ghettos of Los Angeles and other U.S. cities, have slowly migrated south to Central America, where they have transformed themselves into powerful, cross-border crime networks.");
122. Robert J. Lopez, Rich Connell & Chris Kraul, MS-13: An International Franchise - Gang Uses Deportation to its Advantage to Flourish in U.S., L.A. TIMES, Oct. 30, 2005, at 1 (reporting that "a deportation policy aimed in part at breaking up a Los Angeles street gang has backfired and helped spread it across Central America and back into other parts of the United States," including Washington, D.C., and New York).
123. Louis E.V. Nevaer, American Guns Help Fuel Mexico's Drug Trade Killings, S.F. CHRON., July 15, 2007, at D4.
124. The size of the worldwide retail-level market for illicit drugs in 2003 was estimated at $321.6 billion. U.N. OFFICE ON DRUGS & CRIME, 2005 WORLD DRUG REPORT 17 (2005), available at http://www.unodc.org/unodc/en/data-and-analysisAVDR- 2005.html. The latest U.N. report does not include an updated figure of this estimate. U.N. OFFICE ON DRUGS & CRIME, 2007 WORLD DRUG REPORT (2007) [hereinafter 2007 U.N. DRUG REPORT], available at http://www.unodc.org/unodc/ en/data-and-analysisAVDR-2007.html.
125. Bill Powell, The Tony Soprano of North Korea, TIME, July 12, 2007, http://www.time.com/time/magazine/article/0,9171,1642898,00.html.
126. Vivienne Walt, Cocaine Country, TIME, June 27, 2007, http://www.time.com/time/magazine/article/0,9171,1637719,00.html. Similarly, it has been reported that Guatemala has become a haven for drug dealers due to the corruption of local law enforcement. Jerry Seper, U.S. Agents See Drug Flow via Guatemala on Increase, WASH. TIMES, Mar. 11, 2003, atA8.
127. See Christopher Ward & William Byrd, Afghanistan's Opium Drug Economy (World Bank, South Asia Poverty Reduction Working Paper, 2004), available at http://www-wds.worldbank.org/external/ defaultAVDSContentServerAVDSP/IB/2005/01/06/000012009-20050106091108/ Rendered7PDF/311490PAPER0AF100SASPR0no051Dec0171.pdf (analyzing the opium boom in Afghanistan and its effects on Afghanistan's economy).
128. Id. at 9.
129. Id.
130. Andrew Mitrovica, Low Funding Caused U.S. Drug Action, B.C. Says Blacklist Considered, Ruled Out for Now, GLOBE & MAIL (Can.), Aug. 16, 1999, at A1;
131. see also Shannon McCaffrey, Potent Marijuana Rolls into U.S. from Canada: A Joint Antismuggling Effort is Hindered by Liberal Laws in Canada, PHILA. INQUIRER, June 23, 2003, at Al (noting that U.S. law enforcement agents cite the lower sanctions for drug crimes in Canada as a "problem").
132. 2007 U.N. DRUG REPORT, supra note 77, at 123.
133. See 21 U.S.C. § 830 (2006) (creating an array of limitations on the sale of pseudoephedrine, the active ingredient in Meth).
134. See Sam Hananel, Congress Moves Closer to Passing Anti-Meth Law, ASSOCIATED PRESS, Feb. 16, 2006.
135. Id.
136. 2007 U.N. DRUG REPORT, supra note 77, at 123. There are examples of such phenomena taking place with respect to trafficking as well.
137. For example, in 1999 Mexican officials proudly indicated that they had managed to displace cocaine routes to other states with their law enforcement efforts. John Ward Anderson & Douglas Farah, Mexico Faces U.S. Scorn in Failing Drug War, SEATTLE TIMES, Feb. 10, 1999, at A15.
138. In the United States, for example, casino gaming, which was originally pursued in only a few locales, has considerably expanded in geographic terms over the last few decades due to economic competition. The number of states licensing casinos increased from only one in the 1970s to twenty-seven states in 1999. William R. Eadington, The Economics of Casino Gambling, 13 J. ECON. PERSP. 173, 173 (1999).
139. In 2005, the Ministry of Economic Development and Trade announced that the government was going to invest $400 million in Casino Windsor. News Release, Ontario Ministry of Econ. Dev. & Trade, Government of Ontario Invests in a Competitive Casino Windsor (Feb. 14, 2005), http://www. ontariocanada.com/ontcan/page.do?page=5900.
140. As Vote Nears, Detroit Edges Closer to Gambling, N.Y. TIMES, July 24, 1994, at 28.
141. William M. Thompson & R. Fred Wacker, The Michigan Question: A Legal Quandary, 1 GAMING L. REV. 501, 501 (1997).
142. Allegedly, even evangelist Reverend Billy Graham found Las Vegas to be "a nice place to visit," pointing out that "while he did not gamble himself, the Bible said nothing definitive against the practice." JOHN M. FINDLAY, PEOPLE OF CHANCE: GAMBLING IN AMERICAN SOCIETY FROM JAMESTOWN TO LAS VEGAS 203 (1986).
143. The economic affluence and continued political independence of the principality of Monaco have, to a large extent, been based on the legendary success of Monte Carlo's luxury casino in the nineteenth century-a direct result of regulatory lenience aimed at insourcing activity that was considered illegal elsewhere. The Principality's income from gambling permitted it to engage in another form of regulatory competition when it abolished all individual taxes in 1869, creating a tax haven that has drawn millionaires from all over the world to shift their domicile to Monaco. Russell T. Barnhart, The Legal Future of Monte Carlo, the World's Oldest Gambling Casino, 1 GAMING L. REV. 371 (1997).
144. Legalized casino gambling was introduced in Atlantic City, N.J., in 1976, in an effort to revitalize the Bast Coast resort. This is another example of a jurisdiction's attempt to decriminalize a certain activity for economic gains. However, interfering planning and political factors severely impeded the anticipated success of this move. Paul Teske & Bela Sur, Winners and Losers: Politics, Casino Gambling, and Development in Atlantic City, 10 REV. POL. RES. 130, 135 (1991).
145. See supra note 72 and accompanying text.
146. See I. NELSON ROSE & MARTIN D. OWENS, JR., INTERNET GAMING LAW 53 (2005) (discussing the proliferation of gambling in light of technological change).
147. See I. Nelson Rose, Should Antigua Sue China?, 11 GAMING L. REV. 645, 645 (2007) (noting that "[g]ambling has almost always been a local issue .... The introduction of internet gaming into interstate and intercommercial commerce has turned the control of gambling on its head.").
148. For a comprehensive study of gambling regulation in the United States, covering many of the points mentioned here, see EDWARD A. MORSE & ERNEST P. GOSS, GOVERNING FORTUNE: CASINO GAMBLING IN AMERICA (2007).
149. See Joel Michael Schwarz, The Internet Gambling Fallacy Craps Out, 14 BERKELEY TECH. L.J. 1021, 1028-38 (1999) (arguing forcefully that internet gambling is illegal in the United States, even if servers are based offshore);
150. see also Gregory Manter, The Pending Determination of the Legality of Internet Gambling in the United States, 2003 DUKE L. & TECH. REV. 16, 16-22, available at http://www.law.duke.edu/journals/dltr/articles/pdf/2003DLTR0016.pdf (discussing legality of internet gambling in the United States with respect to judicial and legislative subsequent developments).
151. Such jurisdictions include, but are not limited to, the United Kingdom, Canada, Costa Rica, Gibraltar, Antigua and Barbuda, and recently, the seemingly unlikely state of Papua New Guinea. See Edward A. Morse, The Internet Gambling Conundrum: Extraterritorial Impacts of Domestic Regulation, 23 COMP. L. & SEC. REPORT 529, 530 (2007).
152. For an example of undisguised publicity aimed at attracting internet gambling businesses to (in this case) the Isle of Man, see Casino Blog, Isle of Man: Nice Place for Your Online Gambling Business!, http://casinoblog.viaden. com/2007/03/15/isle-of-man-nice-place-for-your-online-gambling-business/ (Apr. 16, 2007, 18:26 EST) (publishing an interview with Tim Craine, e-business minister of the Isle of Man, who explains tax and other benefits).
153. This is an example of heterogeneity, a complex model of inter-jurisdictional competition, as explained supra Part II.C.3. See infra Part III for discussion of its policy implications.
154. Morse, supra note 101, at 531.
155. Id.
156. Note that a similar phenomenon may occur with respect to traditional casino gambling. Several states that legalized gambling have done so only with respect to foreigners. This policy allows these states to reap the benefits of gambling tourism, while minimizing the risk of internal social problems that might be created by gambling. See Walter T. Champion, Jr., Is Da Nang the Next Atlantic City? Why Vietnam is the Next Sure Thing in Casino Development, 11 GAMING L. REV. 714, 717 (2007) (Vietnamese casino open only to non-Vietnamese);
157. Edward B. Miller, An Oasis or Just a Mirage: The Jericho Casino and the Future of the Israeli Palestinian Peace Process, 2 RICH. J. GLOBAL L. & BUS. 33, 47 n.54 (2001) (Palestinian casino open only to non-Palestinians).
158. See discussion infra Part III.B.
159. See Report of the Appellate Body, United States-Measures Affecting the Cross-Border Supply of Gambling and Betting Services, 123-27, WT/DS285/AB/R (Apr. 7, 2005).
160. Decision by the Arbitrator, United States-Measures Affecting the Cross-Border Supply of Gambling and Betting Services-Recourse to Arbitration by the United States Under Article 22.6 of the DSU, 1, WT/DS285/ARB (Dec. 21, 2007);
161. see also James Kanter & Gary Rivlin, In Trade Ruling, Antigua Wins Right to Piracy, N.Y. TIMES, Dec. 22, 2007, at C3.
162. See EU Out of US Online Gambling Market, L.A. TIMES, Dec. 18, 2007, at C7.
163. See generally Unlawful Internet Gambling Enforcement Act ("UIGEA"), Pub. L. 109-347, 120 Stat. 1952 (codified as amended at 31 U.S.C. §§ 5561 to 5567 (2006)).
164. For a more indepth discussion applying legal regulation to intermediaries in this context, see generally Ronald J. Mann & Seth R. Belzley, The Promise of Internet Intermediary Liability, 47 WM. & MARY L. REV. 239 (2005).
165. See US Gambling Legislation Hitting Gibraltar Jobs, GAMBLING PLANET, Nov. 7, 2006, http://www.gamblingplanet.org/ latest-news/10249 (claiming hundreds of online gambling employees have been laid off in Gibraltar and India due to UIGEA);
166. see also Simon Bowers, Players Walk Away as US Law Wipes Out 90% of PartyGaming's Poker Revenue, GUARDIAN, Oct. 17, 2006, http://www.guardian.co.uk/business/2006/oct/17/usnews.gambling (describing investor response in leading online gaming firms after enactment of UIGEA).
167. Yahoo! Poker Online, http://yahoopoker.stenodoc.com/yahoopoker/poker/ home/ index.html (last visited Apr. 7, 2009).
168. See Morse, supra note 101, at 531.
169. PRESIDENT'S COMM'N ON ORGANIZED CRIME, INTERIM REPORT TO THE PRESIDENT AND ATTORNEY GENERAL, THE CASH CONNECTION: ORGANIZED CRIME, FINANCIAL INSTITUTIONS, AND MONEY LAUNDERING 7 (1984).
170. For a definition embraced in the international community, see G.A. Res. 55/25, art. 6(l)(a), U.N. Doc. A/RES/55/25 (Nov. 10, 2000), where money laundering is: (i) The conversion or transfer of property, knowing that such property is the proceeds of crime, for the purpose of concealing or disguising the illicit origin of the property or of helping any person who is involved in the commission of the predicate offence to evade the legal consequences of his or her action; (ii) The concealment or disguise of the true nature, source, location, disposition, movement or ownership of or rights with respect to property, knowing that such property is the proceeds of crime.
171. For a more detailed description of the mechanics of money laundering, see Mariano-Florentino Cuéllar, The Tenuous Relationship Between the Fight Against Money Laundering and the Disruption of Criminal Finance, 93 J. CRIM. L. & CRIMINOLOGY 311, 325-36 (2003).
172. Id.
173. The Financial Action Task Force on Money Laundering ("FATF') has pushed for many of these initiatives. See sources cited supra note 12.
174. See Kathleen A. Lacey & Barbara Crutchfield George, Crackdown on Money Laundering: A Comparative Analysis of the Feasibility and Effectiveness of Domestic and Multilateral Policy Reforms, 23 Nw. J. INT'L L. & BUS. 263, 274 (2003) (noting that it has been reported that the Bank of New York made as much as $240 million per month in fees from money laundering).
175. See, e.g., Judy Dempsey, Israel Plans to Act Against Money Laundering, FIN. TIMES (Eng.), June 30, 2000, at 14 (noting an Israeli bank association's concern over "protecting the privacy of the citizen");
176. Ivelaw L. Griffith, Drugs and Democracy in the Caribbean, 53 U. MIAMI L. REV. 869, 873-74 (1999) (describing how banks prevent legislation in the Caribbean);
177. Igor Reichlin & Peter Galuszka, Germany's Brash New Import: Dirty Money, BUSINESS WEEK, Apr. 6, 1992, available at http://www.businessweek.com/archives/1992/b326044.arc.htm (suggesting that German legislation could "scare away customers");
178. Mark A. Uhlig, Panama Resisting Move to Clean Up Banking System, N.Y. TIMES, Oct. 22, 1990, at A1 (reporting Panamian businessmen were worried the legislation "would ruin the country's lucrative position as a tax haven and dollar-based financial center").
179. See, e.g., George A. Lyden, The International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001: Congress Wears a Blindfold While Giving Money Laundering Legislation a Facelift, 8 FORDHAM J. CORP. & FIN. L. 201, 230-31 (2003) (noting that banks in the United States traditionally opposed new legislation because it would bother them to compete internationally);
180. S. Selena Nelson, Regulating Money Laundering in the US and Honk-Kong: A Post 9-11 Comparison, 6 WASH. U. GLOBAL STUD. L. REV. 723, 735-39 (2007) (noting the stricter U.S. legislation after 9-11 as an indication of the decline of the previously influential banking lobby).
181. For a comprehensive analysis of an array of policy issues relating to sexual activity from a rational choice perspective, see generally RICHARD A. POSNER, SEX AND REASON (1992).
182. Rose Kisia Omondi, Gender and the Political Economy of Sex Tourism in Kenya's Coastal Resorts 9 (Africa Regional Sexuality Resource Centre, Working Paper, 2003), available at http://www.arsrc.org/downloads/ features/omondi.pdf.
183. Christopher Torchia, Child Sex Tourism Continues in Southeast Asia Despite Legal Efforts, ASSOCIATED PRESS (Mar. 11, 2006).
184. Thomas Bell, Thailand Police Arrest Suspected Paedophile, TELEGRAPH (Eng.), Oct. 20, 2007, available at http://www.telegraph.co.uk/news/worldnews/1566720/Thailand-police-arrest- suspected-paedophile.html.
185. Torchia, supra note 123;
186. see also Summary of the News: From Jan 19 to Jan 25, 2003, BANGKOK POST, Jan. 26, 2003 (finding policymakers aware of sex crimes shifting from Thailand to Cambodia and Bali as a result of new legislation);
187. Thailand Under a Familiar Glare, BANGKOK POST, Aug. 27, 2006 (pointing out that "child sex tourists are more likely to go to Cambodia, Vietnam, the Philippines, or Indonesia, where law enforcement is less strong").
188. Patrick Mayoyo, Tour Firms 'In Child Sex War,' NATION (Kenya), Nov. 4, 2004.
189. Wash State Man Sentenced to 10 Years for Soliciting Teen Online, AP ALERT-IDAHO, Oct. 25, 2006.
190. Ken Reed, Letter to the Editor, Age of Consent Should Be 16, COLLINGWOOD CONNECTION (Can.), Nov. 25, 2005, at Al (quoting Member of Parliament Vic Toews);
191. see also Nancy Turley, Viewpoint, Age of Consent Should Protect Kids, CAMBRIDGE TIMES (Can.), July 4, 2006, at 6 ("Because Canada's age of consent is only 14, Canada has become a preferred destination for predators to prey on innocent children.");
192. Nancy Turley, Viewpoint, Salvation Army Applauds Federal Bill to Raise Age of Consent, STONEY CREEK NEWS (Can.), July 28, 2006, at 9 (expressing support for the bill because it will "help prevent Canada from being a destination for sex tourism").
193. Tory Government to Raise Age of Consent to 16 to Target Sex Predators, AP ALERT-BUS., Feb. 8, 2006 (quoting child protection advocate Roz Prober).
194. For an updated introduction to the topic, see COOTER, supra note 23, at 127-48.
195. See Tiebout supra note 24, at 424.
196. For an example of a later optimistic view on regulatory competition in the area of environmental regulation, see Revesz, supra note 25, at 1233-44.
197. See COOTER, supra note 23, at 128.
198. See Tiebout, supra note 24, at 422 ("Just as the consumer may be visualized as walking to a private market place to buy his goods, the prices of which are set, we place him in the position of walking to a community where prices (taxes) of community services are set.").
199. To be sure, scholars who have applied the theory of regulatory competition to international affairs are not opposed to international harmonization of substantive norms as such, but rather examine the optimal balance between harmonization and competition on an issue-specific basis. See generally REGULATORY COMPETITION AND ECONOMIC INTEGRATION: COMPARATIVE PERSPECTIVES (Daniel C. Esty & Damien Geradin eds., 2001) [hereinafter Esty & Geradin]. Moreover, a strong case for international regulatory competition based on the allocation of horizontal (i.e., interstate) regulatory jurisdiction is made by Trachtman.
200. See Joel P. Trachtman, International Regulatory Competition, Externalization, and Jurisdiction, 34 HARV. INT'L L. J. 47 (1993);
201. Joel P. Trachtman, Regulatory Competition and Regulatory Jurisdiction in International Securities Regulation, in Esty & Geradin, supra, at 289. We acknowledge that the application of Tiebout's model to international affairs is not without difficulty. Tiebout assumed labor mobility, which permitted individuals to move to the local jurisdiction whose policies best suited their preferences. Tiebout, supra note 24, at 419. Labor mobility is much more restricted in the international setting, so ostensibly this parameter of the theory of regulatory competition is not met. However, the mobility of transnational crime in a globalized environment does not depend on the movement of people.
202. See supra Part II.B.
203. Moreover, as Trachtman notes in his analysis of international securities regulation, "the parameters [of the Tiebout model] are never completely met, placing us in the realm of the theory of the second best." Trachtman, Regulatory Competition and Regulatory Jurisdiction in International Securities Regulation, supra, at 289.
204. For a few examples of skepticism with respect to the efficiency of regulatory competition, see Jenna Bednar & William N. Eskridge, Jr., Steadying the Court's "Unsteady Path": A Theory of Judicial Enforcement of Federalism, 68 S. CAL. L. REV. 1447 (1995);
205. Scott R. Saleska & Kirsten H. Engel, "Facts are Stubborn Things": An Empirical Reality Check in the Theoretical Debate Over the Race-to-the-Bottom in State Environmental Standard-Setting, 8 CORNELL J.L. & PUB. POL'Y 55 (1998).
206. Bednar & Eskridge, supra note 135, at 1470-75.
207. For a complete explanation about the prisoner's dilemma, see Saleska & Engel, supra note 135, at 55 n.2.
208. Id.
209. In his model of regulatory competition, Tiebout explicitly assumed away all externalities. See Tiebout, supra note 24, at 419. A transnational externality emerges when "actions by one state create an uncompensated interdependency for other nations." TODD SANDLER, GLOBAL COLLECTIVE ACTION 69 (2004).
210. For a similar framework evaluating the efficiency of regulatory competition and externalities with respect to corporate law, see Lucian Arye Bebchuk, Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law, 105 HARV. L. REV. 1435, 1485-95 (1992).
211. See Craig Volden, Entrusting the States with Welfare Reform, in THE NEW FEDERALISM 65, 78-86 (John Ferejohn & Barry R. Weingast eds., 1997) (reviewing the connection between federalism and innovation).
212. In the American context, the concept of the states as "experimental laboratories" for public policy has been a powerful justification for federalism. The term was originally coined by Justice Brandeis in New State Ice Co. v. Liebman. 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting) ("It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.").
213. This is the central argument in favor of subsidiarity in international regulation as a principle whereby decisions should be taken at the lowest, and most specialized, possible level. "The more local and the more specialized an international norm is, the better its legitimacy, or its 'compliance pull.' " Andreas L. Paulus, Subsidiarity, Fragmentation and Democracy: Towards the Demise of General International Law?, in THE SHIFTING ALLOCATION OF AUTHORITY IN INTERNATIONAL LAW: CONSIDERING SOVEREIGNTY, SUPREMACY AND SUBSIDIARITY 193, 193 (Tomer Broude & Yuval Shany eds., 2008).
214. Interestingly, there is great convergence regarding how communities judge different crimes. See Paul H. Robinson & John M. Darley, Intuitions of Justice: Implications for Criminal Law and Justice Policy, 81 S. CAL. L. REV. 1, 8-12 (2007) (reviewing studies on the matter).
215. Note that the non-consequentialist views with respect to sanctioning may have consequentialist implications to the extent that people's welfare is affected by the appropriateness of the sanctions assessed to criminals. For a connection between non-consequentialist views and welfare economics, see LOUIS KAPLOW & STEVEN SHAVELL, FAIRNESS VERSUS WELFARE 21-23 (2002) (presenting the concept of a taste for fairness).
216. This claim is tied to a long line of criminological studies that point out the positive diffusion of law enforcement efforts from one area to another. See generally Ronald V. Clarke & David Weisburd, Diffusion of Crime Control Benefits: Observations on the Reverse of Displacement, 2 CRIME PREVENTION STUD. 165 (1994).
217. See generally, e.g., Ronald M. Dworkin, Is Wealth a Value?, 9 J. LEGAL STUD. 191 (1980).
218. See, e.g., James M. Buchanan, Federalism and Fiscal Equity, 40 AM. ECON. REV. 583 (1950). In the American context this issue has manifested itself through the debate over the desirability of federal grants to the states. See, e.g., Ilya Somin, Closing the Pandora's Box of Federalism: The Case for Judicial Restrictions of Federal Subsidies to State Governments, 90 GEO. L.J. 461 (2002).
219. The United States currently has the highest per capita incarceration rate in the world. Robert Batey, The Cost of Judicial Restraint: Forgone Opportunities to Limit America's Imprisonment Binge, 33 NEW ENG. J. ON CRIM. & CLV. CONFINEMENT 29, 29 (2007).
220. See supra notes 84-88, 121-29 and accompanying text.
221. In articulating the "security dilemma" pervasive among nuclear powers, John Herz referred to "anarchic society" as "a fundamental social constellation, one where a plurality of otherwise interconnected groups constitute ultimate units of political life, that is, where groups live alongside each other without being organized into a higher unity." John Herz, Idealist Internationalism and the Security Dilemma, 2 WORLD POL. 157, 157 (1950);
222. see also HEDLEY BULL, THE ANARCHICAL SOCIETY: A STUDY OF ORDER IN WORLD POLITICS (1977).
223. In considering the prospects for international harmonization of rules regarding domestic regulatory subsidies, Trachtman notes that "[w]e may assume that international society is unprepared for such an effort toward 'essential harmonization' on any comprehensive basis." Trachtman, International Regulatory Competition, Externalization, and Jurisdiction, supra note 134, at 102. This is a fortiori true in the even more sensitive areas of criminal regulation. See SANDLER, supra note 139, at 161 (noting that "autonomy has great sway over nation-states, particularly when it comes to law enforcement").
224. According to Krasner's classic definition, international regimes are implicit or explicit "principles, norms, rules, and decisionmaking procedures around which actors' expectations converge in a given [area of international relations]." Stephen D. Krasner, Structural Causes and Regime Consequences: Regimes as Intervening Variables, in INTERNATIONAL REGIMES 1, 1 (Stephen D. Krasner ed., 1983).
225. For discussion of the definition of international regimes, see ANDREAS HASENCLEVER, PETER MAYER & VOLKER RITTBERGER, THEORIES OF INTERNATIONAL REGIMES 8-22 (1997).
226. See Abbott, supra note 27, at 348-51;
227. Slaughter, supra note 27, at 381.
228. A crude formulation of hegemonic stability theory in the era of the 1980s is provided in Charles P. Rindleberger, Dominance and Leadership in the International Economy: Exploitation, Public Goods and Free Rides, 25 INT'L STUD. Q. 242 (1981). A critique and nuanced application of the concept is provided in ROBERT O. KEOHANE, AFTER HEGEMONY: COOPERATION AND DISCORD IN THE WORLD POLITICAL ECONOMY (1984).
229. See Duncan Snidal, The Limits of Hegemonic Stability Theory, 39 INT'L ORG. 579 (1985) (criticizing hegemonic stability theory and distinguishing between its benevolent and coercive strands).
230. See KEOHANE, supra note 155, at 67.
231. Id. at 27;
232. see also HASENCLEVER, MAYER & RLTTBERGER, supra note 153, at 26.
233. See KEOHANE, supra note 155, at 25-26 (explaining why a study of international regimes should focus on states).
234. See id. at 68-69 (summarizing the prisoner's dilemma model).
235. For an overview of game theory applications to IR, see Duncan Snidal, The Game Theory of International Politics, in COOPERATION UNDER ANARCHY, supra note 28, at 25.
236. See Emanuel Adler & Peter M. Haas, Epistemic Communities, World Order and the Creation of a Reflective Research Program, 46 INT'L ORG. 367 (1992) (generally discussing the use of epistemic communities in studying international theory).
237. ANDREAS & NADELMANN, supra note 13, at 243 ("[I]t would not be too much of an exaggeration to say that much of the internationalization of crime control has in practice meant Americanization.... For the United States, exercising policing hegemony through international institutions enhances legitimacy, is easier and less costly than the raw exercise of power.").
238. ODED LÖWENHEIM, PREDATORS AND PARASITES: PERSISTENT AGENTS OF T RANSNATIONAL HARM AND GREAT POWER AUTHORITY (2007).
239. See supra note 12.
240. Under an economic perspective on crime control, there is an efficient (usually positive) level of crime in society, and investing resources in order to reduce crime below this point is socially wasteful. For the development of this idea, see Becker, supra note 22, at 180-85 (deriving the optimal level of crime).
241. Sandler briefly presents the phenomenon analyzed here as an example of an international collective action problem. See SANDLER, supra note 139, at 160.
242. There is a wealth of literature on this subject. The pathbreaker in the field was Robert Axelrod & William D. Hamilton, The Evolution of Cooperation, 211 SCIENCE 1390 (1981) (focusing on reciprocal "tit-for-tat" strategies).
243. For similar arguments, see also ROBERT AXELROD, THE EVOLUTION OF COOPERATION (1984);
244. Robert Axelrod, The Emergence of Cooperation Among Egoists, 75 AM. POL. SCI. REV. 306 (1981). The role of additional factors in the facilitation of cooperation-such as the number of players, the range of possible choices, variation in the payoff structure, noise, the shadow of the future, population dynamics, and population structure - is consolidated in Robert Axelrod & Douglas Dion, The Further Evolution of Cooperation, 242 SCIENCE 1385 (1988).
245. See Robert Axelrod & Robert O. Keohane, Achieving Cooperation Under Anarchy: Strategies and Institutions, 38 WORLD POL. 226 (1985);
246. Robert O. Keohane, Reciprocity in International Relations, 40 INT'L ORG. 1 (1986).
247. See generally ROBERT C. ELLICKSON, ORDER WITHOUT LAW: HOW NEIGHBORS SETTLE DISPUTES (1991) (documenting cooperative social norms among neighbors in Shasta County, California).
248. See, e.g., Robert W. Helsley & William C. Strange, Gated Communities and the Economic Geography of Crime, 46 J. URB. ECON. 80 (1999) (analyzing the inefficiencies associated with gated communities);
249. Steven Shavell, Individual Precautions to Prevent Theft: Private Versus Socially Optimal Behavior, 11 INT'L REV. L. & ECON. 123 (1991) (presenting a general model of the issue).
250. Note that even easily comparable measures such as average prison terms might be difficult to compare once you take into account that different prison conditions might create different deterrence levels. See Lawrence Katz, Steven D. Levitt & Ellen Shustorovich, Prison Conditions, Capital Punishment, and Deterrence, 5 AM. L. & ECON. REV. 318 (2003) (exploring the deterrence value of harsh prison conditions).
251. See infra Part III.B.2.
252. See Agreement on Safeguards, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, Legal Instruments-Results of the Uruguay Round, 33 I.L.M. 1125 (1994), available at http://www.wto.org/english/docs-e/legal-e/25-safeg.pdf; General Agreement on Tariffs and Trade art. XIX, Oct. 30, 1947, 61 Stat. A-11, 55 U.N.T.S. 194 [hereinafter GATT].
253. See Agreement on the Application of Sanitary and Phytosanitary Measures, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, Legal Instruments-Results of the Uruguay Round 33 I.L.M. 1125 (1994) [hereinafter SPS], available at http://www.wto.org/english/ docs-e/legal-e/15-sps.pdf.
254. See GATT, supra note 174, art. XIX.
255. See Alan O. Sykes, Protectionism as a 'Safeguard': A Positive Analysis of the GATT 'Escape Clause' with Normative Speculations, 58 U. CHI. L. REV. 255 (1991).
256. The SPS preamble and SPS Article 3.4 refer to international expert groups such as "the Codex Alimentarius Commission, the International Office of Epizootics, and the relevant international and regional organizations operating within the framework of the International Plant Protection Convention." SPS Article 3.2 establishes a presumption that SPS measures conforming to international standards are SPS consistent; but SPS Article 3.3 permits WTO members to introduce higher standards of protection if they are scientifically justified. SPS Article 5 sets out the rules for scientific risk assessment that might justify such higher standards. For detailed commentary of the SPS agreement and its WTO case law, see JOANNE SCOTT, THE WTO AGREEMENT ON SANITARY AND PHYTOSANITARY MEASURES: A COMMENTARY (2007).
257. For a similar proposal in the context of local governments, see Amnon Lehavi, Intergovernmental Liability Rules, 92 VA. L. REV. 929 (2006).
258. We refer to the famous Trail Smelter arbitration. See Trail Smelter Arbitral Tribunal Decision, 33 AM. J. INT'L L. 182 (1939);
259. Trail Smelter Arbitral Tribunal Decision, 35 AM. J. INT'L L. 684 (1941).
260. For contemporary analysis, see TRANSBOUNDARY HARM IN INTERNATIONAL LAW: LESSONS FROM THE TRAIL SMELTER ARBITRATION (Rebecca M. Bratspies & Russel A. Miller eds., 2006) [hereinafter TRANSBOUNDARY HARM IN INTERNATIONAL LAW].
261. It has been argued that the Trail Smelter "polluter pays" principle cannot be extended to the effects of drug trafficking, because its transnational harms are more complex, diffuse, and causally attenuated than environmental harm. See Judith Wise & Eric L. Jensen, International Drug Pollution? Reflections on Trail Smelter and Latin American Drug Trafficking, in TRANSBOUNDARY HARM IN INTERNATIONAL LAW, supra note 180, at 281. However, we do not consider this analysis definitive; similar arguments could have been raised against international environmental accountability at the time of its establishment. In any case, Wise and Jensen address problems caused by under-enforcement, not over-enforcement.
262. See Eric Cafritz & Omer Tene, Article 113-7 of the French Penal Code: The Passive Personality Principle, 41 COLUM. J. TRANSNAT'L L. 585, 586 (2003).
263. See, e.g., Anthony J. Colangelo, Constitutional Limits on Extraterritorial Jurisdiction: Terrorism and the Intersection of National and International Law, 48 HARV. INT'L L .J. 121, 126-29 (2007).
264. See 18 U.S.C. § 2423(c) (2006) (criminalizing illicit sexual conducts outside of the United States). Section 2423(c) was upheld against a constitutional challenge in United States v. Clark, 435 F.3d 1100 (9th Cir. 2006).
265. For a review of the legislation, see Naomi L. Svensson, Note, Extraterritorial Accountability: An Assessment of the Effectiveness of Child Sex Tourism Laws, 28 LOY. L.A. INT'L & COMP. L. REV. 641 (2006).
266. On the "assurance" or "stag hunt" game, see HASENCLEVER, MAYER & RLTTBERGER, supra note 153, at 49-50.
267. See Stuntz, supra note 26, at 523-29.
268. See Axelrod & Keohane, supra note 169, at 147-54.
269. On the development of Europol, see Monica den Boer, Law-Enforcement Cooperation and Transnational Organized Crime in Europe, in TRANSNATIONAL ORGANIZED CRIME AND INTERNATIONAL SECURITY: BUSINESS AS USUAL? 103, 103-06 (Mats Berdal & Mónica Serrano eds., 2002).
270. See Council Decision 2002/187/JHA, Setting Up Eurojust with a View to Reinforcing the Fight Against Serious Crime, 2002 O.J. (L 63) 1.
271. On JHA in the EU, see Klaus Eder & Hans-Jörg Trenz, The Making of a European Public Space: The Case of Justice and Home Affairs, in LINKING EU AND NATIONAL GOVERNANCE 111 (Beate Kohler-Koch ed., 2003).
272. For an overview, see the website of the Directorate-General for Justice, Freedom and Security of the European Commission, EUROPA, Justice and Home Affairs - Freedom, Security and Justice, http://ec.europa.eu/justice-home/fsj/ intro/fsj-intro-en.htm (last visited Apr. 7, 2009).
273. See, e.g., EUROPA, Justice and Home Affairs - Freedom, Security and Justice-Criminal Justice, http://ec.europa.eu/justice-home/fsj/ criminal/fsj-criminal-intro-en.htm (last visited Apr. 7, 2009) ("The functioning of the European judicial area could be undermined by differences between national criminal legislation. Approximation of legislation is needed to avoid criminals using differences between national legislations legislation [sic] to operate from one EU country toward others ....");
274. see also Memorandum from the General Secretariat of the Council of the European Union to the European Council, EU Drugs Strategy (2005-2012), at 5 (Nov. 22, 2004), available at http://register.consilium.europa.eu/pdf/ en/04/stl5/stl5074.en04.pdf ("Member States should consider the impact of their national strategies on other Member States, the ways national strategies of different Member States can be mutually supportive ....").
275. See Council Framework Decision 2004/757/JAI of 25 October 2005, Laying Down Minimum Provisions on the Constituent Elements of Criminal Acts and Penalties in the Field of Illicit Drug Trafficking, 2004 O.J. (L 335) 8.
276. This is, no doubt, part of the crime control problem of drugs in Europe, which is in part an outsourcing race and in part a heterogeneous race. See Caroline Chatwin, Drug Policy Developments Within the European Union: The Destabilizing Effects of Dutch and Swedish Policies, 43 BRIT. J. CRIM. 567 (2003) (discussing the effects of divisions in policy styles among European Union member states).
277. See Matti Joutsen, International Instruments on Cooperation in Responding to Transnational Crime, in HANDBOOK OF TRANSNATIONAL CRIME AND JUSTICE 255 (Philip Reichel ed., 2005).
278. See CATOC, supra note 6.
279. Id. art. 5(1). The CATOC also criminalizes money-laundering, id. art. 6, and certain forms of corruption, id. art. 8; however, this would appear to be consistent with the view that states might consider these activities to be "desirable," and so a minimum standard is in order.
280. Id. art. 11(2) (emphasis added). McClean points out that this provision is virtually identical to Article 3, Paragraph 6 of the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, Dec. 20, 1988, 28 I.L.M. 493. See DAVID MCCLEAN, TRANSNATIONAL ORGANIZED CRIME: A COMMENTARY ON THE UN CONVENTION AND ITS PROTOCOLS 133 (2007). Importantly for our purposes, McClean notes that "the authors of this proposal were concerned that withdrawal of charges, or plea-bargains as to the level of offence or the likely sanction might be secured by improper means." Id..
281. The U.N. has adopted several Protocols that apply the CATOC's general provisions, including Article 11, to a series of transnational criminal problems, such as human trafficking. See Protocol Against the Illicit Manufacturing of and Trafficking in Firearms, Their Parts and Components and Ammunition, Supplementing the United Nations Convention Against Transnational Organized Crime, G.A. Res. 55/255, U.N. Doc. A/RES/55/255 (May 31, 2001); Protocol Against the Smuggling of Migrants by Land, Sea and Air, Supplementing the United Nations Convention Against Transnational Organized Crime, G.A. Res. 55/25, annex III, U.N. Doc. A/RES/55/25 (Nov. 15, 2000); Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children, Supplementing the United Nations Convention Against Transnational Organized Crime, G.A. Res. 55/25, annex II, U.N. Doc. A/RES/55/25 (Nov. 15, 2000).
282. See Press Release, Israel Ministry of Foreign Affairs, Israel to Join OECD (May 16, 2007), available at http://www.mfa.gov.il/MFA/ Government/Communiques/2007/Israel+to+join+OECD+16-May-2007.htm.
283. See FATF, supra note 12 (an OECD initiative);
284. see also Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, S. TREATY DOC. NO. 105-43 (1997).
285. See, e.g., Peter L. Fitzgerald, Managing "Smart Sanctions" Against Terrorism Wisely, 36 NEW ENG. L. REV. 957, 959-60 (2002);
286. Jesse S. Morgan, Dirty Names, Dangerous Money: Alleged Unilateralism in U.S. Policy on Money Laundering, 21 BERKLEY J. INT'L L. 771 (2003);
287. Daniel J. Steinbock, Designating the Dangerous: From Blacklists to Watch Lists, 30 SEATTLE U. L. REV. 65, 117-18 (2006).
288. 22 U.S.C. § 2291h(a)(3) (2006). Updated information on the application of the Act can be found at the website of the State Department. U.S. Dep't of State, Narcotics Certification Process, http://www.state.gOv/p/inl/ rls/rpt/cll766.htm (last visited Apr. 7, 2009).
289. 22 U.S.C. § 2291j(a)(l).
290. Id. § 2291j(a)(2).
291. See Robert Howse, India's WTO Challenge to Drug Enforcement Conditions in the European Community Generalized System of Preferences: A Little Known Case with Major Repercussions for "Political" Conditionality in US Trade Policy, 4 CHI. J. INT'L L. 385, 385-87 (2003).
292. In 2006, Israel was put on a watch list prior to being categorized as a Tier 3 country in the State Department's report on human trafficking. U.S. DEP'T OF STATE, TRAFFICKING IN PERSONS REPORT 46 (2006), available at http://www.state.gov/documents/ organization/66086.pdf. Following this addition to the list, Israel amended its legislation on the matter and appointed a special inter-office liaison in order to improve enforcement. See Ruth Eglash, Israel Still Falls Short Over Human Trafficking Problem, JERUSALEM POST (Isr.), Nov. 20, 2007, at 4.
293. See 22 U.S.C. § 2291j(b)(l)(B) (creating a "vital national interest" exception to the certification process).
294. See Jimmy Gurulé, The 1998 U.N. Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances-A Ten Year Perspective: Is International Cooperation Merely Illusionary?, 22 FORDHAM INT'L L.J. 74, 86-87 (1998).
295. See Morgan, supra note 202, at 799-800.
296. United States v. Cohen, 206 F.3d 68 (2d Cir. 2001), cert. denied, 536 U.S. 922 (2002).
297. Simon Bowers & Andrew Clark, Sportingbet Arrest Threatens Internet Gambling, GUARDIAN (Eng.), Sept. 9, 2006, at 29.
298. Dominic Walsh, Sportingbet Pays $400,000 to Call it Quits, TIMES (Eng.), Mar. 22, 2007, at 53.
299. James Quinn, You Bet: Dallas Arrest Spoils the Party, DAILY TELEGRAPH (Eng.), July 22, 2006, at 35.
300. Andrew Ross Sorkin & Stephanie Saul, Gambling Subpoenas on Wall St., N.Y. TIMES, Jan. 22, 2007, at C1.