Financial Transparency Coalition

In America in the 1920s, during the years of prohibition, bootlegging became a pervasive and widespread problem. Bootlegging, named after the practice of concealing illicit liquor in boot tops, was the illegal traffic in liquor in violation of restrictions on sale and transportation of alcohol.  As with drugs, human trafficking, or endangered species, when a government restricts the supply of a good with a demand, a black market emerges.  Though there was a generous domestic supply—underground distilleries often made liquor out of corn and of course there was “medical” whiskey prescribed by doctors—many Americans got liquor from across the boarder.  Liquor (literally) poured in from Canada, Mexico, the Bahamas, and Cuba, among other countries.

Today the term “bootlegging” has a wide variety of connotations.  In addition to referring to rum running, it can describe illict coal mining, the use of illegal frequencies for radio broadcasting, or even smuggling more generally.  In our lives, we often understand the term in the context of “bootlegged DVDs,” or illegally manufactured copyright movies.  Some are produced domestically, but many are imported from countries with lax regulations on intellectual property rights—namely China, Thailand, or Russia—and they are often sold in the alleys of large U.S. cities.  We think of them as cheap, often of poor quality, and otherwise innocuous.

I don’t want to be sensationalist here.  Buying bootlegged DVDs is not going to push us over a precipice of global doom.  But, as a moral issue it is a violation of international intellectual property rights, and on the criminal side, it funds organized crime on a larger scale than many are aware.  Some Justice Department officials even believe that large-scale overseas DVD piracy is linked to terrorism.

In 2007 President Bush recognized this as a major problem and placed certain countries notorious for this crime on a “priority watch list,” with threats of sanctions if bootlegging did not subside.  His effort was not isolated; in 1995 the Clinton administration imposed punitive tariffs on more than $1 billion of Chinese goods in reaction to the country’s rampant piracy of American software, music, and movies.

Though it is not as widely recognized, pirated copyright material is also damaging to developing countries.  The New York Times recently noted that pirated Nigerian films, the products of “Nollywood,” are popular in Brooklyn where they are sold for about $3 a piece.  But the illegal trade robs African filmmakers of their rightful rewards and undercuts their efforts—in a county where many movies are already low budget and low profit.

Some have noted that Americans are either turning to bootlegs because they believe “movie and music prices are too high, while quality is too low” or because “Hollywood is already making enough money.”  These are not reasons to support an illicit activity.

Many Americans may not be aware that bootlegging (during prohibition) in many ways led to the establishment of organized crime in this country as organized gangs arose out of the groups who controlled chains of bootlegging operations and the broadest bases of sales.  In fact, the quintessential American crime syndicate, the Mafia, was born from the coordinated activities of Italian bootleggers in New York City in the 1920s and’30s.

I would not suggest that bootlegged DVDs are funding criminal organizations on the scale of the bootlegged alcohol in the 1920s.  I draw this comparison only to make the point that our actions are often intertwined with the world in ways that we don’t understand.  Often those of use who study of illicit financial flows think about “those” corporate executives depositing money on some remote island or “those” smugglers crossing borders with drugs half a world away.  But, even the man sitting in an office in London or the woman in front of a TV in Washington, are linked to criminal organizations in ways they may not understand.  Our actions and our purchases may be funding a criminal network in China or Russia or may be undercutting development in Nigeria.  The world is closely intertwined, country to country, region to region, and licit to illicit.  And the worst part is: we don’t even know it.