"More Gangs. Less Crime"

(W)ell-established economic theories on how and why governments evolve from situations of anarchy...suggest(s) that within a society without law and order, individuals are under constant threat of being victims of aggression and crime, and small "gangs" evolve to provide protection services to people. By forming groups, people who cannot protect themselves individually can be more secure...A clear example of our logic is the case of gangs in the prison system. This is one of the only (sic. "few") places where a 40-year old white man would be a gang member, and for good reason. In prison, inmates are frequently the victims of violence and intimidation that go unreported (or if reported, unpunished). This makes the environment similar to that in government-run schools and on inner-city streets. An inmate who joins a gang receives protection, which lowers the odds that he will be a victim of violent crime. Once again, the underlying demand for gangs stems from the presence of pre-existing violence.

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