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Why Crime Rates Rise and Fall

Inflation plays a critical role.

According to the Department of Justice (DOJ), crime rates have fallen precipitously since the early 1990’s in the United States. Violent crime and robberies have fallen to the lowest levels ever recorded. Homicide rates have declined to levels last seen in the early 1960’s. Why have crime rates declined so precipitously?

What caused crime rates to rise so dramatically from the 1960’s to the early 1990’s?

The answer is inflation.

Beginning in the mid 1960’s, and continuing until the end of the 1980’s, the US economy experienced continued levels of higher inflation. From the early 1990’s, continuing until today, the US economy has seen far lower levels of inflation. It was the higher levels of inflation prevalent from the mid 1960’s until the late 1980’s that fueled the increase in crime rates. The lower levels of inflation prevalent from the early 1990’s to today, has allowed crime rates to drop back to previous levels and below.

What does inflation have to do with crime rates?

Inflation destroys the value of existing money. When we get up everyday and go to work we are paid for our labor with money. Inflation destroys the value of money, in effect, inflation destroys the labor that went into earning the money. When the money you’re working for, or have worked for and saved, loses its value, the work that went into earning that money is also destroyed.

When inflation occurs people feel as if a wrong has been committed against them. People feel this way because a wrong has indeed been committed. The value of their money, in effect, their labor is being destroyed yet they have done nothing to cause it.

When people feel as if wrongs have been and are continuing to be committed against them they are more likely to go ahead and commit crimes against others.

A look at some crime rates from around the world further underscores the role of inflation in determining crime rates.

According to the Center for Disease Control (CDC), the murder rate in Brazil rose from 11.8 (murders per 100,000) in 1980 to 28.4 in 2002. Throughout the time frame, Brazil has had very high levels of inflation. On the other hand, Japan has seen very little inflation over the same time frame, and the yearly murder rate in Japan remained at or below 1 per 100,000 throughout the same time frame. (Where it remains today in Japan, along with low levels of inflation.)

Two other countries with very high levels of inflation, Mexico and Columbia, also have very high murder rates. In Mexico, 17.58 per 100,000, and in Colombia the murder rate in 2002 was 59 per 100,000.

In Switzerland, which has very low levels of inflation, the murder rate was just 1.06 per 100,000 in 2002.

While crime rates can rise and fall for many different reasons, there is a logical and factual argument that inflation plays the lions share role in determining crime rates.

If Brazil, Mexico, Columbia and any other country which has high crime rates wants those crime rates to fall and to remain at lower levels they must lower the levels of inflation prevalent in their economies and keep those inflation levels low going forward.

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