Credit Matters Blog

History Shows How Legislators and Governments Create the Crimes and Frauds of Tomorrow

Kim Radok 23 May 2016


We are all aware of the old adage about how today's problems are often as a result from not learning from the lessons of the past. Governments, Legislators and business people show they have often failed to learnt anything from past history lessons. As a result, we continue to see how poorly designed legislation, taxes and business practices produce unintended outcomes that do not benefit society.

Three examples show how Governments, Legislators and business people have failed to learn from the lessons of the past. As a result, criminals and fraudsters find new ways to practice their criminal behaviour.

The first example was how Prohibition via Legislation did not did not work. Crime flourished as the ordinary person went from buying their alcohol from reputable sources, to any source, usually criminal, they could find.

Secondly, prohibition via increasing tobacco taxes in Australia, has seen an increase in the raids by criminals against retail shops and seizures of illegal tobacco by customs agents.

As alcohol excises increase, based on past behaviour, I suspect local bottle shops will become a target of criminals and opportunists. In addition, home brewing may also become increasingly popular with negative consequences for society which are not yet considered.

Thirdly, in consumer and commercial business environments, purchase and consumer fraud is often unchallenged because of the impact of Legislation implemented with good intentions. The outcome however, has been to empower criminals, fraudsters and naive people to believe they can commit fraud against their creditors with minimal negative consequences.

What are the factors which cause the aforementioned situations?

1  Money, or the lack of it

Criminality studies reveal; in good times, people steal because they can. In bad times, people steal to survive. Today there are many disadvantaged people which are stealing to survive. Whilst the practice of stealing to survive cannot be condone, it is difficult not empathise in such circumstances.

Governments are increasingly cash poor and are trying to balance their budgets. Consequently, taxes and excise on goods deemed to be harmful to people and society are raised or increased. These increases are designed as an encouragement to help people to restrain from indulging in bad practices. Of course, these policies might just win a few extra votes from the "do-gooders of society".

2  The "do-gooders of society".

"Do-gooders" have great intentions in their desire to help protect the disadvantaged in the community. However, they do not seem to display any understanding of the true nature of "human nature" or want to be held accountable for the negative consequences of their beliefs and actions. Indirectly as a result, the ordinary person and honest business people are now disadvantaged.

3   The attitude "I am entitled to ..."

Today we live in a society where it seems every person is entitled to something. Criminology studies again point to one of the key motivators for fraud in the business sector; "The perpetrator felt they were entitled to take the goods or money because of ..."

The extension of B2B credit under a signed contract of payment is an example where poor Legislation has impacted negatively. To obtain the credit, debtors need to sign a contact agreeing to pay within terms of the agreement. Too often however, once the debtor has the goods or accessed the services, the debtor feels they are entitlement to change the terms of payment with impunity.

Good Legislation assists to protect good citizens and encourages them to be good citizens in bad times. Poorly designed Legislation encourages bad behaviour and criminality from criminals and good people alike. Similarly, poorly designed taxes under the disguise of being good for people and the Country, encourages criminal behaviour.

The truth is, poorly designed Legislation and taxes do help create to create the crimes and frauds of tomorrow.