Comment by AnthonyMouse

Comment by AnthonyMouse 3 days ago

> All of the other items you mentioned are things that society attempts to regulate against as well.

Which is exactly the point. The proceeds from both market monopolization and contract killings are the proceeds of a crime, but the proper way to address this is to impose penalties for the antitrust violation or murder rather than tracking the finances of millions of innocent people only to fail to prevent the criminals from successfully laundering the money of the un-prosecuted original crime regardless.

If you're prosecuting the original crime, you don't need laws against money laundering. If you're not prosecuting the original crime you're already screwed and need to fix that.

> If the drug dealer is happy to trade heroin for house painting the damage is self limiting.

It's quite the opposite. The drug dealer doesn't want their house painted by a heroin addict, they want money. But by definition money is fungible. Anybody can buy or sell whatever.

Now let's suppose the heroin addict has a choice between taking a job to buy heroin and stealing the copper pipes out of your house to buy heroin, and these things are equally annoying. It's hard to hold a job as an addict but it's also hard to steal things because it's dangerous and illegal, so to begin with it's six of one, half a dozen of the other. But the drug dealer wants money, not copper pipes, so the first one has an edge.

Then you pass a law against money laundering. Well, now the drug dealer wants copper pipes, or wire, or anything else that can be pawned, because he can take them to the scrap yard or pawn shop himself, claim he found them in an old shed or had them left over after a renovation etc., or even set up a fake construction company in order to do that at scale, and then get a receipt from the scrap yard legitimizing the cash he gets from selling your pipes that the addict stole to get drugs. Is this new arrangement helping you or hurting you?

slv77 2 days ago

If all the drug cartels in the world were limited to pawning copper scrap it would make me very happy indeed. I am also sure that it would benefit a large number of people who live in countries where cartel money dominates the economy.

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AnthonyMouse 2 days ago

> If all the drug cartels in the world were limited to pawning copper scrap it would make me very happy indeed.
That isn't one of the alternatives. Notice that the laws against "money laundering" are the status quo and the cartels continue to get enough money to buy entire countries.
> I am also sure that it would benefit a large number of people who live in countries where cartel money dominates the economy.
I feel like I must not be explaining this well enough.
The cartels are going to end up with money, not assorted junk. When they launder money through a car wash, they're not doing it because they want to have their cars washed. They're doing it so they can claim their drug profits are car wash profits and then deposit them into a bank.
The problem with trying to prohibit "money laundering" is that nobody except for the criminals knows that it's happening. If you deposit money into a bank, the bank has no way to know what you were actually paid for, they only know what you tell them, and then criminals just lie to them.
Anyone can convert an arbitrarily large amount of money to stuff and then back to money again. You simply buy something fungible and then sell it again. That prevents anyone observing financial transactions from tracing the money because they have no way to know that the stuff Alice bought and the stuff Bob sold was the same stuff. The cartels know this which is why the laws against money laundering are completely ineffective.
And when you have a law that causes a ton of collateral damage to innocent people while being highly ineffective at producing value to the public, you should get rid of it.

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- flatb 2 days ago
  
  Cite on “ton of collateral damage”? That’s the disputed point in my mind. I just see obstacles that are like speed bumps in parking lots. I don’t find speed bumps do a ton of collateral damage. They also don’t really “work.” But they are needed, and better to keep in place at this point, maybe they could be made slightly less common at the margins. Why not treat AML regulations similarly?
  
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  AnthonyMouse 13 hours ago
  
  > I just see obstacles that are like speed bumps in parking lots.
  If you multiply a small inconvenience by the entire general population, you are causing a lot of damage.
  And the damage to specific people or industries is significantly worse. There are legitimate things people may need to buy that would be dangerous to have associated with their identity, e.g. because it reveals something about their religion or health or sexual preferences. If you want to anonymously pay for any of those things to be sent to you in an unlabeled box at a numbered mailbox so that you don't have to risk someone seeing you buying it in person with cash, you should be able to do that. If some schmucks you've never even met have added some erroneous data to a database or you share the same name with someone rowdy, you shouldn't be endlessly aggrieved like an outlaw by financial institutions that aren't even allowed to tell you why.
  > They also don’t really “work.” But they are needed
  If something doesn't work then it isn't needed.
  
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  ETH_start 2 days ago
  
  Speed bumps are built on public roads, which are shared property.
  A private transaction is incomparable to that. The government imposing itself on every private economic interaction, by making itself a gatekeeper from whom you need permission, is incredibly invasive and dangerous. The threat vector here is the government, or the people in it, harming the general populace through malice, and more commonly, incompetence in how they wield these powers of warrantless surveillance and financial exclusion.
  Banks unilaterally closing people's accounts, or refusing to open an account for them, because those people fall into high-risk categories, is now very common.
  On the bank side alone, the costs of this system are estimated at hundreds of billions of dollars a year. All those costs are ultimately passed down to the consumers in a way of higher banking fees. On the consumer side, not knowing if you can move your money or access it is a significant source of anxiety that also makes it harder to plan one's life.
  That's the "ton of collateral damage".
  
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