Assignment #5

The main thesis of this chapter in Freakonomics is that the notion of the average high-earning drug dealer is wrong. In reality, it is only a small portion of those in the illicit business that are high earners, while the rest barely make a living. Statistics used by Levitt and Dubner to support this argument are presented through the reader slowly throughout the chapter to both build this argument (although it is not first explicitly stated in the chapter, except by reading the title of the chapter) and increase shock value.

First, we see the pyramidal structure of drug organizations:
Pg. 99, 20% of the Black Disciples revenues are sent to the "Board of Directors" for right-of-sale

Next, we see the total monthly revenues of the Black Disciples while Venkatesh was looking at the books:
Pg. 100, Monthly Revenue is $32000

On pg. 102., we see that the gang leader takes a large payout for leading his gang.
Pg. 102, Monthly earnings for J.T.: $8500

By comparison, we see that the majority of drug dealers, foot soldiers, earn very little"
Pg. 103, foot soldiers make $3.30/hour

These statistics achieve several goals. First, the organizational structure of the gang dispels the notion of a grassroots drug dealership, in which the actual drug dealers take home the majority of the profit. Likewise, we see that while the operation is highly profitable, most of the profits don't go to the actual drug dealers, but the leaders. Lastly, we see how very little the actual drug dealer, or foot soldier earns, and it's less than minimum wage.

The presentation of the statistics in this order makes for a very readable and fairly understandable argument that the majority of drug dealers are not wealthy Tony Montana's, but poor below minimum wage earners who might work several jobs besides being a foot soldier to make ends meet. That said, the viability of the statistics is questionable. First, the data is merely from the books of one Chicago-based gang. It is also questionable how much of the books that Venkatesh got his hands on are indeed the legitimate operations of the gang or forgeries That said, these statistics are fairly believable. Why would we ever expect the foot soldier of a gang, who does the actual day-to-day selling of the product, to make the most money in the gang. Furthermore, why would we even expect them to even make decent money? It makes sense to see that the foot soldiers of a gang make next to nothing, while the small top tier takes the largest portion of the profits. In an illicit business such as this, it only makes sense that those who run the organization would receive the largest share of the profits as opposed to the average worker/dealer.