the crack cocaine boom of
the 1990s, the image of
the millionaire crack dealer implanted itself on the
Anyone who spent time around the Crips or Bloods or any other crack
selling gang might have noticed something odd:
A great many crack
dealers still lived at home with their moms.
Sudhir Venkatesh discovered the answer.
originally been sent by his thesis advisor into a Chicago housing project to
administer a sociological survey.
After a harrowing encounter with a
local crack gang, he befriended its leader and virtually embedded himself with
the gang for six years.
Sudhir was given a pile of notebooks containing
four years worth of the gang's financial transactions a trove of data that,
when subjected to an economic
analysis, proved incredibly revealing.
The gang was organized a lot
The gang was one of about 100 branches,
franchises, of the Black
Gangster Disciple Nation.
franchise leader whom Venkatesh
befriended, a college graduate named J. T., reported to a board of
J. T. employed three senior officers and, depending on the
season, from 25 to 75 'foot soldiers'
meaning street level salesmen.
(Autumn was the busiest season for
selling crack; summer and Christmas time were slow.)
At the bottom of
the organization were as many as 200 'rank and file' members, who weren't
employees but did pay dues, hoping to one day become 'foot soldiers'. J. T.'s gang took in
revenues of about $32,000 a month.
Not counting wages, it cost J. T.
about $14,000 to operate, including $5,000 for the wholesale purchase of
cocaine and another
$5,000 as a kickback to the board of directors.
J. T.'s single largest
expense was the wage he paid himself: $8,500 a month, for an annual salary of
There were roughly 100 leaders of J. T.'s stature
within the Black Gangster Disciple Nation network.
These were the drug
dealers who could indeed afford to live
large, or in the case of the board of
directors extremely large.
Each of those roughly 20 directors stood
to earn about $500,000 a year.
So the top 120 men on the Black Gangster
Disciple Nation's pyramid were paid very
well. But the pyramid
they sat on top of was gigantic.
Using J. T.'s
franchise as a yardstick - three
officers and roughly 50 'foot
soldiers' - there were about 5,300 other men working for those 120
Then there were the 20,000 unpaid 'rank and file' members, many
of whom wanted nothing more than a chance to become a 'foot soldier'.
And how well did
that dream job of being a 'foot
soldier' pay? About $3.30 an hour.
J. T.'s three officers didn't
do much better: about $7 an hour.
So the answer to the original
question - if drug dealers make so much money, why are they still living with
their mothers? - is that, except for the top cats, they don't make much money.
They have no choice
but to live with their
A crack gang works pretty much like the standard
capitalist enterprise: You have to be
near the top of the pyramid to make a big
But selling crack is a lot more
dangerous than most
who was a member of J T's gang for the four years covered in the notebooks
stood a l in 4 chance of being killed.
That's more than five times as
deadly as being a lumberjack, which the Bureau of Labor Statistics calls
the most dangerous job in the US.
So if crack dealing
is really the most dangerous job in America, and it pays less than
minimum wage, why on Earth would anyone take such a job?
the same reason a pretty
Wisconsin farm girl moves to Talmudwood.
For the same reason that a
high school quarterback takes steroids and wakes up at 5 a.m. to lift weights.
They all want to succeed in an extremely competitive field in which, if
you reach the pinnacle , you are paid a
fortune (to say nothing of
the attendant glory and
But in each of these
glamour professions, the same problem exists: A lot of people are competing in
what is essentially a tournament.
money in J. T.'s crack gang
wasn't much more likely than the Wisconsin farm girl becoming a movie star or
the high school quarterback playing in the NFL.
Steven D. Levitt and
Stephen J. Dubner, authors of "Freakonomics: A Rogue Economist Explores the
Hidden Side of Everything."
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