ON PIMPING: A LETTER TO THE ECONOMIST (January 21, 2008)
I was happy to learn that the American Economic Association’s annual meeting in New Orleans considered, among other worthy topics, the market for paid sex (“Selling Sex,” January 19, 2008). Not surprisingly, this market is far from surprising. The only controversial finding you report is that prostitutes do better with pimps, who not only provide protection from the police and street gangs, but also pay more than the minimum rate in order to attract, retain, and motivate the best staff. Prostitutes thus seek pimps, who often operate under the auspices of larger and more diversified criminal organizations. Specializing in the construction market, however, I was a bit less surprised by this finding than the average economist would be. Subcontracting, which is rife in construction, amounts to little more than glorified pimping. Although construction workers can make ends meet by working alone or in small informal gangs, just like prostitutes can, they are better off by forming small companies, which are at the bottom of subcontracting chains. Each link in such a chain provides better pay and protection, but the construction work always stays at the bottom.