Smuggling Be Legal in Migration

¶ … Smuggling be Legal in Migration but not Business Products?

Smuggling represents the practice or action by businesspersons to import or export commodities or products while evading the tariffs or taxation system. This definition applies to properties that have financial value. Such activities include drugs, necessities (sugar, flour, and cereals), and other relevant products or commodities. Smuggling is a crime against the business principles or policies because of the economic relationship with the interpretation of the law. Smuggling in migration refers to the practice of facilitating transportation of individuals for financial or material gain. Unlike human trafficking, human smuggling focuses on procurement for financial or material gain. Human trafficking focuses on exploitation of migrants in the process of participating in the transaction. There are growing trends on human smuggling in the current or contemporary world because of various perceptions on how the society should consider the practice. Some individuals or scholars propose that smuggling of human beings (human smuggling) should be heroic act rather than criminal activity. This view borrows directly from the social perception on the difference of the context or geographical location that might foster the development of individuals as human beings.

Some scholars view human smuggling as crime against humanity. This perception relates to human rights and the condition in which the smuggling of the individuals takes place

. These scholars argue that human beings in the process of smuggling experience adverse conditions that might be crucial to their health development. Such conditions prove to be costly in relation to the treatment and other relevant costs thus reducing the actual or real income levels. Unlike human smuggling, there is little difference in view of smuggling of market or products with the value. The government or economy suffers mightily for evasion of the taxation system or tariffs by the business agents in the generation of GDP. Taxation systems contribute significantly to the development of the total revenue that the government apply to execute several economical programs. The development programs draw financial assistance from public finance. This raises the question on whether smuggling in migration should be legal rather than smuggling of products and commodities.

Issue

The paper seeks to evaluate is human smuggling should be legal rather than smuggling of products and commodities. The policy question or issue states, "should smuggling be legal in migration but not in business products? Human smuggling involves contractual state or agreement between the smuggler and the migrants. This reflects on the distinction between human trafficking and human smuggling. Human trafficking involves forceful adoption of individuals from their native lands to act as slaves or sex objects in other nations away from home. Human trafficking is a crime against humanity while human smuggling proves to be heroic action in the process of transaction. Human smuggling occurs because some individuals try to escape poverty and hardship conditions from their native lands

. Some also look for economic advantages in the new areas to satisfy their needs. Other migrants participate in smuggling practice because of the need for asylum thus political need for protection. Immigration act supports the move with the view of seeking asylum thus the basis for legality of the human smuggling.

Smuggling of commodities or products has considerable influence on the development of total revenue and pricing system within the economy

. This reflects on hindrance to the development and growth of the economy. Smuggling enables business transactions (export and import) to occur with evasion of the environmental orientation of the nation. This indicates smuggling allows businesspersons to avoid paying taxes or tariffs during the process of transactions. One of the causes of smuggling of commodities or products is extent tariff or restrictions in relation to exportation and importation. High tariff and restriction status results into greater cases or incidences of smuggling because business agents would constantly look for ways to maneuver their way past the laws or regulations. Smuggling process has the capacity to offer cheap products to counteract the increase in the pricing system. This leads to adverse effects on the market in relation to individuals who pay tariffs and taxes for their commodities

. Smugglers can afford to sell at cheaper prices because they evade the payment of tariffs and taxes. The process of evasion of the taxation system and other restrictions limit the revenue collections by the government to facilitate public expenditure. Business activities must follow the environmental orientation of the country hence the consideration of smuggling as a criminal offence against the development of the economy.

Other activities or factors that influence the extent of smuggling within the economy are corruption and relations or law systems. High extents of corruption result into low volume of smuggling activities because business agents would find easiest and cheapest way to smuggle their products across the border. The agents would offer financial benefits to the relevant authorities in order to smuggle their products in to the internal market or external environment. Strict law enforcement system leads to the development of low cases or incidences of smuggling within the economy if other conditions remain constant. This notion indicates that fight against smuggling must focus on the adjustment of the regulations or law systems thus reduction in the cases or incidences of illegal exportation and importation practices.

The other economic view that supports legality of the human smuggling practices is the cost of the process and conditions during the transaction. Human smuggling involves contractual practices between the migrant and the smuggler. The migrant agrees to pay some amount of money according to the contract that ends on reaching the destination

. Human smuggling occurs in most cases due to the need of economic benefits in other nations. The migrants have the opportunity to transform their lives and the living conditions of individuals in their native lands. This would improve the economic situation of their native land thus reduction of the poverty incidences. This economical value should initiate the legality of the human smuggling practices. Immigrants also have the opportunity to contribute to the development of the GDP of the country of resident hence increase in the economic value. The relevant authority such as government should ensure the legality of the smuggling agents thus legalizing the human smuggling process.

Legalizing the human smuggling practices would improve the conditions of the transaction process. Most human smuggling practices have economic or effective intentions thus should occur under admirable conditions. Human smuggling involves transportation of human beings under adverse environmental conditions such as congestion within the transportation vessels. Improvement of the condition would indicate that immigrants do not have to incur medical cost upon arrival in their destinations. Reduction in the medical cost reflects on the development of the income levels hence indication of growth and development of the economy. The economy can apply this extra amount to help in the development of the other section of the nation hence overall growth of the country.

Governments can generate an enormous amount of financial benefits in the legalization of the human smuggling practices. This is through application of restrictions on financial policies to govern the smuggling practices. The government can generate sufficient revenues in the contractual processes thus increment in the volume of the GDP of the nation. These financial benefits would supplement efforts of the government in executing public expenses in relation to different projects. The smuggling companies or agencies have a role to play in the generation of the GDP of the country. The contributions of the smugglers contain economic value thus crucial to the development of the nations in the smuggling practices. Legalization of the smuggling process would streamline the practices thus enhances the contribution towards the public finance.

Human smuggling practice should undergo legalization in order to confirm that individuals seeking transportation support or assistance do not have elements of crime as they cross the borders. This would limit numerous cases of criminal activities in the new countries thus appropriate environment for economic development. Illegal smuggling of human beings leads to inclusion of criminals whose main objective is to commit the criminal offence across the borders. These criminals find their way to other countries hence the increase in the chances of criminal activities in the new countries. Legalization of smuggling would allow the government to take strict measures in relation to conducting extensive inspection before crossing the border by the criminals. This would reduce the transfer of criminal activities in the new areas thus growth and development of the economy because of minimal interference from criminal intentions. Criminal activities affect the development and growth of the nation from different aspects. The first aspect involves hindrance to economic development because of destruction of properties and investments. This reduces the level of GDP and the total government finance thus affecting the public expenditure. The next aspect is social hindrance to development. Criminal activities exert social tension on individuals thus the negative impact of development as social beings. Criminal activities also create political tension within the nation thus affecting this aspect or sphere of the new country. This indicates that the government must take necessary measures to limit or reduce the extent of criminal activities within the economy. This can occur through legalization of human smuggling while tightening the rules and regulations governing property or product smuggling.

Smuggling and Price Disparity Model

In the Bhagwati and Hansen Model (Bhagwati-Hansen Model), smuggling is a trade at the world or international prices. This indicates that there is evasion of taxes. This trade involves less favorable transformation curve in comparison to curves under the free trade condition in the absence of the taxation system. This is under the assumption that smuggling involves real cost such as additional transport costs. In their illustration of smuggling and welfare, Bhagwati and Hansen indicate that smuggling has negative effects on welfare. This illustration explains that smuggling reduces welfare in the presence of co-existence between legal and illegal trade (smuggling). Bhagwati and Hansen explain that non-smuggling situation in the presence of legal and illegal transactions have the effect of promoting or enhancing welfare within the society. This is application in any characterization of smuggling (constant or increasing costs). Coexistence of legal and illegal transaction characterizes real world smuggling situations or conditions. This indicates how crucial it is to adjust economic rules to reduce the extent of smuggling within the economy. The government has the opportunity to maximize economic welfare by strictly by initiating sub-optimal taxation systems on transactions or trade rather than promoting some evasion. These conclusions are not in accordance with the findings of smuggling and price disparity model.

Figure 1

Figure 2

Figure 1 illustrates the presence of maximum or greater welfare in the existence of smuggling conditions. Figure 2 illustrates the presence of lesser welfare in the smuggling situation, in comparison to legal trade situation (non-smuggling condition). The non-smuggling condition, there is the production at Pt. At this point, taxation is inclusive of the price thus the tangent existence to the production possibility curve AA1. There is transaction or trade at international prices PtCt thus, the existence of welfare at Ut. In the presence of smuggling or illegal transactions, production occurs at Ps. At point, the domestic relative prices are equal to the marginal rate of transformation in relation to production. There is the transformation of the smuggling-to-smuggling curve PsQsB from Ps until Qs. At this point, the smuggling transformation curve reflects tangency to the internal or domestic prices. Non-smuggling conditions allow the exchange at the international terms of trade QsCs with Us as the point of welfare

In the case where costs of smuggling to the traders include penalties and confiscation by the relevant authority, there would be minimal difference in the price and production equilibrium such as 2a and 2b in the figure 1 and figure 2. There is an assumption that smuggling costs reflects real resource costs of the country. Since the cost of smuggling to the smuggler or trader represents merely revenue to the government or relevant authority, the aggregate rate of transformation in the transaction is the free trade terms at PsCp in figure 1 and figure 2. This results into the welfare level being Up>Us. This result indicates that smuggling has an unambiguous gain in welfare while non-smuggling conditions have an unambiguous loss or decrease in welfare. The cost of smuggling to the business agents or traders reflects on the mixture of penalties and real resource costs. There is independent existence in the price and production levels while there is the definition of the welfare levels by Us and Up

Tax Revenue Maximization and Smuggling

First, there is an assumption that the tax or custom authority obtains the exportation tax rate (t) from the central government. The main objective of the customs authority is to maximize the levels of trade tax revenues. The crucial tool or instrument that the custom authority can apply in dealing with this objective is the degree of enforcement. Assume that the enforcement is costless and the authority has the capacity to eliminate smuggling altogether thus obtaining g (l, s)=0. With reference to the assumptions, it is possible for the authority to maximize tax revenue at a positive level of smuggling. Illustration in figure 1 indicates that with the taxation system in the process of transaction (non-smuggling condition), production levels reflect at P1 with legal trade at C1tP1t. This compares to the smuggling condition or situation where production is at Ps with legal trade at Q1mQ1s. The customs authority can decide to maximize the tax revenue levels at g because of the fixed rate by the central government. Illustrations indicate that an increase in the total or overall transactions because of high prices is greater that quantities within the smuggling situation or condition

Smuggling and Price Disparity

In most of the commodity models of smuggling, the domestic relative price of the exportable terms of any importable is bounded by the free trade relative prices and taxation inclusive free trade relative prices. The other scenario is where prices are considered in monetary units, the domestic price of an exportable subject to an export tax might be more than its free trade price. This is because of the fact that smuggled exportable has the capacity to earn foreign exchange, which might prove to be of enormous value in the illegal or black market situation. In the absence of trade interventions in the direction of a particular exportable, the domestic price might still be more than the legal trade price in the presence of intervention in relation to the market for other commodities or flow of capital that might cause the existence of black or illegal market. Price disparity of any product or commodity that has price value in terms of money can be calculated by comparing the domestic price of the commodity with the quantity of the domestic exchange earned in the process of free trade. Domestic exchange refers to the world price times the legal, effective exchange rate for the exportable. Price disparity can be expresses as the percentage of free or legal trade price

Application of the Model to the Policy Question

Since the model proves that lighter fines or penalties prove to enhance the development of smuggling within the economy, it is appropriate for the government to tightening the rules and regulations in relation to business transactions. This would discourage smugglers to jump from the illegal business practice since they would have to forego their prices in paying the cost of smuggling. The penalties should be heavy to the extent that it exceeds the profit levels for the smugglers. This would reduce their welfare as they participate within the black market. The authority should also reduce the cost of tariffs and taxation system in order to maximize its revenue and profit levels. This is because the model illustrates that high tariffs and taxation systems enhances the development of smuggling activities within the economy. In order to avoid neglecting taxes by the smugglers, it is crucial for the government to consider the opportunity of bring down the taxes. This would increase the level of revenues of the authority since the smugglers would see no reason to evade the taxation system. Their contribution would enhance the maximization of welfare of the community. It is crucial for the market system to facilitate itself without external influence. Smuggling represents external influence within the development of the market structure. The government should also reduce the level of corruption within its systems. This would reduce the level of smuggling of commodities since the smugglers would find it difficult to go against or behind the business principles and policies. Human smuggling should be promoted within the setting of the nation in case it has positive effects in relation to maximization of the welfare. Most of the human smuggling cases seek to eradicate their poor state thus working towards development of the society or the entire planet.

How Conclusion Matches or Contradicts other Theories or Economic Models

The main objective of this model is to present and illustrate the coexistence of smuggling, price disparity, and legal or free trade. This is defined as the domestic price that is more or less than the return from legal exports and imports. There is a difference between this model and the model presented by Bhagwati and Hansen in attempts to determine the cost of smuggling. This is because, the presence of legal trade is applied in this model to cloak smuggling activities with the implication that the greater the volume of free (non-smuggling situation); the less the cost of smuggling in an economy. The model concludes that smuggling might be welfare increasing in different scenarios thus it is considered to have an unambiguous impact. Non-smuggling condition also has the capacity to lower down the welfare of the economy thus unpredictable economic scenario. The model explains that, in cases where the costs of smuggling involve fines and confiscation, there is the difference in tariffs and the values of the fines. In this scenario, smuggling has the capacity to increase unambiguously the level of welfare within the community.

The other conclusion that agrees with application of different economic models is that, in the presence of suppression of smuggling, which is costless, maximization revenue maximization might still require the positive element or value of smuggling. The model notes that smuggling has enormous influence and impact on the domestic prices and relevant returns from the transactions. The effects of Smuggling on prices of the commodities within the market are negative. This is because; the presence of smuggled goods in the market has the capacity to lower down the market prices. This would have a negative impact on the profit levels since most traders pay taxes for their trade. They have to charge at specific prices in order to come up with effective and appropriate profit and revenue levels. it'd crucial for the society to ensure that laws are in place to oversee the fact smuggling of commodities that have money value should be at its minimum. This supports the policy that calls for illegality of smuggling of commodities with the value of money while legalizing the smuggling in immigration.

This is because smuggling in immigration or human smuggling has greater capacity to increase and promote the welfare of the society than smuggling of commodities that have valuation in terms of money. It is critical for the authority to enhance penalty for smugglers thus tightening the rules and regulations to minimize the cost of smuggling. In the presence of enhanced regulations and penalties, smuggling would decrease the welfare of the society hence criminal activity in relation to the rules and policies governing free trade. The market system should be free to enhance maximization of profits and revenue levels while minimizing the total cost of production and distribution. The inclusion of smuggling habits within the market structure has the capacity influence the prices of the commodity thus affecting the level of competition in the market. This is because; smugglers enjoy some advantages such as tax evasions hence they can sell their goods in relatively lower prices. Despite the relative low prices, smugglers still have higher chances of making profits for their transactions within the market structure. The creation of black market structure is dangerous to the development of the economy. This is because the authority would have to forego some elements taxes in the presence of vices such as corruption and inefficiency in the production and distribution sectors. The government should ensure that the smugglers pay heavy prices for their actions in affecting the pricing system within the economy.