While I’m not completely comfortable referring to human trafficking and its victims in economic terms, the truth is this crime would not exist without a market that offers great financial rewards to those involved. One of the most disturbing characteristics of human trafficking lies in its most basic definition: the sale of human beings. Trafficking turns a life into a mere commodity, which can be bought and sold like any other good. Because trafficking is driven by economic motivations, it must be analyzed in economic terms–regardless of the discomfort such an analysis may cause.

As any introductory economics course teaches, in a market price is a function of supply and demand. With human trafficking, the supply side refers to the economic and social factors that create a pool of potential victims for traffickers to target. The demand side includes who is buying these people and for what purposes.

On the supply side, poverty, lack of education and social inequality are often cited as the main contributing (or ‘push’) factors. Wars, natural disasters and civil unrest can create a large number of displaced people which facilitates trafficking. The 2004 tsunami caused mass devastation and increased trafficking from Southeast Asia. Other recent examples include the 2006 Israeli-Lebanon conflict and the ongoing civil war in the Democratic Republic of the Congo. Rapid industrialization can also inflate the supply side of trafficking. In many developing countries, there is a wide socioeconomic divide between the urban centers and the rural areas. Poor, uneducated, rural populations become prime targets for traffickers who lure young people into the city with the promise of a good job and a luxurious lifestyle. Girls with many siblings seem to be the most vulnerable in this case. Also, cultural factors often play a role. Traffickers can exploit certain cultural norms such as the value placed on virginity, the responsibility of an older child to contribute to the family income, the common practice of taking out a ‘loan’ from an employer which is then repaid through work, etc. On a macro scale, insufficient birth registry and identification systems, the ready supply of fraudulent travel documents, corruption, and ineffective migration policies affect the supply side of human trafficking.

In terms of demand, I split the factors into two categories: direct and indirect. Direct factors which influence demand are obviously what and how much people are willing to pay a trafficker for particular services. The most common image of direct demand is a man paying for sex from an enslaved prostitute. However, other types include forced labor, bonded labor, illegal adoptions (‘baby selling’), begging rings and the sale of vital organs. What I call indirect demand comes from consumers’ constant quest for ever-cheaper goods and services. The nature of the capitalist system is to minimize production costs. Labor is normally one of the most expensive factors of production and as such it becomes an obvious place to try and cut corners. In fact, after being busted for trafficking many factory owners defend their actions on the grounds that they couldn’t compete in the industry (carpets, clothing, bricks, whatever) without slaves because ‘everyone else’ is using them too. This brings us to a much larger issue of sub-contracting, global supply chains, etc. which would be too long and complex for this particular piece. However, the important thing to remember is that the demand for human trafficking is not only driven by those who actually pay for the victim’s services; on the contrary, we all contribute to to trafficking demand–indirectly–even if we’re not aware of it.

As a function of supply and demand, prices fluctuate from one region and/or country to the next. Price is influenced by all the factors mentioned above as well as the distances travelled and the mode of transport employed. As Kevin Bales, President of Free the Slaves (www.freetheslaves.net) notes, price also influences the treatment modern day slaves receive. FTS reports that hundreds of years ago slaves cost as much as the equivalent of $80,000 apiece. Now that figure has fallen to about $100.  David Batstone echoes this point in his book Not For Sale:

"During the era of the American plantation economy, the slaveholder considered slave ownership an investment. The supply of new recruits was limited. Though the slave owner usually treated the slave like a beast, it would be equal to the treatment of a prized bull. The slave owner aimed to extract the value of his investment over the course of the slave’s lifetime." However, in the modern-day slave trade, "the glut of slaves and the capacity to move them great distances in a relatively short period of time drastically alters the economics of slave ownership. As relative costs plummet, slaves cease to be a long-term investment. The owner need not be too concerned about maintaining the health of the slave…just like used batteries, once the slave exhausts his or her usefulness, another can be procured at no great expense"

In terms of the ‘business model’ of trafficking operations, size and
strategy can range from individual entrepreneurs to small ‘mom and pop’
operations to sophisticated, mafia-style rings. "In some cases, traffickers have emerged specifically to meet the migration demand, and in other cases, there are established international criminal syndicates who have incorporated trading of humans into their existing spheres of criminal activity" (IOM report, June 1996). In many cases, law enforcement’s cooperation and/or willingness to look the other way plays a key role in traffickers’ success.

So that’s the basics of human trafficking economics. As I’ve mentioned previously, modern day slavery is a booming business; it’s the third most profitable black market activity behind drugs and arms. The current estimate of human trafficking’s total market value is $32 million, $10 million of which comes from the initial ‘sale’ of people and the rest from the profits and goods they produce.

The next post in this series will explore geographic trends in human trafficking. It will address questions such as: How are individual countries and regions categorized into places of origin, points of transit and destinations? Which specific types of trafficking are linked to each region? What are the similarities and differences in these geographic trends?