Journal Entry: James Velissaris-08/23/2023-KNIGHT Program

Journal Entry

The US Constitution promises the protection of life, liberty and property to all U.S. citizens. In recent years, however, the rising crime rates across the United States have usurped these rights. Economic crime in the US has risen by a substantial percentage since 2019 with motor vehicle theft rising 104%, gun assaults rising 39% and burglaries rising 5% (“Offenses More Than Doubling in Seven Cities,” Council on Criminal Justice. Warren, J. July 20, 2023). Over the same time period, the number of individuals incarcerated has increased to over 2 million people with another 2.9 million people on probation. A number of governing officials throughout the U.S. have attempted to explain these substantial increases as transitory or temporary, but the data has only gotten worse. Immediate action needs to be taken to reduce this extremely troubling trend. U.S. Citizens deserve the liberties promised to them in the Constitution and we are proposing bold steps to change the tide.

The overwhelming majority of the increase in incidence of crime are economic crimes. These crimes are motor vehicle theft, robbery, burglary, drug dealing, sex trafficking, and illegal labor practices. These are black market crimes taking the place of legal activities due to inadequate opportunities within the legal economy. Most recently, the string of coordinated attacks on large retail stores, has caused Nordstrom to close its flagship store in San Francisco and a number of retail companies are following suit in Los Angeles, New York, Atlanta and Chicago. This mass exodus will only make the problem worse as the local economy will be even more impacted by the large chasm created by their absence. Commercial real estate data shows that buildings in Chicago are 40% vacant, and buildings in Los Angeles, Atlanta, and San Francisco are 35% vacant (Fox crime news report, August 21, 2023). As corporate flight takes hold in urban communities, the black market economy will grow even larger due to the gaping hole created by these large employers.

This very important macroeconomic problem requires a microeconomic solution. At a high level, it appears that the solution should be focused on fixing the macroeconomic variables that appear to be driving this sharp rise in economic crime. Yet, upon deeper analysis, we find that the marginal criminal decision maker has a more subtle objective function. The common narrative of criminals being pushed to commit crime due to socioeconomic circumstances is highly flawed and is not supported by key recidivism data. The decision making objective functions of criminals who are actively committing crime in the U.S. as well as those who are incarcerated is not as simple as lawmakers have previously proposed. This is why recent changes in policing approaches have been unsuccessful throughout urban communities in the U.S.

The criminal decision criteria has been cultivated over years and sometimes decades of reinforcing behavior. A large percentage of criminals in the U.S. have been committing some form of crime since adolescence. As the U.S. economy boxes out more and more citizens due to education, technical proficiency and lack of experience, this crime will get perpetually worse because these citizens feel entitled to commit crime. As such, the objective function for their decisions has completely shifted from what Adam Smith envisioned when he penned “The Wealth of Nations.” There is no “invisible hand” driving the decision making of career criminals. It is only through a complete reprogramming that the majority of criminals in the U.S. will become functional and productive decision makers. This is the basis of our innovative program. We are looking to help reprogram the criminal mind.

The troubling approach to describing crime and violence in the U.S. has been to absolve responsibility and place blame on mitigating 3553(a) factors. If a criminal grew up poor, uneducated, and as a minority, they are somehow less responsible for the crimes they have committed. This line of reasoning is fueling the problem that has grown to a historic size. The criminals in the U.S. now have a government stamped excuse for why they can commit crime. To overcome this troubling trend, we must focus on providing an environment to reprogram the criminal mind and to shift their thinking to be independent, functional, and economically oriented thinkers. The potential criminal needs to have an opportunity cost for committing crime, and prison time has been proven to not be an adequate deterrent as evidenced by the staggering 44% recidivism rates in the U.S.

The current economic barriers are substantial for individuals who are considering committing crimes in urban communities as well as individuals who are being released from prison. We are proposing a new economic solution to this problem. Instead of trying to force feed companies to hire former and potential criminals with government incentive programs, we propose the creation of an entirely independent ecosystem. A major problem with the current system of employment for formerly incarcerated individuals is that it flies in the face of basic economic principles. Private companies hire labor they think will add utility to their company of greater than or equal value to the total cost of employing them. The total cost of employing them includes, compensation, benefits, as well risks including employer liability, professional liability, risks an ex-felon continues committing crime, risks an ex-felon convinces other productive employees to commit crime, and a myriad of other risks. As a result, a prospective ex-felon employee would need to add significantly more value to a company than an equivalent non ex-felon candidate to compensate for all of these additional risks. To make matters even more dire, the average ex-felon has less education and less experience than the law-abiding candidates they are competing against. So the only way an ex-felon will get hired is if they are overqualified and underpaid, which will lead to an irrational outcome for the ex-felon. As a result, even with government incentives, private companies would have to hire underqualified and overpaid ex-felons to overcome all of these obstacles. Consistently making these decisions is economically irrational and in the long-run irrational private companies go out of business.

The best way to overcome these hurdles is to create an ecosystem of companies that are operated by formerly incarcerated individuals, who employ ex-felons, and offer unique opportunities where ex-felons can thrive in an inclusive environment. This would remove the barriers that exist to most ex-felons because it would create a self-sustaining economy run by ex-felons and employing ex-felons. These companies can operate across multiple industries including transportation, logistics, healthcare services, real estate, education, food, entertainment and technology.

With the advent of artificial intelligence, the U.S. economy is currently at a unique crossroads. This new technology can finally bridge the gap for ex-felons who are under educated and under qualified. Inmates could begin training for these companies while incarcerated with the use of artificial intelligence to help bridge the knowledge gap. Inmates at low and minimum security facilities would be eligible to begin working for these companies and, if the prospective inmate performed up to the company’s standards, the company would provide a job offer for direct employment after release. This would create a pipeline of guaranteed employment for inmates to a cultural environment that is accepting and productive. Companies such as INROADS have operated over the last 40 years by successfully creating a pipeline for professional employment opportunities at Fortune 500 companies for BIPOC college students. We think this program can have similar success and could reshape the nature of the crime landscape in the U.S.

A medium sized private company in the U.S. typically employs approximately 2,000 people. If this program successfully launched as little as 25 medium sized companies, that would create 50,000 jobs for the previously incarcerated. If the average salary paid was ~$40,000/year, this program would create $2 billion/year of productive benefit that would have been shifted from illegal activity. More importantly, in 2022 there were 250,000 economic crimes committed in the largest 32 urban communities in the US (Warren, CCJ, 2023). If these crimes were committed by approximately 250,000 individuals, and a representative sample of these individuals gains 50,000 new jobs, crime would be reduced by a minimum of 20%. In reality, the impact would be far greater because there is a substantial network/multiplier effect of the ecosystem for the local economy that would likely reduce crime by as much as 2-3x this amount. Our proposed solution directly attacks a growing problem by filling the economic void of criminality.

The current trend in economic crime will continue to get worse if we do not attack this problem head on. This program offers an innovative solution that has the ability to be self-sustaining. By building an entirely new economic ecosystem, this program will create a new road map for formerly incarcerated individuals to greatly reduce crime and recidivism rates. This innovative program has the ability to reshape the very fabric of criminality in our country for generations to come.

James Velissaris
Reg #: 86813-509
Work Assignment: Education

KNIGHT Program

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