Public Square

The Economics of Human Trafficking

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The human trafficking industry is estimated to generate around $150 billion annually.

The industry spans the world, energized by the power of globalization. It targets vulnerable populations affected by war, poverty, and oppression.

According to International Justice Mission (IJM),

There are an estimated 35.9 million people held in slavery today. Children represent an estimated 26% of all forced labor victims.

How is it that this horrific act has continued to not only survive but thrive as an immensely profitable business?

The Asian Philanthropy Forum published results from a recent study by Dasra, a strategic philanthropy foundation, that gives one reason for human trafficking’s persistence:

The reason why sex trafficking persists is straightforward: immense profitability with minimal risk. A net profit margin of over 70 percent makes sex trafficking one of the most profitable businesses in the world. It is becoming increasingly easy and inexpensive to procure, move and exploit vulnerable girls.

This is true of all forced labor as well: high profits, low risk. The demand for cheap labor in order to accrue high profits keeps this economic machine running. Paired with little risk of criminal prosecution, this makes human trafficking a lucrative business to enter.

The demand for trafficked humans is a problem that must be addressed and eliminated.

There needs to be a heart change, the gospel needs to penetrates the hearts of the perpetrators. In addition, institutions around the world need to increase the cost of trafficking victims by increasing investigations, prosecutions and criminal charges.

All the while, beautiful people created in the image of God are finding themselves in vulnerable environments where they are exploited. This is not the way the world was meant to be.

Defining Human Trafficking

The United States Victims of Trafficking and Violence Prevention Act of 2000 defines human trafficking as:

(A) sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform such act has not attained 18 years of age; or (B) the recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery.

We know that forced labor and slavery have long been a part of our world history. Just think about the centuries-long North Atlantic Slave Trade, which transported millions of slaves from Africa to the Americas from the 15th to 19th century.

Now there are more slaves today than at any time in history. How is this so?

In my previous article on how globalization affects the poor, I presented the positive and negative effects of globalization and showed how globalization can help a country lift its people out of poverty.

However, when exploitation is a part of the globalization process, we need to vigilantly, proactively seek to protect the lives of individuals.

As we look into this, it is important to note that this “industry” cannot totally be compared to a regular market. This is because the labor supplied by trafficked individuals is not a willing supply but a coerced supply.

Because globalization allows for greater openness in trade, the trade of human lives becomes easier for traffickers. What motivates their actions? Look no further than to the elements that influence the supply and demand of modern day slaves.

Supply

In an article by author and activist Siddharth Kara in the International Harvard Review, Kara discusses the role supply-side economics plays in perpetuating human trafficking.

He writes,

The supply of contemporary trafficked slaves is promoted by longstanding factors such as poverty, lawlessness, social instability, military conflict, environmental disaster, corruption, and acute bias against female gender and minority ethnicities.

These elements provide a mass number of vulnerable populations ripe for the picking by traffickers, and migrating populations are among the most vulnerable to human trafficking.

As individuals migrate from one country to another, or within a country, they become a more vulnerable target for traffickers – especially if from or within a transitioning state.

Again, it is important to note that unlike regular markets, trafficked persons are coerced and hijacked – this is an unwilling supply.

After the collapse of the Soviet Union, the economy in the Russian Federation (as well as other post-Soviet states) was devastated. New economic policies failed, leaving a vacuum of power allowing criminal organizations to thrive. Unemployment was high. Those most vulnerable were women and children.

Women were taken advantage of as they migrated to new countries to find jobs. In some cases, a woman would apply for a waitressing position in another country through a company that offered to cover the costs of her visa and travel. When she arrived in the country, her passport was taken, she didn’t speak the local language, and she was forced into bonded labor.

Many organizations like IJM work hard to decrease the supply of victims of human trafficking.

These organizations work with local law enforcement to protect the rights of the poor and vulnerable. They try to provide the poor with other job opportunities that keep them from the vulnerabilities of poverty. They educate people about the darkness of human trafficking.

Demand

While the supply of people is an important element in the continuation of human trafficking and forced labor, demand is what really drives the industry.

Kara lays this out in his article by providing comparative data on slavery. He states:

Whereas slaves in 1850 could be purchased for a global weighted average of between US$9,500 and US$11,000 (adjusted for inflation) and generate roughly 15 to 20 percent in annual return on investment, today’s slaves sell for a global weighted average of US$420 and can generate 300 to 500 percent or more in annual return on investment, depending on the industry.

This alone is great reason for pause. It shows us that the value of a human life has decreased. It also reveals a huge increase in the intense exploitation of individuals.

High demand for forced labor exists for various reasons.

One reason is that if employers can purchase a slave through a trafficker, the cost might be high upfront (the “fixed cost”), but after that the labor costs are practically nothing. The employer can now generate higher profits.

Another reason why demand is able to stay at current levels is because there are little to no risks deterring traffickers from selling and purchasing trafficked persons.

An article published by the International Organization for Migration (IOM) says this about the risks:

Conviction rates show that the risks of human trafficking are lower than the risks of trafficking illegal drugs or arms… For example, with only a few hundred federal prosecutions since January 2001, the TVPA has had little impact on human traffickers in the United States…and beyond those identified, arrested, and prosecuted, much trafficking goes unrecognized or undiscovered.

If there are few to no consequences for the perpetrators of human trafficking, how can we expect the demand for trafficked individuals to decrease, especially given the enormous amounts of profits that are generated out of forced labor?

Not the Way It Has to Be

While demand for cheap labor is driving the human trafficking “market”, this is not the way it has to be.

We know that supply always responds to demand – so if we want the supply to go away then we have to take action to remove the demand.

If we desire to see an illumination of human trafficking, there will have to be a heart change on the part of those who demand trafficked humans. The power of the gospel must permeate their hearts to transform them from continuing on this evil path.

While this is our hope, we know that this may not happen for all people and therefore we have to rely on our institutions that are put in place to protect individuals against such perpetration. This is why the rule of law, justice in the courts, and property rights are so important. These elements increase the risk people are willing to take to harm others.

The IOM says this about affecting demand:

Reducing the demand for trafficked humans means decreasing benefits to employers of employing trafficked labor, whether on-site or through subcontracting…[additionally] Increasing costs to human traffickers is the main way to affect the supply side of the market.

As more people are educated about human trafficking, we will hopefully see greater penalties and prosecutions.

The demand of trafficked individuals must be contained and put to an end by increasing the risks for perpetrators.

In addition, the supply of trafficked individuals can be reduced by providing vulnerable populations with better economic opportunity and rule of law.

God has created each person with immense worth, and human trafficking is a direct contradiction to God’s purpose for human life.

Human trafficking attempts to strip individuals of their God given dignity and should no longer be tolerated as an industry in the global economy.

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  • Thanks for highlighting this devastating economic environment. Your readers may be interested in The Locust Effect by Gary Haugen and Victor Boutros (of IJM), for a thorough account of how vulnerable people – particularly women and children – are lured or coerced into the sex trade.
    Boutros and Haugen argue with you to increase the cost to traffickers. I would love to have heard more about addressing demand. Men – my neighbors and fellow citizens – are purchasing sex. If one trafficker is jailed, they find new suppliers. We are desperately in need of ways to stigmatize, sanction, and reduce the purchase of sex. Did your sources have promising stories where this is happening?

  • Good summary of some of the economic factors of modern slavery.

    So, how can we, as Christians in the marketplaces of goods, services, and ideas, join the efforts to set the captives free?

    • Laza Andria

      Part of the solution is already mentioned by the author: “the supply of trafficked individuals can be reduced by providing vulnerable populations with better economic opportunity”. There are social entrepreneurship initiatives towards this goal in different countries. But a lot is still to be done. For one of such initiatives, you can visit http://www.freedombusinessalliance.com/#freedombusiness

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