Sunday, April 14, 2013

Wherever the law creates an opportunity, the desperate will exploit it

Smuggling has been with us forever.

Over the last twenty years or so cigarette smuggling has become one of the drivers of economic sustainability among some First Nations in Canada. In fact, on some reservations it's become the main driver.

The Montreal Gazette provides a reasonably fair and balanced overview of the business. While they do have the obligatory reference to really bad (white) gangsters, they acknowledge that this is a business run by and for First Nations.

And the overall tone of the article is remarkably non-judgmental.

Which is as it should be. Chief Simon is merely following in the footsteps of the Kennedys and the Bronfmans. You do what you have to do, and when circumstances permit, you go legit.

One thing that Gazette story doesn't spell out is how that Akwesasne reservation came by the high-tech cigarette manufacturing machinery that allowed them to get into the game in the first place. Imperial Tobacco, manufacturers of 70% of the cigarettes smoked in Canada, used to have cigarette factories in Montreal and five hours down the road in Guelph, Ontario.

Being a world-class multinational, Imperial Tobacco was constantly on the lookout for ways to cut the labour component of their cigarette costs. They did this by constantly upgrading their cigarette-making machinery.

The old machinery, still absolutely workable, was routinely sold for its scrap value at a junk-yard near Montreal. Somewhere along the line the proprietor of said junk-yard had an epiphany.

"Maybe there's somebody who would pay a premium for this machinery. After all, it still works... maybe I could get more out of it than the scap metal value?..."

He found someone who was willing to pay more than the scrap metal value, and the rest is history. I think that's what's called a win-win. A nice windfall for the scrap dealer; a viable business opportunity for the First Nations.

Alas, the "tough-on-crime" gang in Ottawa seems determined to put an end to this happy story.

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