Quora Answer: Do You Think Money Laundering Inflows Help Balance Latin American Economies?

The following is my answer to a Quora question: “Do you think money laundering inflows help balance poor Latin American economies?”

Money laundering is defined as the concealment of the origins of illegally obtained funds.  It involves placement, layering and integration.  Within the context of Latin America, most of these illegal funds are obtained through the drug trade.

Contrary to what is believed, Latin American economies are not, generally, poor.  The primary economic activities are agriculture and mining.  They generate tremendous profits.  These countries suffer from economic mismanagement, corruption and a poor distribution of wealth.  Wealth is concentrated, while much of the population does not benefit.  Infrastructure development is also very poor when compared to East Asia, and South East Asia, which are similarly undergoing an economic boom.

Due to the structure of the economy, the dark economy does not benefit the populace.  That wealth, laundered, with the collusion of the banks and politicians, is still concentrated among the ultra-wealthy.  It does not circulate in the economy, and benefit the population.  Money laundering subverts the institutions of state, and weakens the government and judiciary.  It does not benefit them.