Snakeheads as high-impact entrepreneurs

I recently read The Snakehead: An Epic Tale of the Chinatown Underworld and the American Dream by Patrick Radden Keefe. The term “snakehead” is used for a person who manages human smuggling operations for people from China (note that “human smuggling” should not be confused with human trafficking). The book is a fascinating, and in some ways disturbing, story of the huge network used to smuggle Chinese people illegally into the United States. I discovered the book when reading up an obituary of Cheng Chui Ping (better known as Sister Ping), one of the most reputed snakeheads.

Sister Ping
Image source: The New Yorker

There is a lot of interesting material in the book, and although its relevance to the basic moral case for migration is fairly limited, it sheds light on many aspects of the realities of the ground. The book’s focus is the complex human smuggling operation of people from China and neighboring areas (but mostly from the northern part of Fujian province in China) to the United States, with most of them ending up in the Chinatown in New York City. But much of what it discusses is relevant to migration in other contexts.

TL; DR

The book paints a poignant picture of the strength of people’s desire to migrate. There is also plenty of material in the book that sheds light on the international refugee system, and in my view it strengthens the case laid out in John’s recent post. The book does a good job of going beyond the simple (albeit mostly correct) narrative of migrants as ordinary, innocent people who simply want a better life for themselves. Rather, it notes how migrants, like the rest of us, care about their own (and their families’) long-term survival and flourishing deeply enough that they can sacrifice their own short-term interest, as well as a number of ethical scruples, in order to make that happen. Arguably, there is a strong selection effect, both for legal and illegal immigration: people who undertake such arduous journeys are the ones with the most to gain and the least to lose, which could tell us something about the sort of people they are. But the basic urges moving them are present in all of us. Many of the people we know would have taken similar decisions under similar circumstances.

Unfortunately, the existing immigration system makes criminals of these migrants, in both senses of the word: it labels the act of unauthorized border-crossing as a crime, and some of the measures that people take to evade detection often involve them committing, or indirectly financing, activities that are criminal in a more objective sense. While the migrants and their facilitators who engage in the latter are in some (albeit not all) cases blameworthy, some part of the blame also falls on those of us who support the existing closed borders system that aims to shutter off such a basic human desire, in full cognizance of the unintended but easily anticipated consequences. (I’ve had a draft post on the ethics of illegal immigration for a while, but it’s not going to be finished any time soon. But you can read my co-blogger Nathan’s take on the subject or our background page on the morality of violating restrictive immigration laws).

#1: Who migrates, how, and why?

The book’s focus is on Cheng Chui Ping (better known as Sister Ping), who owned a modest storefront and restaurant in Chinatown in New York City, but whose main business involved servicing migrants in two ways: facilitating their smuggling into the United States, typically via an intermediate country such as Hong Kong or Thailand, and providing a low-cost service for them to send remittances back home.

The operations managed by Sister Ping, and others with whom she collaborated, were extremely complex. Her money transfer system relied on peer-to-peer movement of money: the person sending money gives it to Sister Ping in New York, and her Chinese counterpart gives the money to her family. Occasionally, she may need to physically transfer some money between her New York City and Fujian operational centers. Banks do the same thing (at least in principle) but bureaucratic and regulatory overhead make them more costly, and moreover, many of Sister Ping’s clients didn’t have bank accounts. Sister Ping’s operation is similar to the Hawala system, an extremely cheap system of money transfer in South Asia, the Middle East, and North Africa.

The people smuggling operation similarly required cooperation from people at different locations. First, people were smuggled from China to a holding country such as Thailand or Hong Kong. Thailand was good for holding because there was a sufficient density of corrupt officers who could be bought to look the other way as people waited en route to the United States. The trip from Thailand to the United States could be undertaken by plane or by ship. Usually, the ships sailed across the Pacific and landed in California. Sometimes, they went via the Indian Ocean, stopping in East Africa or South Africa before setting off across the Atlantic. Since landing directly on the US Coast was tricky, sometimes they would land in one of the Central American countries and then cross by land or by boat.

This operation is pretty nontrivial and involves considerable risk. The money transfer and human smuggling business netted revenues in the billions of dollars annually during their peak, and the gains to the migrants and their families back home were considerably greater.

The smuggling operation was complex and impressive. But more than simply marvel at the ingenuity of the operation, we should note how it often failed people: there were accidents en route that killed people, and often the smuggling operation wasn’t successful. Sometimes people would be caught on arrival. The sad fact is that the closed border system led to much ingenuity, risk, and effort being directed to undoing the damage of closed borders, rather than to moving the world further forward (cf. the parable of the broken window).

The fees for smuggling were high. Even back in the 1980s, smuggling fees could be as high as eighteen thousand dollars. A pretty huge sum. And although the snakeheads like Sister Ping made a profit, the profit margin wasn’t extraordinary: the price was high because the costs and risks were high. So why were migrants willing to pay the fee, and how could they afford it?

The answer to the why is pretty clear: a huge place premium: The pay in Chinatown in New York City, even for somebody doing a menial job and with zero English language skills, was an order of magnitude more than what the person could make in rural Fujian. The male adult of the family could migrate, send remittances home, and work really hard so that his wife and children could enjoy a good standard of living (relative to the other natives) back home. (For more on the network of jobs accessible to these migrants, see this New Yorker piece).

What about the question of how? In short, diaspora dynamics, which in this case literally involves early migrants paying for later migrants. For the most part, smugglers like Sister Ping held migrants who’d just arrived in captivity until their family members and friends within Chinatown had paid the smuggling fee. The migrant was then released and not tracked. He now owed money, but not to Sister Ping, but to his relatives. And that created a stronger incentive system to repay. Either way, Sister Ping didn’t have to track the migrant or worry about what he ended up doing.

But how did the relatives come there in the first place? This is the basic idea of diaspora dynamics: the first few people are unusual in some way: unusually wealthy, unusually enterprising. They either migrated legally or were able to personally finance their unauthorized journey into the United States. Both of these signal some unusualness relative to the reference population they were from. Then they smuggled their relatives in. And they smuggled their relatives in. And so on. This does suggest that, after a few iterations, the selection effects could be somewhat weaker than one might expect a priori.

#2: Non-cooperating countries

A Slate article talks about the importance of spoiler countries and corrupt officials in facilitating the global human smuggling network:

Sister Ping’s operation involved associates in dozens of countries, and corrupt officials in a string of strategic entrepôts. In the early ’90s, she funneled passengers through Bangkok, Thailand, where corrupt airline inspectors turned a blind eye to phony documents. By the late ’90s, she was sending ships full of migrants to the shores of Guatemala, from whence they could proceed overland through Mexico. She didn’t need to worry about the Guatemalan navy. She had them on the payroll.

This was one of the most surprising (and daunting) themes to emerge in my research: If criminal organizations, like multinational corporations, are mobile and opportunistic and can migrate wherever they like, engaging in a kind of jurisdictional arbitrage and seeking out an optimal environment in which to do business, then all it takes is one spoiler country, like Thailand or Guatemala, to render them virtually untouchable. When Sister Ping fled the United States after the Golden Venture incident, she settled in her home village in Fujian Province, where she enjoyed the protection of the Chinese authorities and proceeded to continue running her business for six long years. The FBI knew exactly where she was. But when they asked China to extradite her, Beijing brushed them off.

At least she was confined to China, you might say. But she wasn’t. She traveled all over the world during those years—even, amazingly, to the United States. How? When she was finally arrested in Hong Kong in 2000, she had a passport with her picture and someone else’s name. It was issued by Belize, a classic spoiler country.

Is the existence of spoiler countries a feature or a bug? If you consider the current closed borders system a moral anomaly, then it’s a feature, but if you strongly respect the status quo, it’s a bug. Some might argue countries don’t have the prerogative to be lax about facilitating migration to other countries while strictly enforcing their own migration laws, for that may be hypocritical. I don’t buy that argument. Nonetheless, some of the spoiler countries have relatively lax de facto immigration laws too, in some (albeit not all) senses. Thailand is arguably one such example (more on Thailand in another post).

#3: Sister Ping’s time in China

There is some level of irony in Sister Ping’s relationship with the Chinese government. On the other hand, she lent a helping hand to a large number of people who were escaping political and economic problems created through government policies, including some who were directly persecuted by the government. On that account, we might expect that Chinese government officials would take a negative view of Sister Ping. On the other hand, Sister Ping had helped a lot of people in northern Fujian migrate and become rich, and they had in turn sent back money and enriched their villages back home. This made her a popular figure back home in her region. Even if the government officials’ own feelings for Sister Ping were ambiguous, the people’s love for her made it difficult for the officials to take action against her. It would be a needless risk to their popularity with no upside. But it is ironic that the woman who facilitated so many people from China claiming refuge in the United States spent the latter half of the 1990s seeking refuge in China from the United States regime.

The irony dissipates somewhat by taking a bigger view. People want to be free and comfortable. Free to make choices in their own lives. Free to move elsewhere if those places offer better opportunities. Both the Chinese and the US government have a mixed record when it comes to curtailing those freedoms. The Chinese government’s record is more generally negative: after disastrous experiments with Maoism, the country has liberalized considerably but much progress remains to be made with respect to political and economic freedom. The United States government does a better job in protecting political and economic freedom for people within its territory, but getting in there can be tough (to be fair, the Chinese don’t have a great track record with immigrants either, particularly those from North Korea, who basically have nowhere else to go). Sister Ping and her clients appreciated the United States for its strengths. That’s why she migrated there and helped facilitate her clients’ moves. At the same time, they did not “respect the law” in the cases where it inhibited their basic freedoms. And to the extent that the very flawed Chinese government tolerated Sister Ping, she was happy to seek refuge there.

#4: What motivates people like Sister Ping?

Snakeheads (the people who head the human smuggling operations) differ considerably in their intentions and integrity. But the best among them, such as Sister Ping, seem like upstanding folks. Sister Ping was fairly wealthy. But more than most wealthy people, she had very little opportunity to bask in her wealth. She needed to maintain a very low profile in order to avoid getting noticed by the police, the immigration agencies, and local rival gangsters who might rob her. She generally kept her word to clients. Unlike other snakeheads, she stayed true to her 100% money-back guarantee: in case of a botched operation (even an ultimately successful one) she didn’t charge her clients.

So why did she enter the business? For reasons that, I think, are very similar to the reasons people become entrepreneurs. Ambition, a desire for power, a keen sense for business opportunities, and a desire to have an impact. And a cold, calculating utilitarian ruthlessness. A concern that the balance of her actions was highly positive for her clients, not necessarily that every individual action was beyond reproach. As Keefe (the author of the book I’m drawing on) wrote in The New Yorker:

To the end, Sister Ping remained defiant. Illegal migration is an inherently precarious business. Mattathias Schwartz recently wrote for The New Yorker about the lengths that African migrants will go to wash ashore on the Italian island of Lampedusa, and Jim Dwyer, at the Times, published a heartbreaking piece about the death of a young Ecuadorian girl seeking to reconnect with her parents in the United States. In Sister Ping’s view, the balance of her contributions outweighed the costs. “My life remains valuable,” she insisted, during the sentencing phase of her trial. “It remains valuable.”

In Chinatown, many people seem to agree. Her death was front-page news in New York’s Chinese-language newspapers, with articles describing her “righteousness,” and calling her an “immigration hero.” “Her warmth moved everyone,” a local man who came from her village back in Fujian told the Times.

Over in Silicon Valley, there is a stereotype of the bold entrepreneur who forges ahead bravely, taking risks and not caring for social convention. Perhaps one of the most flamboyant examples of the entrepreneur who’s willing to fight hard, John Galt-style, and doesn’t mind appearing arrogant, is Travis Kalanick, Uber CEO. While some of his business choices are arguably ethically challenged, others seem to be ahead of their time in challenging common but mistaken moral norms (such as the norms against surge pricing). Regardless of the specifics, Kalanick is an impressive entrepreneur: after a decade of working on businesses that failed despite being promising, he didn’t give up, and he got it right the third time, with Uber. This is a man who perservered and it paid off, for him, and the large number of people whose lives have been improved by Uber.

But the risk-reward ratio faced by Kalanick pales compared to what Sister Ping faced. Kalanick may end up a billionaire if Uber continues to execute well. Sister Ping probably had just as much, or perhaps even more, business sense, but because she chose to operate in an underground business, the opportunities to her were limited in scope. She had to adopt even more unsavory tactics than Kalanick, including outright violence. And even though she acquired money, it was far less than what Kalanick could accumulate, and she had little opportunity to live it out lavishly due to other constraints. When it comes to the risks, there is no comparison. Sister Ping spent the last 14 years of her life in prison. Kalanick will at worst have to pony up money in a lawsuit and shut down Uber, and in the median case will probably do pretty well for himself.

The following passages from the book illustrate Sister Ping’s determination and relentless resourcefulness:

Whenever people asked Occhipinti about Sister Ping, he told a story that he thought demonstrated just how untouchable she had become. Early on, he had gone to see her at the apartment in Knickerbocker Village, on Monroe Street. He’d taken along another investigator and an interpreter. Occhipinti didn’t have much to bust her on, but he made it clear to Sister Ping, through the interpreter, that he was on to her and he would get her eventually. To Occhipinti’s surprise, Sister Ping wasn’t fazed in the slightest. “You don’t have the time to get me,” he remembers her saying. “Or the resources.” He made a note of the meeting, and it ended up in Sister Ping’s file. It became part of her lore within the agency. But what always struck Occhipinti about the exchange wasn’t just the arrogance of it, or the insult, so much as the fact that she was right.

Keefe, Patrick Radden (2009-07-15). The Snakehead: An Epic Tale of the Chinatown Underworld and the American Dream (pp. 55-56). Knopf Doubleday Publishing Group. Kindle Edition.

A segment on Sister Ping’s brief jail stint in the early 1990s (distinct from her end-of-life jail stint starting 2000):

Sister Ping did go to prison, in upstate New York. She hated it […] She no doubt was also troubled by the opportunity costs of remaining in jail. Goldenberg had asked that she be permitted to serve her time in a halfway house in New York, arguing that she should be close to her four children, but also that if she was removed from her base of operations in Chinatown, “she would merely languish and her time would not be used profitably.”

[…]

She could still communicate with Yick Tak and the rest of the family in New York City, and as her lawyer had observed, Sister Ping was eager to use her time profitably. The nature of the alien smuggling business, after all, is that there is a pipeline. It sometimes took months to move people from Fuzhou or Changle to Chinatown, so at any given moment there were numerous people at stations along the way: in Shenzhen or Hong Kong, Guatemala or Belize, Tijuana or California, Vancouver or Toronto. “Sister Ping had to keep working from prison,” Patrick Devine explained. “Because when she went in, there were already dozens of people en route to the U.S.”

Keefe, Patrick Radden (2009-07-15). The Snakehead: An Epic Tale of the Chinatown Underworld and the American Dream (pp. 94-95). Knopf Doubleday Publishing Group. Kindle Edition.

But rather than merely admiring the net benefit that Sister Ping may have given her clients, the more important lesson we should take is that our perverse migration restriction regime made it the case that a business that involved such violence and high risk to life and limb was still one with high social value and a decent personal profit opportunity. How much better would the world be if the need for this kind of innovation was eliminated through a more open regime for legal migration? Sister Ping’s innovative energies could then have been directed to creating additional value rather than merely undoing the damage of immigration restrictions (yes, I know I’m repeating myself here).

Addenda

The book is interesting in two other senses that each deserve their own post.

#1: Writers on the subjects of ethnicity, race, culture, and immigration in the United States often describe Chinese immigrants as a model minority, with Mexican and other Hispanic immigrants being contrasted unfavorably with the Chinese. While the case for Chinese superiority cannot be completely ruled out, this book does a good job of deflating the strongest and most exaggerated forms of the myth. Highly selected people who migrate from China through legal channels, and their children, disproportionately inform elite commentators’ impressions of Chinese immigrants. Illegal immigration and human smuggling from China to the United States suffers many of the same qualitative problems that illegal immigration from Mexico and other Latin American countries does. If the United States had a land border with China and an ocean separating it from Mexico, it’s plausible that Mexicans would be touted as the model minority for Chinese to emulate (note also that the population size difference makes it easier to select highly successful Chinese immigrants). More in this OBAG discussion on Facebook.

#2: There is plenty of discussion in the book about various attempts to game the ambiguous rules for refugee status among Sister Ping’s clients. How morally justified were these attempts to stretch the spirit of the rules? This is a topic that requires a post of its own, but the upshot is that almost inevitably, a close examination of each individual case would make one sympathetic to it, even if it did not fit the narrow framework of political persecution reqired to qualify for refugee status. Chapter 13 of the book talks about the People of the Golden Vision, a movement that arose to release a bunch of people who landed ashore in New York City after the ship smuggling them, called the Golden Venture, ran aground. The chapter describes how ordinary Americans, whose prior views on immigration ranged across the spectrum of mainstream views, came to identify with the story of the immigrants. Once people got to hear the people’s stories and interact with them up close, they were convinced that these people should be granted the opportunity to stay in the United States. This is a topic that deserves a separate blog post, since it offers a blueprint of sorts for successful activism in the migration domain, and also provides insight into how actual contact helps resolve people’s moral contradictions in the direction most consistent with a free migration regime.

#3: The relation between human smuggling and organized crime at different levels is worth exploring. The book discusses the connection between snakeheads and local gang activity in Chinatown, with gangs playing important enforcement functions for snakeheads. This too is a topic worth further exploration in a separate post, in the broader context of understanding the role of crime in both the enforcement and the defiance of migration controls.

Related reading