Peenie Wallie

The businessman:
The average legitimate businessman, in any given city, wants to make as much money as possible. This is the foundation of capitalism. The last thing he needs is a lot of competition. So, he needs City Hall to work with him very closely.

The municipal bureaucrat:
City Hall issues permits that allow businesses to operate a taxi company, open a restaurant that sells liquor, guns, or hamburgers. So City Hall weilds a tremendous amount of power, but the people weilding this power are, by and large just faceless, underpaid bureaucrats. So, the situation is ripe for businessmen to collude with city hall to restrict issuing of permits to new competitors.
The businessmen bribe the city employees with whatever they can get away with to make sure that their little economic venture is stable.

But what if the city council won't work with the businessmen? What if they are impervious to corruption, and they just continue to issue licenses and permits to the detriment of the existing businesses? The business people will vote the regime out of office to get a mayor more sympathetic to their needs.

The Police:
Normally, there is a limit to how much even the most servile minions of the municipality can help the business people. For instance, denying legitimate businesses the right to compete in a free market economy is de regiuer. But what about businesses that are themselves illegal? They need protection, just like any legitimate business needs protection, but they frequently need a higher level of protection than even the most jaded of mayors would publicly condone.

Many companies operate illegally, profiting from financial ventures such as gambling, prostitution, drugs, theft, etc. All of these businesses need to be protected, but they can't pick up the phone and dial 911 and say "Someone just stole a shipment of coke from me" or "Guido keeps taking all of my roosters right before a big cockfight."

They need to be protected from the police, not by the police.

Police and Crime:
In Honolulu, when the sun goes down, the whores come out like cockroaches. They stand, perched on clear plastic platform shoes, yards from the police substation at Waikiki, and have sex with strangers for U.S. dollars. The police just wink at them as they pass. This made me wonder what sort of understanding they had with the police. How is it that people can openly run a criminal enterprise within a few yards of the police substation?

As it turns out, the relationship between the police and crime is an interesting one. Any rational policeman in any large city knows for a fact that prostitution, drug abuse, and gambling are activities that can not be prevented. So, police are sort of caught up in this idea that they must wage a war in perpetutity that, as even a casual observer could discern, is not winnable.