Using 14 national censuses and a wide variety of first-hand accounts, I trace the creation of a largely fictive identity for Japan’s putative outcastes and the transformation of their nominal human rights organization into (on several crucial dimensions) a heavily criminal extortion machine. Scholars have long described the outcastes – the “burakumin” – as descended from a pre-modern leather-workers’ guild. Their members suffer discrimination because their ancestors handled carcasses, and ran afoul of a traditional Japanese obsession with ritual purity. In fact, most burakumin are descended not from leather-workers, but from poor farmers with distinctively dysfunctional norms. Others may or may not have shunned them out of concern for purity, but they certainly would have shunned many of them for their involvement in crime and their disintegrating family structures. The modern transformation of the buraku began in 1922, when self-described Bolsheviks lauched a buraku “liberation” organization. To fit the group within Marxist historical schema, they invented for it the fictive identity as a leather-workers’ guild that continues to this day. Bitter identity politics followed. Within a few years, criminal entrepreneurs hijacked the new organization, and pioneered a shakedown strategy that coupled violent accusations of bias with demands for massive amounts of money. Selective out-migration and spiraling levels of public subsidies ensued. The logic follows straightforwardly from the economic logic outlined by Becker and Hirschman: given ever-larger amounts of (expropriable) subsidies, burakumin with the lowest opportunity costs faced ever-larger incentives to stay in the buraku and invest in criminal careers; given the virulent public hostility that this strategy generated, those burakumin with the highest legitimate career options abandoned the community and merged into the general public instead.