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Description:
Black market
A market in which certain goods or services are routinely traded in
a manner contrary to the laws or regulations of the government in power.
Typical reasons why the market goes underground in this way include
the desire by substantial numbers of buyers and sellers to evade restrictive
government price controls or inconvenient rationing schemes, to avoid
paying heavy taxes on the good or service in question, or simply to
be able to obtain forbidden goods or services that the government does
not want the people to have at all. The size and relative importance
of black markets vary greatly from one country to another and from one
historical period to the next within any single country. In general,
the greater the extent to which the government tries to dominate and
control the economy, the larger the fraction of economic activity that
takes place through the black market can be expected to be. Partially
offsetting this tendency of more interventionist policies to spawn ever
larger black markets, the size of the black market in any given country
at any given time also reflects the size and effectiveness of the bureaucratic
machinery the government mobilizes to catch people who violate its economic
regulations and the severity of the punishments that are routinely inflicted
on those who get caught. Thus it was surely no accident that the ultra-highly
regulated economic institutions of Nazi Germany, Soviet Russia, Eastern
Europe and Communist China coexisted in symbiosis with gigantic regulatory
and secret police establishments, extensive informer networks, crowded
prison systems featuring thousands of slave labor camps, and frequent
imposition of the death penalty for so-called "economic crimes."
The Nazi regime was destroyed by World War II before it was old enough
to undergo any very extensive modifications, but it was surely no accident
that even the first very tentative and partial gestures by the various
Communist regimes to abolish or restrain many of their more extreme
"police-state" practices during these last few decades quickly
resulted in an enormous expansion of black market activity, despite
the fact that these governments were also just beginning to loosen up
their control of the economy at the same time.
In the United States, government efforts to regulate and micro-manage
the economy have historically been much less extensive than in Communist
or socialist countries. In fact, the American commitment to the general
ideal of "free enterprise" has typically been considerably
stronger than has been the case in virtually all of the more advanced
industrialized Western countries. Nevertheless, we can easily identify
at least a few rather large examples of the black market in the United
States. First of all, the US government has typically been more ambitious
and aggressive in its attempts to regulate and control economic activities
during times of perceived national crisis (especially during wartime).
World War II rationing and price controls were accompanied by extensive
black market activity involving illegal dealings in meat, sugar, automobile
parts, penicillin and other regulated commodities as well as widespread
evasion of rent controls. Even in relatively normal times, however,
there are important areas of black market activity in the US economy.
First of all, and most clearly "criminal" in the eyes of the
general public, there is always a certain amount of illicit trade in
stolen goods passed on directly (or indirectly, through "fences")
from burglars, jewel thieves, cattle rustlers, hijackers, shoplifters,
light-fingered employees, and the like. In addition, black market trade
remains very widespread (and probably still is growing) in certain demerit
goods which remain strongly in demand, even though federal and/or state
governments have sought to prohibit them entirely (narcotics and most
other psychoactive recreational drugs, hard-core pornography, the services
of prostitutes, false i.d. cards, ozone-depleting Freon for automobile
air conditioners, Cuban cigars, the gall bladders of bears, products
made from elephant tusks) or to monopolize the product in government
hands (running of lotteries-for-profit, fully automatic firearms) or
to tax them very heavily in a discriminatory fashion (moonshine whiskey,
bootleg cigarettes). Heavy rates of taxation on otherwise perfectly
legitimate wages, salaries, and unincorporated small business profits
(currently a minimum federal tax take of 18% for income tax plus more
than 15% for social security tax, even before beginning to tally up
state and local income taxes and license fees) provide strong incentives
for illegal working "off the books" for cash to evade taxes,
at least in low capital or temporary service occupations where government
detection is unlikely and/or punishment would probably be mild (lawn
care services, free-lance handymen, automobile mechanics, household
servants, baby-sitters, plumbers, electricians, part-time beauticians,
locksmiths, appliance repairmen, temporary day-laborers, computer consultants,
tutors, etc.). Putting even an approximate number on the full extent
of black market activity in the US (or in any country) is very hard
to do and necessarily rather imprecise, but, for what it is worth, economists
who have made serious and systematic efforts at estimation claim that
black market activity probably amounts to at least 10% of US GNP. In
many Third World countries (which tend to put a tremendous number of
detailed economic regulations on the books but have only very inefficient
bureaucratic capabilities for enforcing them), black market activity
is believed to produce well over half of GNP.
Chicago
New York
Baltimore
Cincinatti
Precarious
|
Description:
Black market
A market in which certain goods or services are routinely traded in
a manner contrary to the laws or regulations of the government in power.
Typical reasons why the market goes underground in this way include
the desire by substantial numbers of buyers and sellers to evade restrictive
government price controls or inconvenient rationing schemes, to avoid
paying heavy taxes on the good or service in question, or simply to
be able to obtain forbidden goods or services that the government does
not want the people to have at all. The size and relative importance
of black markets vary greatly from one country to another and from one
historical period to the next within any single country. In general,
the greater the extent to which the government tries to dominate and
control the economy, the larger the fraction of economic activity that
takes place through the black market can be expected to be. Partially
offsetting this tendency of more interventionist policies to spawn ever
larger black markets, the size of the black market in any given country
at any given time also reflects the size and effectiveness of the bureaucratic
machinery the government mobilizes to catch people who violate its economic
regulations and the severity of the punishments that are routinely inflicted
on those who get caught. Thus it was surely no accident that the ultra-highly
regulated economic institutions of Nazi Germany, Soviet Russia, Eastern
Europe and Communist China coexisted in symbiosis with gigantic regulatory
and secret police establishments, extensive informer networks, crowded
prison systems featuring thousands of slave labor camps, and frequent
imposition of the death penalty for so-called "economic crimes."
The Nazi regime was destroyed by World War II before it was old enough
to undergo any very extensive modifications, but it was surely no accident
that even the first very tentative and partial gestures by the various
Communist regimes to abolish or restrain many of their more extreme
"police-state" practices during these last few decades quickly
resulted in an enormous expansion of black market activity, despite
the fact that these governments were also just beginning to loosen up
their control of the economy at the same time.
In the United States, government efforts to regulate and micro-manage
the economy have historically been much less extensive than in Communist
or socialist countries. In fact, the American commitment to the general
ideal of "free enterprise" has typically been considerably
stronger than has been the case in virtually all of the more advanced
industrialized Western countries. Nevertheless, we can easily identify
at least a few rather large examples of the black market in the United
States. First of all, the US government has typically been more ambitious
and aggressive in its attempts to regulate and control economic activities
during times of perceived national crisis (especially during wartime).
World War II rationing and price controls were accompanied by extensive
black market activity involving illegal dealings in meat, sugar, automobile
parts, penicillin and other regulated commodities as well as widespread
evasion of rent controls. Even in relatively normal times, however,
there are important areas of black market activity in the US economy.
First of all, and most clearly "criminal" in the eyes of the
general public, there is always a certain amount of illicit trade in
stolen goods passed on directly (or indirectly, through "fences")
from burglars, jewel thieves, cattle rustlers, hijackers, shoplifters,
light-fingered employees, and the like. In addition, black market trade
remains very widespread (and probably still is growing) in certain demerit
goods which remain strongly in demand, even though federal and/or state
governments have sought to prohibit them entirely (narcotics and most
other psychoactive recreational drugs, hard-core pornography, the services
of prostitutes, false i.d. cards, ozone-depleting Freon for automobile
air conditioners, Cuban cigars, the gall bladders of bears, products
made from elephant tusks) or to monopolize the product in government
hands (running of lotteries-for-profit, fully automatic firearms) or
to tax them very heavily in a discriminatory fashion (moonshine whiskey,
bootleg cigarettes). Heavy rates of taxation on otherwise perfectly
legitimate wages, salaries, and unincorporated small business profits
(currently a minimum federal tax take of 18% for income tax plus more
than 15% for social security tax, even before beginning to tally up
state and local income taxes and license fees) provide strong incentives
for illegal working "off the books" for cash to evade taxes,
at least in low capital or temporary service occupations where government
detection is unlikely and/or punishment would probably be mild (lawn
care services, free-lance handymen, automobile mechanics, household
servants, baby-sitters, plumbers, electricians, part-time beauticians,
locksmiths, appliance repairmen, temporary day-laborers, computer consultants,
tutors, etc.). Putting even an approximate number on the full extent
of black market activity in the US (or in any country) is very hard
to do and necessarily rather imprecise, but, for what it is worth, economists
who have made serious and systematic efforts at estimation claim that
black market activity probably amounts to at least 10% of US GNP. In
many Third World countries (which tend to put a tremendous number of
detailed economic regulations on the books but have only very inefficient
bureaucratic capabilities for enforcing them), black market activity
is believed to produce well over half of GNP.
Chicago
New York
Baltimore
Cincinatti
Precarious |
Description:
Black market
A market in which certain goods or services are routinely traded in
a manner contrary to the laws or regulations of the government in power.
Typical reasons why the market goes underground in this way include
the desire by substantial numbers of buyers and sellers to evade restrictive
government price controls or inconvenient rationing schemes, to avoid
paying heavy taxes on the good or service in question, or simply to
be able to obtain forbidden goods or services that the government does
not want the people to have at all. The size and relative importance
of black markets vary greatly from one country to another and from one
historical period to the next within any single country. In general,
the greater the extent to which the government tries to dominate and
control the economy, the larger the fraction of economic activity that
takes place through the black market can be expected to be. Partially
offsetting this tendency of more interventionist policies to spawn ever
larger black markets, the size of the black market in any given country
at any given time also reflects the size and effectiveness of the bureaucratic
machinery the government mobilizes to catch people who violate its economic
regulations and the severity of the punishments that are routinely inflicted
on those who get caught. Thus it was surely no accident that the ultra-highly
regulated economic institutions of Nazi Germany, Soviet Russia, Eastern
Europe and Communist China coexisted in symbiosis with gigantic regulatory
and secret police establishments, extensive informer networks, crowded
prison systems featuring thousands of slave labor camps, and frequent
imposition of the death penalty for so-called "economic crimes."
The Nazi regime was destroyed by World War II before it was old enough
to undergo any very extensive modifications, but it was surely no accident
that even the first very tentative and partial gestures by the various
Communist regimes to abolish or restrain many of their more extreme
"police-state" practices during these last few decades quickly
resulted in an enormous expansion of black market activity, despite
the fact that these governments were also just beginning to loosen up
their control of the economy at the same time.
In the United States, government efforts to regulate and micro-manage
the economy have historically been much less extensive than in Communist
or socialist countries. In fact, the American commitment to the general
ideal of "free enterprise" has typically been considerably
stronger than has been the case in virtually all of the more advanced
industrialized Western countries. Nevertheless, we can easily identify
at least a few rather large examples of the black market in the United
States. First of all, the US government has typically been more ambitious
and aggressive in its attempts to regulate and control economic activities
during times of perceived national crisis (especially during wartime).
World War II rationing and price controls were accompanied by extensive
black market activity involving illegal dealings in meat, sugar, automobile
parts, penicillin and other regulated commodities as well as widespread
evasion of rent controls. Even in relatively normal times, however,
there are important areas of black market activity in the US economy.
First of all, and most clearly "criminal" in the eyes of the
general public, there is always a certain amount of illicit trade in
stolen goods passed on directly (or indirectly, through "fences")
from burglars, jewel thieves, cattle rustlers, hijackers, shoplifters,
light-fingered employees, and the like. In addition, black market trade
remains very widespread (and probably still is growing) in certain demerit
goods which remain strongly in demand, even though federal and/or state
governments have sought to prohibit them entirely (narcotics and most
other psychoactive recreational drugs, hard-core pornography, the services
of prostitutes, false i.d. cards, ozone-depleting Freon for automobile
air conditioners, Cuban cigars, the gall bladders of bears, products
made from elephant tusks) or to monopolize the product in government
hands (running of lotteries-for-profit, fully automatic firearms) or
to tax them very heavily in a discriminatory fashion (moonshine whiskey,
bootleg cigarettes). Heavy rates of taxation on otherwise perfectly
legitimate wages, salaries, and unincorporated small business profits
(currently a minimum federal tax take of 18% for income tax plus more
than 15% for social security tax, even before beginning to tally up
state and local income taxes and license fees) provide strong incentives
for illegal working "off the books" for cash to evade taxes,
at least in low capital or temporary service occupations where government
detection is unlikely and/or punishment would probably be mild (lawn
care services, free-lance handymen, automobile mechanics, household
servants, baby-sitters, plumbers, electricians, part-time beauticians,
locksmiths, appliance repairmen, temporary day-laborers, computer consultants,
tutors, etc.). Putting even an approximate number on the full extent
of black market activity in the US (or in any country) is very hard
to do and necessarily rather imprecise, but, for what it is worth, economists
who have made serious and systematic efforts at estimation claim that
black market activity probably amounts to at least 10% of US GNP. In
many Third World countries (which tend to put a tremendous number of
detailed economic regulations on the books but have only very inefficient
bureaucratic capabilities for enforcing them), black market activity
is believed to produce well over half of GNP.
Chicago
New York
Baltimore
Cincinatti
Precarious |