The Counter-Economy is vast. Our brief study of economics tells us that this should be no surprise. The more controls and taxation a State imposes on its people, the more they will evade and defy them. Since the United States is one of the less (officially) controlled countries, and the Counter-Economy here is fairly large, the global Counter-Economy should be expected to be even larger — and it is.
U.S. government estimates of the size of just the tax-dodging part of the Counter-Economy is twenty to forty million of the population. The Western European Counter-Economy is larger; in Italy, much of the civil service sits in government offices during the early part of the day and then moonlights at private jobs and business in the afternoon and evening.
Communism collapsed in no small part due to the Counter-Economy. Nearly everything was available in the Counter-Economy with only shoddy goods and shortages in the official social- ist economy. The Soviets called Counter-Economic goods “left-hand” or nalevo and entire manufacturing assembly lines co-existed nalevo with the desultory State industry ones, on the same factory floor. Counter-Economic “capitalists” sold shares in their companies and vacationed in Black Sea resorts. Managers of collective farms who needed a tractor replaced in a hurry look to the Counter-Economy rather than see their kolkhoz collapse awaiting a State tractor delivery. Currently, the Russian government seeks to reestablish State control of the economy by granting monopolies to cronies and imprisoning recalcitrant corporate executives. As with Communism, this flirtation with Fascism is just as doomed to failure.
Nothing works in “right-hand” communism; everything works in the left-hand free market. From “black” market apartments in the Neth- erlands to “black” housing in Argentina, the Counter-Economy is well known to the people of the world as the place to get things otherwise unobtainable — or keep things one has earned. Inflation breeds flight from fiat money; exchange controls have created dual exchange rates in nearly every country on the globe. Whatever the number of local currency units a tourist can get for his dollars at the official exchange rate, he or she can get more on the black market.
Smuggling is so commonplace that nearly all tourists slip purchases past customs agents with- out thinking. Perhaps 20%-30% of Americans fail to report taxable income (actually nearly 100% fail to report at least some); but, in Latin American countries, close to 80% goes uncollected and the State supports itself by ever-greater inflation of the fiat money supply.
The border between Hong Kong and Communist China and even the ocean straits between Taiwan and the mainland bustle with illegal trade. Western DVDs and jeans were once illegally available in most provinces of China — now they’re manufacturing them there!
Saigon, renamed Ho Chi Minh City, remains the black market center of Vietnam. Even more telling, it produces most of the goods and services of all Vietnam. Myanmar’s (Burma’s) rigidly controlled official economy, according to the Manches- ter Guardian, is nothing but paper and the entire market has gone black.
Under the noses of American forces, Afghani tribes grow, process, and ship heroin by the metric tonne. Tax evasion, inflation avoidance, smuggling, free production, and illegal distribution still compose only half the Counter-Economy. Labor flows as freely as capital, as hordes of “illegal aliens” pour across borders from more-statist to less-statist economic regions.
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