The underground economy

The underground economy is fascinating because it involves civil disobedience, desperation or criminal behaviour.

My understanding of the underground economy is that it is economic activity that contradicts some legislation and is thus illegal.  By this definition, people who live on the economic margins may not be participating in the underground economy as most of what they do is not illegal.  How can you break the tax laws if your income is not enough to be taxable?

trapdoorCivil disobedience is a complex subject with lots of moral issues and variations. (Are there other ways of protesting a law?)   I think of it as deliberately disobeying a law because one disagrees with that law.  As most economic legislation works to limit competition so that a few people can make profits they otherwise would not get, there are a lot of unjust economic laws and many opportunities for civil disobedience.  Examples include subsidies, trade restrictions,licensing, copyright and patents.  Legislation that imposes morals, religious values or sexuality upon people who don’t share those values also invites civil disobedience.

Economic civil disobedience  might be more effective if it were organized and stated to be civil disobedience.

Generally people living on welfare are living very close to the subsistence margin.   As the welfare rules tend to be restrictive  the only way these desperate people can get anything extra is to break the rules and/or not declare any extra income they can scrap up.  I think a lot of these people are there through no fault of their own.  They deserve a lot of sympathy and more generous welfare rates.  I believe we should have a collective responsibility to ensure everyone has the opportunity to live the same standard of living as most other people.  Illegal immigrants are also probably here out of desperation or because they are better off here illegally than they were in their home countries.

There is also a double standard in hitting welfare recipients  in that wealthy people are good at ensuring tax legislation has lots of loopholes from which they can benefit.

A third type of underground economic activity is exploitive and/or deliberately criminal.  I am thinking of people who employ illegal immigrants and get away with inhumane working conditions because their employees are afraid of deportation.  We cannot tolerate inhumane working conditions in Canada or the United States although Bangladesh is somehow different.

This post was inspired by a post on a weblog by Eric Hare titled “Cheers for the Underground Economy!”  I wish there were no need for an underground economy although when we hire neighbors to do some little job for us I usually pay in cash.




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