The Shadow Economy, An Interesting Article Options

[JanessaVR]

Greetings, Dumpshockers.

I recall some threads on the shadow economy here recently, and just came across this, rather by chance as a link from a news story. It seemed rather appropriate to some of the discussions here, so I thought I'd pass it along.

The article is: Hiding in the Shadows - The Growth of the Underground Economy

Janessa

[Daylen]

Its what happens with excessive taxation and regulation. When the options are starve or hide economic activity most choose to hide activity. Kind of a big thing in SR obviously.

[JanessaVR]

Its what happens with excessive taxation and regulation. When the options are starve or hide economic activity most choose to hide activity. Kind of a big thing in SR obviously.

That's something along the lines of what I was thinking, as far as the SR world goes. With a high level of social control and omnipresent (and arguably hostile) surveillance, you're just asking for extensive underground markets.

[CanRay]

Cigarette Boats got their name due to the fact that that's what they did, smuggle cigarettes to get around high tariffs.

NASCAR traces it's origin back to Rumrunners outracing the G-Men and other official officers.

A good part of my Advanced Science Class in High School was able to operate the water distillery because of a family history with Moonshining.

[pbangarth]

Its what happens with excessive taxation and regulation. When the options are starve or hide economic activity most choose to hide activity. Kind of a big thing in SR obviously.

The article to which the OP links us argues that these two by themselves are not enough to swell the underground economy.

Shadow economies tend to be smaller in countries where government institutions are strong and efficient. Indeed, some studies have found that it is not higher taxes per se that increase the size of the shadow economy, but ineffectual and discretionary application of the tax system and regulations by governments.

A heavily regulated economy combined with weak and discretionary administration of the law provides especially fertile ground for shadow activities. These are also the conditions under which corruption flourishes.

Few studies empirically investigate the relationship between corruption and the shadow economy, but those that do so observe that countries with more corruption have relatively larger shadow economies. Corruption is essentially the abuse of public power for private benefit.

The suggestion here is that it is an arbitrary and corrupt application of taxes and regulations that encourage shadow economy.

[Manunancy]

The article to which the OP links us argues that these two by themselves are not enough to swell the underground economy.
The suggestion here is that it is an arbitrary and corrupt application of taxes and regulations that encourage shadow economy.

My undestanding is that both high taxes/regulations and arbitrary applications generate shadow economy - but it's the combination of the two that generates the worst examples (which is hardly a surprise).

[snowRaven]

A good part of my Advanced Science Class in High School was able to operate the water distillery because of a family history with Moonshining.

Canadians... (IMG:style_emoticons/default/grinbig.gif)

[bibliophile20]

Handy article; I'm gonna look it over more in depth and update my Shadowrun Seattle Underworld Economy spreadsheet. Thanks!

Hmm... so the Barrens should apparently have a shadow economy making up between 35% and 44% of the total economy. *thoughtful* Interesting; I put it at about 60%. And I was mostly focusing on outright black activities...

[CanRay]

Canadians... (IMG:style_emoticons/default/grinbig.gif)

'Shiner country. There's places like that in the US as well.

[ShadowDragon8685]

Handy article; I'm gonna look it over more in depth and update my Shadowrun Seattle Underworld Economy spreadsheet. Thanks!

Hmm... so the Barrens should apparently have a shadow economy making up between 35% and 44% of the total economy. *thoughtful* Interesting; I put it at about 60%. And I was mostly focusing on outright black activities...

Does the article account for the complete and near complete breakdown of social order in the barrens? I don't imagine that Stuffer Shacks are all that common in Redmond or Puyallup.

[snowRaven]

'Shiner country. There's places like that in the US as well.

I've been to the US. There ain't any place in the US like Canada...

[CanRay]

I've been to the US. There ain't any place in the US like Canada...

Toronto tries. (IMG:style_emoticons/default/nyahnyah.gif)

[Froggie]

Toronto tries. (IMG:style_emoticons/default/nyahnyah.gif)

(IMG:style_emoticons/default/twirl.gif)

I personally think that there are stuffershacks and the like in Redmond or Puyallup but only on the 'edges' like Tarislar, Puyallup city or touristville.

In the Z zone areas.. further out, maybe? They'd have to be heavily modified and automated. Maybe bunker like vending machines? Oh well, another topic for a different thread.

[pbangarth]

I've been to the US. There ain't any place in the US like Canada...

Toronto tries. (IMG:style_emoticons/default/nyahnyah.gif)

Bah. New York tries to be like Toronto.

[Manunancy]

In the Z zone areas.. further out, maybe? They'd have to be heavily modified and automated. Maybe bunker like vending machines? Oh well, another topic for a different thread.

For a Z-zone gang, a bunkered vending machine is likely to be viewed as a combined challenge, hold of lootable content and source of spare parts rolled in one conveniently immobile and unattended package. When some gangs can have antitank weaponry amongst their stockpiles, that's a losing proposition.

It would probably be far more cost-effective to sell in bulk to a gang and let them and their flunkies handle the retail side of the chain - if they get wiped out, you reconduct the deal with the wipers at no extra cost. That's a business model that works just fine for drugs, it can work for more mundane stuff, even if the profit margin is lower.

[maine75man]

The article to which the OP links us argues that these two by themselves are not enough to swell the underground economy.
The suggestion here is that it is an arbitrary and corrupt application of taxes and regulations that encourage shadow economy.

That makes sense. An arbitrary or corrupt system leaves more opportunities to try to get around taxation. A well run and sensible system would generally be perceived as the cost of doing business, unpleasant but also unavoidable. Of course what is sensible to one person is often arbitrary to another.

What I found interesting is that they consider barter to be shadow economics. In rural Maine that's always been a healthy chunk of the local economy. Maybe that's one reason our local economy isn't that healthy. (IMG:style_emoticons/default/smile.gif)

[pbangarth]

What I found interesting is that they consider barter to be shadow economics. In rural Maine that's always been a healthy chunk of the local economy. Maybe that's one reason our local economy isn't that healthy. (IMG:style_emoticons/default/smile.gif)

I remember once in the early days of his law practice, my brother got paid in chickens.

[CanRay]

The only issue is, in Shadowrun, if you stiff someone in barter, they'll pay you back in bullets.

Very, very quickly. At very high velocities.

[snowRaven]

Bah. New York tries to be like Toronto.

I doubt any lawyers in New York get paid in chickens...

[maine75man]

I doubt any lawyers in New York get paid in chickens...

Haven't you heard chickens are the new cool pet here in America. (IMG:style_emoticons/default/smile.gif) People are fighting for the right to keep chickens in cities. Not in the slums but the posh neighborhoods to.

[Daylen]

The article to which the OP links us argues that these two by themselves are not enough to swell the underground economy.
The suggestion here is that it is an arbitrary and corrupt application of taxes and regulations that encourage shadow economy.

Countries with strong and "efficient" governments only have such because of a healthy private sector. Their conclusions are based on bass ackwards thinking. Plus they admit many times in there, for good reason, that data on shadow economies is not exactly a complete set. By fairly simple logic its easy to discern that data from countries with strong "efficient" governments will be hard to come by as people engaging in such an economy MUST hide it very well. If you buy their argument I'd bet your not from an area with lots of moonshine.

[toturi]

Countries with strong and "efficient" governments only have such because of a healthy private sector. Their conclusions are based on bass ackwards thinking. Plus they admit many times in there, for good reason, that data on shadow economies is not exactly a complete set. By fairly simple logic its easy to discern that data from countries with strong "efficient" governments will be hard to come by as people engaging in such an economy MUST hide it very well. If you buy their argument I'd bet your not from an area with lots of moonshine.

There is very little moonshine where I come from.

[CanRay]

There's more to "Black Economies" than Moonshine. It's the traditional one in Canada and the US, however, and is usually given as an example.

Then again, homebrewed spirits has been around as long as mankind.

[maine75man]

Countries with strong and "efficient" governments only have such because of a healthy private sector. Their conclusions are based on bass ackwards thinking.

I always thought a healthy private sector couldn't develope under a corrupt arbitrary government. You know the whole personal security and predictable legal system encouraging investment and entrepreneurship. Did Econ 101 get it bass ackwards? (IMG:style_emoticons/default/smile.gif)

[Daylen]

I always thought a healthy private sector couldn't develope under a corrupt arbitrary government. You know the whole personal security and predictable legal system encouraging investment and entrepreneurship. Did Econ 101 get it bass ackwards? (IMG:style_emoticons/default/smile.gif)

I think you misunderstood me. I'm not saying a corrupt government is good for the private sector, just that a powerful government is not what causes the economy to be good; if it was North Korea and the former USSR would have the best economies.