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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
QUOTE (Daylen @ Feb 23 2012, 06:15 PM) *
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
QUOTE (Daylen @ Feb 23 2012, 09:15 PM) *
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.
QUOTE
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
QUOTE (pbangarth @ Feb 24 2012, 06:54 AM) *
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
QUOTE (CanRay @ Feb 24 2012, 05:43 AM) *
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... 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
QUOTE (snowRaven @ Feb 24 2012, 04:54 AM) *
Canadians... grinbig.gif
'Shiner country. There's places like that in the US as well.
ShadowDragon8685
QUOTE (bibliophile20 @ Feb 24 2012, 10:15 AM) *
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
QUOTE (CanRay @ Feb 24 2012, 07:18 PM) *
'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
QUOTE (snowRaven @ Feb 24 2012, 03:22 PM) *
I've been to the US. There ain't any place in the US like Canada...
Toronto tries. nyahnyah.gif
Froggie
QUOTE (CanRay @ Feb 24 2012, 05:42 PM) *
Toronto tries. nyahnyah.gif


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
QUOTE (snowRaven @ Feb 24 2012, 02:22 PM) *
I've been to the US. There ain't any place in the US like Canada...

QUOTE (CanRay @ Feb 24 2012, 05:42 PM) *
Toronto tries. nyahnyah.gif

Bah. New York tries to be like Toronto.
Manunancy
QUOTE (Froggie @ Feb 25 2012, 12:10 AM) *
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
QUOTE (pbangarth @ Feb 24 2012, 12:54 AM) *
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. smile.gif
pbangarth
QUOTE (maine75man @ Feb 25 2012, 01:07 AM) *
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. 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
QUOTE (pbangarth @ Feb 25 2012, 06:59 AM) *
Bah. New York tries to be like Toronto.


I doubt any lawyers in New York get paid in chickens...
maine75man
QUOTE (snowRaven @ Feb 25 2012, 04:50 AM) *
I doubt any lawyers in New York get paid in chickens...

Haven't you heard chickens are the new cool pet here in America. smile.gif People are fighting for the right to keep chickens in cities. Not in the slums but the posh neighborhoods to.
Daylen
QUOTE (pbangarth @ Feb 24 2012, 05:54 AM) *
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
QUOTE (Daylen @ Feb 26 2012, 06:28 AM) *
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
QUOTE (Daylen @ Feb 25 2012, 05:28 PM) *
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? smile.gif
Daylen
QUOTE (maine75man @ Feb 26 2012, 12:55 AM) *
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? 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.
CanRay
It's a lot of things that makes a good economy... Very complex.
Daylen
QUOTE (CanRay @ Feb 26 2012, 12:48 AM) *
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.

Aye, I've seen all sorts of things sold with no taxes paid where one would normally expect taxes.
maine75man
QUOTE (Daylen @ Feb 25 2012, 08:05 PM) *
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.


Ah I see where your coming from, but there is a difference between authoritarian/strong and predictable/efficient. Both of your examples are two of the most corrupt governments in history. Loaded with graft, favoritism, and inefficiency. That unpredictability IMO is a major cause of the economic woes both governments have suffered. In comparison some authoritarian regimes actually put a lot of effort into stamping out corruption of that sort. Even though they aren't nice places to live the economy can often do well. Nazi Germany or modern Uzbekistan are examples, evil totalitarian fraggers but fairly good economic growth.
CanRay
QUOTE (Daylen @ Feb 25 2012, 09:08 PM) *
Aye, I've seen all sorts of things sold with no taxes paid where one would normally expect taxes.
Screwing over the Revenuers is an age old tradition. There's some folks that do it morally, however.

"We paid our taxes on the corn we used to make our liquor!"
kzt
QUOTE (maine75man @ Feb 25 2012, 05:55 PM) *
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? smile.gif

Yup. That's how you get Greece.

Antonopoulos and his partners spent hours collecting papers from tax offices, the Athens Chamber of Commerce and Industry, the municipal service where the company is based, the health inspector’s office, the fire department and banks. At the health department, they were told that all the shareholders of the company would have to provide chest X-rays, and, in the most surreal demand of all, stool samples.

Once they climbed the crazy mountain of Greek bureaucracy and reached the summit, they faced the quagmire of the bank, where the issue of how to confirm the credit card details of customers ended in the bank demanding that the entire website be in Greek only, including the names of the products.

“They completely ignored us, however much we explained that our products are aimed at foreign markets and everything has to be written in English as well,” said Antonopoulos.
CanRay
The stool samples makes sense to me. If I had to jump through all those hoops, I'd want to drek on them myself! And the webpage language thing strikes me of the Quebec Language Laws...
ShadowDragon8685
QUOTE (kzt @ Feb 26 2012, 01:29 AM) *
Yup. That's how you get Greece.

Antonopoulos and his partners spent hours collecting papers from tax offices, the Athens Chamber of Commerce and Industry, the municipal service where the company is based, the health inspector’s office, the fire department and banks. At the health department, they were told that all the shareholders of the company would have to provide chest X-rays, and, in the most surreal demand of all, stool samples.

Once they climbed the crazy mountain of Greek bureaucracy and reached the summit, they faced the quagmire of the bank, where the issue of how to confirm the credit card details of customers ended in the bank demanding that the entire website be in Greek only, including the names of the products.

“They completely ignored us, however much we explained that our products are aimed at foreign markets and everything has to be written in English as well,” said Antonopoulos.


That... That seems labyrinthine and insane.

Why in the hell would you need to submit chest X-rays and stool samples to open an online store selling olives?!

And the bank... That's just retarded. You can't sell to someone if they can't read your website.

kzt
Perhaps you'd prefer to open an ice cream parlor in San Francisco? A Lemonade stand in NYC?

Bureaucracies like these exists solely to further expand their control of every part of people's lives. The answer to any failing is more laws, more goverment employees and more money.

To a large extent the whole "corporation are king" craziness that underlies SR actually won't produce this kind of insanity, because the government doesn't have nearly as much money as they did and the Corps are not going to stand for this. Profit oriented companies in cut throat competition can do a lot of crazy and evil things, but employing hordes of highly paid people to prevent themselves from doing anything isn't one of them.
ShadowDragon8685
QUOTE (kzt @ Feb 26 2012, 02:18 AM) *
Perhaps you'd prefer to open an ice cream parlor in San Francisco? A Lemonade stand in NYC?

Bureaucracies like these exists solely to further expand it's control of every part of people's lives. The answer to any failing is more laws, more government employee and more money.


Bureaucracies exist to impose reasonable order and regulation. The alternative to strong bureaucracies include Making Shirtwaists and Pumping Petroleum.


Can bureaucracy get carried away? Yes. It's ridiculous that in a district packed with businesses, the city should impose the cost of creating a detailed map of existing businesses on a would-be entrepreneur, and it's equally tragically comical that the full regulations involved in opening an actual restaurant or food cart should be imposed on a couple of kids.

But that doesn't mean that bureaucracy exists to control people's lives, and the absence of bureaucracy is far, far worse.

QUOTE (kzt @ Feb 26 2012, 02:18 AM) *
To a large extent the whole "corporation are king" craziness that underlies SR actually won't produce this kind of insanity, because the government doesn't have nearly as much money as they did and the Corps are not going to stand for this. Profit oriented companies in cut throat competition can do a lot of crazy and evil things, but employing hordes of highly paid people to prevent themselves from doing anything isn't one of them.


Case in point. Frankly, I'd rather businesses be regulated within an inch of their lives than let any business start to achieve megacorporate authority ala the British East India Company or any given Extraterritorial Megacorp from Shadowrun.
kzt
QUOTE (ShadowDragon8685 @ Feb 26 2012, 12:29 AM) *
But that doesn't mean that bureaucracy exists to control people's lives, and the absence of bureaucracy is far, far worse.

It's true, the absence of a zoning bureaucracy has relegated Houston to being only the 5th largest city in the US, with only the second highest growth in jobs in the US. Too bad they are not like San Francisco, with SF city goverment pension spending growing at the rate of 66,733% per decade.

You'll notice I said "bureaucracies like these". Essentially the people running these cities think that "trees grow to the sky" and they can continue to impose an ever increasing burden of taxes and regulations on the citizens and businesses without any adverse impact. I suspect that they are wrong.
CanRay
Great, I'm getting memories of my own days in the paperwork mines...
Daylen
QUOTE (maine75man @ Feb 26 2012, 04:33 AM) *
Ah I see where your coming from, but there is a difference between authoritarian/strong and predictable/efficient. Both of your examples are two of the most corrupt governments in history. Loaded with graft, favoritism, and inefficiency. That unpredictability IMO is a major cause of the economic woes both governments have suffered. In comparison some authoritarian regimes actually put a lot of effort into stamping out corruption of that sort. Even though they aren't nice places to live the economy can often do well. Nazi Germany or modern Uzbekistan are examples, evil totalitarian fraggers but fairly good economic growth.

Taking other people's stuff (National Socialists in Germany) does help economic growth, but I'm not sure I'd call that a healthy economy. However, the economic growth was mostly superficial and government growth. Not long ago the history channel did a fair documentary showing things got worse for most people under NAZIs economically.
Daylen
QUOTE (kzt @ Feb 26 2012, 08:18 AM) *
Perhaps you'd prefer to open an ice cream parlor in San Francisco? A Lemonade stand in NYC?

Bureaucracies like these exists solely to further expand their control of every part of people's lives. The answer to any failing is more laws, more goverment employees and more money.

To a large extent the whole "corporation are king" craziness that underlies SR actually won't produce this kind of insanity, because the government doesn't have nearly as much money as they did and the Corps are not going to stand for this. Profit oriented companies in cut throat competition can do a lot of crazy and evil things, but employing hordes of highly paid people to prevent themselves from doing anything isn't one of them.


Oh not true, this kind of bs HELPS big business because it limits access to markets. I'd expect it would take 5 years of paperwork and studies costing millions of dollars to open a lemonade stand legally in SR, that way the only source (legally anyway) is the local Ares subsidiary Thirsty-Shack! Where a bottle of lemonade is 10 nuYen.
Daylen
QUOTE (ShadowDragon8685 @ Feb 26 2012, 08:29 AM) *
...
But that doesn't mean that bureaucracy exists to control people's lives, and the absence of bureaucracy is far, far worse....

What? Freedom? The East India Company was a mandate of the crown making it effectively a collusion of bureaucracy and private enterprise. Without bureaucracy we simply have laws, lawmakers and courts, it worked well in the USA and colonies(that became USA). No East India company there for the most part. Of course bureaucracy is essential for SR to get the proper Orwellian feeling.
Wakshaani
Careful with the real-world politics, guys. The mods take a dim view of that.

Meanwhile, Shadow Economies!

Some of the softer examples include babysitters, where transactions are made in cash and no records are kept, lawn care (ditto), and shade-tree mechanics, where a guy you know will do some work for you. You'll see it with some shady business types. (When we had our cable installed, for example, the cable guy offered to give us a couple more connections that wouldn't be on the bill if we gave him $40. We didn't accept the deal, but I wonder how many others do?)

Bigger examples are what people usually think of, corrupt cops, policemen on the take, insurance fraud, are less common but more damaging to a society. Even the old guild-style format, where contracts are made between associates, rather than the best price, fall under this; a few people who attended Yale together, for instance, help one another out, or the Japanese Zaibatsu. Of course, that's more corruption than a true shadow economy, because the business practices are collusion, but no 'secret' money shuffles around.

Essentially, anything that happens 'off the books' with cash and no paper trail equates the shadow economy, some of which is relatively harmless (Here's $10 to mow my yard, kid), some not terribly damaging (I can't afford to pay you minimum wage, but I'll give you $200 a week in cash), and some quite damaging (Here's the money we brought in from drug sales this week, boss.)

People tend to not think about the more harmless stuff, but, it still counts.
CanRay
Stuff falling off the back of a truck...
kzt
QUOTE (Wakshaani @ Feb 26 2012, 08:59 AM) *
r the Japanese Zaibatsu.

SR Megacorps are Zaibatsu. Or what the original writers thought was a Zaibatsu, because they missed the whole banking part of it.
Daylen
QUOTE (kzt @ Feb 26 2012, 05:43 PM) *
SR Megacorps are Zaibatsu. Or what the original writers thought was a Zaibatsu, because they missed the whole banking part of it.

It was much closer in earlier editions. Now with things like Horizon with little to know presence in manufacturing...
maine75man
QUOTE (Daylen @ Feb 26 2012, 10:11 AM) *
Taking other people's stuff (National Socialists in Germany) does help economic growth, but I'm not sure I'd call that a healthy economy. However, the economic growth was mostly superficial and government growth. Not long ago the history channel did a fair documentary showing things got worse for most people under NAZIs economically.


I absolutely agree with most of that. Evil turds, immoral practices, terrible place to live, but National Socialism took a broken economy and bankrupt government and created a nation that nearly conquered half the planet. Was it healthy growth no probably not. Steroids aren't a healthy way to get stronger but that doesn't matter much when someone in a roid rage is pounding you to a pulp.

Any way my point is shadow economies thrive in situations where the benefit of the activity outweigh the expected penalty. In Authoritarian governments riddled with graft getting caught usually means paying a few more bribes. Once an oppressive regime hits that ruthlessly efficient phase getting caught means a lot worse.

On the other hand above board business can only thrive when rules are enforced predictably. Even harsh and Byzantine laws are preferable to no law at all. You can't expect a return on your investment if contracts are enforced by judges on the take.

Daylen
QUOTE (maine75man @ Feb 26 2012, 08:15 PM) *
...
On the other hand above board business can only thrive when rules are enforced predictably. Even harsh and Byzantine laws are preferable to no law at all. You can't expect a return on your investment if contracts are enforced by judges on the take.

Sure you can, just make sure the judges are on the take from you. In both cases there will be someone taking a bribe, its just a question of the form of the bribe, personal and to the judge or formalized as a license/permit and paid to a bureaucrat who will put it into a system where its spread out among a bunch of government workers.
maine75man
QUOTE (Daylen @ Feb 26 2012, 02:32 PM) *
Sure you can, just make sure the judges are on the take from you. In both cases there will be someone taking a bribe, its just a question of the form of the bribe, personal and to the judge or formalized as a license/permit and paid to a bureaucrat who will put it into a system where its spread out among a bunch of government workers.

The difference being when you pay for a permit you get a receipt. Or try getting a bank loan with a line item for Judicial Bribes in your business plan.
More to the point bureaucratic fee's are predicable and accountable by definition. Bribes are not. You can't predict how much you have to pay and you can't sue for redress if the graft recipient doesn't hold up their end of the bargain. And people will not want to invest in your business if they know you can void the contract by sending a couple of hookers into the Judges chamber.

The importance isn't in the fairness or how reasonable the rules are its their predictability. Take the example of opening up a Lemonade stand in NYC. It seems totally unreasonable but it hasn't prevented the recent food truck renaissance there. In fact one could argue that by limiting the market to only serious entrepreneurs food trucks become more sound investments because they don't have to compete with random fly by night businesses. Keeping shadow economies from impinging on legitimate business.

Also no zoning sounds great for business. But do you really want a pig farm opening up next to your restaurant. Or invest in real estate knowing anyone could build a roller coaster right outside your vacation home's window out of spite.
CanRay
QUOTE (Daylen @ Feb 26 2012, 02:23 PM) *
It was much closer in earlier editions. Now with things like Horizon with little to know presence in manufacturing...
Actually, Horizon and Evo are fighting over the Metahuman-Modified/Non-Metahuman-Modified marketplace. But, yes, Horizon's primary domain is non-physical items.

But you better believe they build their own stuff for a lot of things, rather than rely on competitors' goods.
Blade
QUOTE (kzt @ Feb 26 2012, 08:18 AM) *
To a large extent the whole "corporation are king" craziness that underlies SR actually won't produce this kind of insanity, because the government doesn't have nearly as much money as they did and the Corps are not going to stand for this. Profit oriented companies in cut throat competition can do a lot of crazy and evil things, but employing hordes of highly paid people to prevent themselves from doing anything isn't one of them.

I'm not so sure. You can't avoid bureaucracy. Even criminal syndicates end up with large and complex bureaucracy once they get big.
I expect megacorporations to have many employees who don't even know what they're supposed to do, but pretend to anyway.
CanRay
QUOTE (Blade @ Feb 27 2012, 06:09 AM) *
I'm not so sure. You can't avoid bureaucracy. Even criminal syndicates end up with large and complex bureaucracy once they get big.
I expect megacorporations to have many employees who don't even know what they're supposed to do, but pretend to anyway.
“Every revolution evaporates and leaves behind only the slime of a new bureaucracy.” - Franz Kafka
maine75man
QUOTE (Blade @ Feb 27 2012, 05:09 AM) *
I'm not so sure. You can't avoid bureaucracy. Even criminal syndicates end up with large and complex bureaucracy once they get big.
I expect megacorporations to have many employees who don't even know what they're supposed to do, but pretend to anyway.


Well there is the idea of an Adhocracy which is kind of the opposite of bureaucracy. In a bureaucracy an organization try to standardize the way it deals with challenges. An adhocracy deals with challenges on a case by case, ad hoc, basis.

They are largely theoretical showing up mostly in sci fi. GURPS Transhuman Space has a government that uses this model. Some businesses and other real world groups are tying to use this model to.
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