How big would our economy actually be if there was no Black Market

NIMAN

Is there an estimate of how much the Black Market is worth on an annual basis?

Over the last year or so, I have had some work done at home, and all the jobs were cash in hand.

I got to thinking how much money the Gov would be bringing in if every single job was declared. Would it mean we would have a great health service, great education, better roads etc. Maybe, maybe not.

barneystinson

NIMAN wrote: »

Is there an estimate of how much the Black Market is worth on an annual basis?

Over the last year or so, I have had some work done at home, and all the jobs were cash in hand.

I got to thinking how much money the Gov would be bringing in if every single job was declared. Would it mean we would have a great health service, great education, better roads etc. Maybe, maybe not.

It's a completely unrealistic hypothetical though, there always has been and always will be a black market.

It comes down to a cost-benefit decision on one hand, and civil liberties on the other, ie we'd literally need an omnipotent Big Brother to monitor, and absolutely draconian punishments.

NIMAN

Appreciate that it will always happen, and every country is the same, I was just wondering.

I would say any maintenance work or improvement work I will get done at home will be cash. I would guess that we would be looking at quite a few billion extra Euro in the coffers if we did all these jobs legit.

Manach

I doubt it would be anyway near a 1:1 conversion from black market to that of the state sanctioned economy. There is the difficultly of assigning value to the black market were there is not easily fungible figure done to the work. There is the increased mark-up from state taxes that might make the work untenable to perform. There is finally the cost of state supervision and regulation overhead to eliminate the black market, on top of the already historical high level of state share of GDP. Thus as previously mentioned, some form of undeclared economy has always existed and will continue to do so, government inspections not withstanding.

Slydice

They started counting it this year:
Sizing Up Black Markets and Red-Light Districts for G.D.P.
E.U. Nations Counting Sex and Drug Trades Toward G.D.P. By LIZ ALDERMANJULY 9, 2014
http://www.nytimes.com/2014/07/10/business/international/eu-nations-counting-sex-and-drug-trades-toward-gdp.html

As of September, all European Union countries will be required to take fuller accounting of trade in sex, drugs and other underground businesses as part of an overhaul of economic measurements by Eurostat, the European statistics agency.

In Italy, Ireland, Portugal and Spain, which are struggling to overcome recessions, G.D.P. could increase by as much as 2 percent

Sheldons Brain

Slydice wrote: »

They started counting it this year:
Sizing Up Black Markets and Red-Light Districts for G.D.P.
E.U. Nations Counting Sex and Drug Trades Toward G.D.P. By LIZ ALDERMANJULY 9, 2014
http://www.nytimes.com/2014/07/10/business/international/eu-nations-counting-sex-and-drug-trades-toward-gdp.html

I believe the new Love/Hate series will show a CSO statistician turning up to talk to Nidge.

realitykeeper

I do not agree with the black market but I understand why it exists. If businesses could operate legitimately for a reasonable profit, then far fewer would operate in the black market. It is probable that without the black market, the economy would be smaller because these businesses are too weak to operate legitimately. One way to bring these businesses in from the cold is by lowering the bar. For example, the minimum wage could be abolished and the dole could be slashed to make market determined pay worth working for.

On a sub note, those who believe they should be entitled to a minimum wage or generous social welfare may potentially be narcissists. Having "a sense of entitlement" and "being envious of others" are two of the traits which clinically define narcissism. Is there a difference between the narcissist and the socialist?

Frank Lee Midere

realitykeeper wrote: »

I do not agree with the black market but I understand why it exists. If businesses could operate legitimately for a reasonable profit, then far fewer would operate in the black market. It is probable that without the black market, the economy would be smaller because these businesses are too weak to operate legitimately. One way to bring these businesses in from the cold is by lowering the bar. For example, the minimum wage could be abolished and the dole could be slashed to make market determined pay worth working for.

On a sub note, those who believe they should be entitled to a minimum wage or generous social welfare may potentially be narcissists. Having "a sense of entitlement" and "being envious of others" are two of the traits which clinically define narcissism. Is there a difference between the narcissist and the socialist?

Generally you find a link between the narcissist and the capitalist or businessman. Normal people wanting to survive on low pay - not so much.

barneystinson

realitykeeper wrote: »

I do not agree with the black market but I understand why it exists. If businesses could operate legitimately for a reasonable profit, then far fewer would operate in the black market. It is probable that without the black market, the economy would be smaller because these businesses are too weak to operate legitimately. One way to bring these businesses in from the cold is by lowering the bar. For example, the minimum wage could be abolished and the dole could be slashed to make market determined pay worth working for.

On a sub note, those who believe they should be entitled to a minimum wage or generous social welfare may potentially be narcissists. Having "a sense of entitlement" and "being envious of others" are two of the traits which clinically define narcissism. Is there a difference between the narcissist and the socialist?

Do you have a job, oh keeper of the reality, or who pays your way in this world? I think for the sake of credibility you should set out the circumstances that inform your erudite contributions here, particularly when they involve accusing vast swathes of the population of psychological defects...

The Corinthian

Frank Lee Midere wrote: »

Generally you find a link between the narcissist and the capitalist or businessman.

By that logic there were no narcissists in the USSR. Or in present day North Korea...

Both socialism and capitalism are differing philosophical approaches to running an economy. Both have their good points and both have their flaws. So all you girls could argue all day on who is more pretty, but at the end of the day you all have warts.

realitykeeper

The Corinthian wrote: »

By that logic there were no narcissists in the USSR. Or in present day North Korea...

Both socialism and capitalism are differing philosophical approaches to running an economy. Both have their good points and both have their flaws. So all you girls could argue all day on who is more pretty, but at the end of the day you all have warts.

On a point of order, the USSR and present day North Korea restrict people`s freedom to travel. So any type of individual could have lived in the former USSR albeit not of their own choice. After all, thousands died trying to escape from Communism, via the Berlin wall for example.

Come to think of it, isn`t that type of regime just a form of bonded labour, i.e. slavery?

NIMAN

This thread quickly went off course!

The Corinthian

realitykeeper wrote: »

On a point of order, the USSR and present day North Korea restrict people`s freedom to travel. So any type of individual could have lived in the former USSR albeit not of their own choice. After all, thousands died trying to escape from Communism, via the Berlin wall for example.

Firstly a point of order is procedural, what you suggested is a point of information.

Secondly it is irrelevant to what I posted. I specifically stated that both systems are flawed, so pointing out that one is imperfect does not rebut this. You could use is as part of a wider discussion on how one system is more flawed than the other on balance, but I specifically avoided going down that discussion route because it is off topic - which was the point to my interjection in the first place.

In short, arguing over socialism vs capitalism is pointless and off topic here - girls, your're both pretty, so stop fighting.

Come to think of it, isn`t that type of regime just a form of bonded labour, i.e. slavery?

Serfdom would be a more accurate comparison, if you wanted to make one.

nice_guy80

Does the cash economy not exist as part of the black economy?

As in, people paying cash for things and providers not charging vat.

andrew

nice_guy80 wrote: »

Does the cash economy not exist as part of the black economy?

As in, people paying cash for things and providers not charging vat.

AFAIK it'd be the other way around; the Black Economy exists as part of the cash economy. The Black Economy covers transactions which are illegal. The cash economy includes all transactions which aren't taxed(?), some of which are Black Economy transactions.

hfallada

andrew wrote: »

AFAIK it'd be the other way around; the Black Economy exists as part of the cash economy. The Black Economy covers transactions which are illegal. The cash economy includes all transactions which aren't taxed(?), some of which are Black Economy transactions.

But AFAIK, economist will call any thing that tax hasnt been paid on and should have be paid on as black economy. Eg paying workers cash in hand for a construction job. The construction job was legal, but not paying PRSI was illegal

http://www.investopedia.com/terms/b/black-economy.asp

The Corinthian

andrew wrote: »

AFAIK it'd be the other way around; the Black Economy exists as part of the cash economy. The Black Economy covers transactions which are illegal. The cash economy includes all transactions which aren't taxed(?), some of which are Black Economy transactions.

Cash economy refers to unrecorded transactions (typically using cash, but I suppose Bitcoin should be included now) for the purposes of tax evasion.

And tax evasion was illegal last time I checked. As such any transaction that evades paying tax is part of the black economy by your own definition.

andrew

The Corinthian wrote: »

Cash economy refers to unrecorded transactions (typically using cash, but I suppose Bitcoin should be included now) for the purposes of tax evasion.

And tax evasion was illegal last time I checked. As such any transaction that evades paying tax is part of the black economy by your own definition.

I was thinking of transactions like buying a second hand car from a friend, or other stuff on Gumtree or Donedeal etc. They're not illegal (... Right?)

realitykeeper

The Corinthian wrote: »

Serfdom would be a more accurate comparison, if you wanted to make one.

I`m not sure if the system of serfdom in a communist country is any more appealing than the system of slavery would have been in the US prior to their civil war. I think in some ways the slaves had it fairly good when compared with a present day land labourer in North Korea.

Maybe that is because I know the slaves ultimately got their freedom but at this moment in time there is no light at the end of the tunnel for the North Korean land workers.

NIMAN

Sorry, I was talking more about the cash economy, not the black economy.

Like if I get a registered builder or tradesman in to do some work, but he charges me less for cash.

Not talking of anything shady or illegal. Just VAT-less!

barneystinson

NIMAN wrote: »

Sorry, I was talking more about the cash economy, not the black economy.

Like if I get a registered builder or tradesman in to do some work, but he charges me less for cash.

Not talking of anything shady or illegal. Just VAT-less!

That is illegal, on his part, not so much yours unless it could actually proven that you were a knowing participant in the fraud being perpetrated against the State.

Fr. Ned

NIMAN wrote: »

Appreciate that it will always happen, and every country is the same, I was just wondering.

I would say any maintenance work or improvement work I will get done at home will be cash. I would guess that we would be looking at quite a few billion extra Euro in the coffers if we did all these jobs legit.

If every single job done was 'legit' you'd be paying far more than you are currently. Plus, I'm sure most of the money you hand over is spent in the economy too so the taxman gets a cut there too.

nice_guy80

andrew wrote: »

I was thinking of transactions like buying a second hand car from a friend, or other stuff on Gumtree or Donedeal etc. They're not illegal (... Right?)

No VAT on second hand cars.

I was thinking more of services - tradesmen, mechanics, free to air satellite installers, builders etc

The Corinthian

andrew wrote: »

I was thinking of transactions like buying a second hand car from a friend, or other stuff on Gumtree or Donedeal etc. They're not illegal (... Right?)

I don't know; in theory if you sell your car to another person for more than you bought it for (or more than it's value taking into account depreciation) then you could well be liable for tax. So it could be technically tax evasion and thus illegal, but of a kind that we presently turn a blind eye on because it is unenforceable.

Either way, while such transactions may be part of the cash economy, they are not the cash economy.

realitykeeper wrote: »

I`m not sure if the system of serfdom in a communist country is any more appealing than the system of slavery would have been in the US prior to their civil war. I think in some ways the slaves had it fairly good when compared with a present day land labourer in North Korea.

Who said it was? I simply said it was a more accurate comparison than slavery. As I already said, this is ultimately not a discussion on capitalism versus communism, so I don't know why you seem to insist to drag it off topic.