''Robert Neuwirth tells how the informal economy generates trillions of dollars in 'Stealth of Nations''

From Cleveland.com
 
''In large cities, they're everywhere -- unlicensed food carts selling snacks, vendors hawking counterfeit designer handbags and pirated DVDs. These are members of what author Robert Neuwirth labels System D in his illuminating book, Stealth of Nations: The Global Rise of the Informal Economy.

What happens in "the unregistered markets and roadside kiosks of the world is not simply haphazard," Neuwirth reports. "It is a product of intelligence, resilience, self-organization, and group solidarity, and it follows a number of well-worn though unwritten rules." System D "is based on small sales and tiny increments of profit," yet it produces an estimated $10 trillion annually around the world.''

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''Fake Products Swallow Economy on Global Scale''

From Epoch Times

''It’s a constant game of cat and mouse between counterfeiters and law enforcement authorities.

As counterfeiters have moved beyond knock-off Rolexes and fake Louis Vuitton handbags to more ambitious, and dangerous, goods such as medicine, electronics, and food products; the stakes in terms of harm to human health and the global economy have increased.

The Washington-based International Anticounterfeiting Coalition estimates that counterfeiting costs the globally economy $600 billion a year. ''

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''Where the Mob Keeps Its Money''

From NYTIMES

''THE global financial crisis has been a blessing for organized crime. A series of recent scandals have exposed the connection between some of the biggest global banks and the seamy underworld of mobsters, smugglers, drug traffickers and arms dealers. American banks have profited from money laundering by Latin American drug cartels, while the European debt crisis has strengthened the grip of the loan sharks and speculators who control the vast underground economies in countries like Spain and Greece.''

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''The World Bank Wants Eastern Europeans Above-Ground and Paying Taxes''

From Reason.com

''The World Bank has clued in to the fact that many Eastern Europeans prefer to work in the "shadow economy" — that is, off the books and out of sight of tax men, inspectors and other assorted bureaucrats. This has the World Bank very concerned, for a variety of reasons — some convincing, and others, not so much.''

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''Pakistan's black marketers cheer reopening of NATO supply lines''

From MinnPost

''Pakistan’s active black markets, which stretch from the southern port city of Karachi to northwestern Peshawar, and from the southwestern city of Quetta to the northern tribal belt, used to be flooded with US-made goods, from flak jackets to M-4 rifles, soda, and cigarettes. Then, a few months ago, the underground economy, which largely depends on the NATO supply trucks for supplies, dried up. The thousands of Pakistanis who depended on it for income and cheap supplies were hit hard.''

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''Euro Crisis Fuels Shadow Economy''

From Reason.com

''The informal, or shadow, economy is growing in the European Union (EU) due to the economic crisis. It ranges from eight per cent of Gross Domestic Product (GDP) in Switzerland and Austria to more than 30 per cent in some Central and Eastern European countries, such as Bulgaria, Croatia or Romania. Curtailing this “other” marketplace is a challenge for both state governments and the EU, as the transformation of undeclared work into formal work can be an important step towards the fulfilment of the EU employment targets set out in the Commission strategy “Europe 2020”.''

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''Where Are the Missing 5 Million Workers? In the Underground Economy''

From AlterNet

''So, where have all the workers gone? Have they retired, suspended their labors temporarily or are they languishing on public assistance? asks Wessel.

There are some other possibilities. Since the crash of 2008, there’s no question that millions of Americans have indeed stopped looking for a job. But that doesn’t necessarily mean they’re not working. Look around, it’s much more likely that the officially “unemployed” are busy, doing their best to make ends meet in whatever ways they can. Sex work, drugs and crime spring to mind, but the underground or “shadow” economy includes all sorts of off-the-books toil. From baby-sitting, bartering, mending, kitchen-garden farming and selling goods in a yard sale, all sorts of people—from the tamale seller on your corner, to the dancer who teachers yoga—are all contributing to the underground economy along with the “employed” who pay them for their wares.''

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Taxman: "Underground economy robs the state of Billions"

so does wall st, the fortune 500, the military industrial complex and the politicians and lobbyist.......

From Central Valley Business Times

"Counterfeiters, smugglers, illegal operators and others who make money in the so-called “underground economy” could be targets of a sort of state central intelligence agency that would pool information to catch tax cheats.

California is losing an estimated $8 billion in taxes every year to the underground economy, the state Board of Equalization says."

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'Inside the Trillion-Dollar Underground Economy Keeping Many Americans (Barely) Afloat in Desperate Times'

when the feds start putting bankers in jail, American will rejoin the real economy........from alternet.......

.............."That's where the underground economy comes in. Also called the shadow or informal economy, it's not just illegal activity like selling drugs or doing sex work. It's all sorts of work that doesn't get regulated by the government or reported to the IRS, and it's a far bigger part of the economy than most of us are aware—in 2009, economics professor Friedrich Schneiderestimated that it was nearly 8 percent of the US GDP, somewhere around $1 trillion. (That makes the shadow GDP bigger than the entire GDP of Turkey or Austria.) Schneider doesn’t include illegal activities in his count-- he studies legal production of goods and services that are outside of tax and labor laws. And that shadow economy is growing as regular jobs continue to be hard to come by—Schneider estimated 5 percent in '09 alone"...........READ MORE



check out our other stories on the underground economy.....HERE

'States Crack Down on Cigarette Tax Evaders'

the underground economy is alive and well.......from governing.com.........

"Over the last decade, states and the District of Columbia have aggressively pushed to increase cigarette taxes -- collectively hiking them 100 separate times. Today, more than half the retail price of a pack of cigarettes is composed of taxes and other fees, and last year, cigarettes generated more than $16.8 billion for state governments, according to the U.S. Census Bureau. That aggressive push has had an unintended consequence: It’s made the cigarette market very attractive to smugglers and bootleggers.

The intent behind cigarette taxes has always been to discourage an unhealthy habit that increases health-care costs while generating revenue in a way that is politically palatable to most voters. But all those cigarette taxes give criminals extra incentives: They make money if they can get away with selling cigarettes sans the state fees. Estimates of just how much cigarette tax evasion costs states are hard to come by, though the Government Accountability Office is expected to take a stab at the number later this year. California has previously pegged the cost of cigarette tax evasion to the state at $182 million annually, plus another $94 million for other tobacco products"...............READ MORE

'Detroit Scrap City'

welcome to the new economy........picking thru the ruins for profit.........from inthesetimes.........

"In the last decade, 250,000 people have left Detroit. An estimated 60,000 buildings sit abandoned. As the city empties, the millions of tons of copper, aluminum, brass, steel, iron and tin used to erect the Motor City are being shipped out, in the form of scrap, much of it to China.

As Detroit’s jobs continue to disappear and the foreclosure crisis swells its ranks of vacant buildings, an increasing number of residents have turned to scrapping. For some, like Mo, scrapping is a profession. For others, it’s just another hustle, like collecting cans or passing out handbills, one of the dozens of marginal occupations in a city in which a quarter of the population has no job.

“First week of the month is always the slowest,” says Stanley Beltzman of McNichols Scrap Iron & Metal, a scrap yard on the city’s east side. “That’s when the checks come in.”

“If [scrappers] see a house is unoccupied, within two weeks it’s stripped,” says Tom Fayz, president of the Springdale-Woodmere Block Club, located in the city’s southwest side.

Last year, scrappers in his neighborhood pulled down two telephone poles with a pickup truck just to get at the transformers, robbing residents of electric and phone service. The crime occurred in broad daylight, next to an elementary school..................LINK

Book Finds Out-of-Control Government Spending and Complex Tax Laws Spur Growth in Underground Economy and Tax Evasion'

from businesswire..........


"The United States has $1 trillion and growing “underground economy” in which no taxes are paid. According to a new book, “Class Tax Mass Tax: America and Its Underground Economy,” unreported income in America is now greater than the total economies of all but fifteen other countries


 In his book, “Class Tax Mass Tax: America and Its Underground Economy,” Rush cites example after example of how congressional tax laws written by the special interests discriminate against hard-working American families. He explains how loopholes for wealthy individuals and corporations and social engineering have combined to create a tax code that is incomprehensible to the common person. He notes that this trend has accelerated in recent years as federal and state spending has ballooned. Further, Rush explains how the recession and the tax burden on the average American has led to an increase in tax avoidance.


According to Rush, tax evasion in the U.S. has boomed in recent years because federal and state spending has skyrocketed and individual taxpayers have come to the conclusion that politicians cannot be trusted to spend money wisely"...................LINK

'State taxes on cigarettes now leading to black market selling and smuggling'

from examiner.com....

"A new trend has emerged in the underground economy due to the draconian taxes states have imposed on the sale of cigarettes.  Black market smuggling and selling of the product, especially in the eastern part of the United States, has grown over the past two years and is becoming a concern for the federal government.

Over the past decade, state legislatures have used the fallacy of health concerns to impose massive taxes on the sale of cigarettes to the public.  In many cases and in many states, anytime there was a need to acquire more revenues for their budgets, lawmakers would simply increase the cigarette tax"............read more here

'Book Reveals Tax Laws Spur Huge Underground Economy'

from business wire.....

"The United States has an “underground economy” – in which no taxes are paid – that already amounts to more than $1 trillion a year and is growing fast, according to a new book, which notes that this underground economy is now greater than the total economies of all but fifteen other countries"........read it here

The Underground Economy: How Big Is It?

a must read ............from op-ed news.....

"Reiterating, all transactions in an UE are not connected to illegal activities; everyday legitimate activities or jobs can also go underground for various reasons, most notably the avoidance of having to pay taxes or receiving government handouts while working at a paid job. The desire to go underground may intensify when people think that they are being unfairly treated by the tax system or do not benefit deservingly from the outcome of economic prosperity. In particular, people get upset when they learn from the news that corporations do not pay their fair share of taxes because of countless numbers of loopholes they can take advantage of or learn about their symbiotic relationships with politicians. The tax-paying consumers feel betrayed when news media report about pay raises for already well-paid CEOs or they hear the phrase "tax cuts for the wealthy." They too try to escape paying taxes by defecting to the underground sector or resorting to cash business. 


"Furthermore, the current harsh and long economic slump has created financial hardship for millions of households as well as for business firms, forcing them to craft creative ways to deal with burdensome expenses. Consequently, the UE has become a frugal choice for many individuals as well as business people who have watched their real income, their purchasing power, dwindle down because of escalating costs, a rigged economic system, and an unlevel economic playing field".....read more here