When
I worked in U.S. Embassies in various third-world countries, the term “informal
economy” was bandied about to describe a market sector that was not submitting
to the taxation and regulation of the individual countries. A term often used in tandem with
“informal economy” is “ungoverned space” meaning the geographic area where the
activity occurs.
Generally,
the more oppressive the government, the larger the presence of the “informal
economy.” Ironically, the usual stance of the U.S. (an allegedly free
country) in such situations is to prompt the foreign government to capture and
regulate the identified informal economy through heavy-handed police action.
This informal economy is no secret to the foreign government. Even the foreign
government officials make use of, almost entirely, the informal economy to make
purchases for their own households. Why pay full price, including tax and
import fees, for the items you need?
The
hustle and bustle of the stalls in the sprawling outdoor and sometimes indoor
black markets represent freedom bursting onto the scene. They allow the
otherwise oppressed inhabitants of the country to survive. It doesn’t matter
what you want, whether it be a new refrigerator or a pair of shoes, the
informal market will provide it at a cheaper price. The ”formal”
merchants tied to a building at a fixed street address are identifiable
by the government and will be targeted for closure if they don’t sell things
with an official serial-numbered receipt, indicating that taxes have been paid.
Although
farmers’ markets, swap meets, flea markets, thrift stores, yard sales, and
garage sales have increased over recent years in the U.S., they haven’t reached
the magnitude of the informal economy in third-world countries. They will get
much bigger, when necessity requires it. People will choose to go “off the
books” rather than die or subsist in abject poverty at the hands of an
oppressive government.
It is
incredible to see the ingenious circuitous routes through the Andes Mountains
that manufactured goods from Asia traverse, going from the sea coast in Chile
and across the Bolivian border in order to avoid confiscatory fees collected by
border officials; and then to see that same merchandise traverse one landlocked
country to the neighboring landlocked country of Paraguay only to rush across
the Parana river at nightfall carried by hundreds of small motorboats going to
unofficial landing spots in the “Tri-border Area” allowing Brazilian residents
to avoid a hefty “Value Added Tax.”
When
the big crash comes in the U.S. (maybe it is arriving now), the black
markets—the informal economy—will arrive very noticeably. There is very little
industrial productivity in this country and, in the winter, the U.S. relies
heavily on produce imports from foreign countries that have year-round growing
seasons. If strict price controls and import controls are imposed or if there
is a flight to an “unofficial” form of money due to hyperinflation, the markets
will pop up quickly in an attempt to meet demand at market prices. Americans
will quickly swap survival for any imagined distaste they thought they would have
for a hodge-podge market place where many vendors and shoppers give each other
the assurance of anonymity as they blend together in a friendly mass. Since the
merchants are outside the formal regulated economy, they can choose to ignore
legal tender laws or any other regulation if it is advantageous to do so and
make their transactions or trades in any medium they want.
Identifiable
store names and logos will likely be absent with vendors, but you will remember
the lady that gave you a good deal on a pair of shoes or the man that sells
good cheese and dairy products. When the informal economy asserts itself
in a big enough way, the regulators will try to play catch-up and try to
enshrine whatever new conditions develop into official policy before the dog
scratches the flea off its back.
Informal markets are not the creations
of know-nothing “substandard” foreigners. They are essential facts of life in
regions where governments have shut down the ability to thrive and conduct
business out in the open. “Out in the open” would be better, where
branding and associated reputation can be tracked more readily by consumers,
but in hard times, getting the things you need becomes the paramount concern.
See you at the swap meet.
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David
Hathaway [send him mail] is a rancher and homeschooling
father of nine children. He is currently a candidate for Sheriff in Santa Cruz
County, Arizona. He maintains the website charityendureth.com and HathawayForSheriff.com.
