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Underground economy, black markets, free markets and organized crime
The underground economy consists of all trade that occurs without government permission or effectual intervention (in the form of taxation or price regulation). This market includes not only trade in legally-prohibited goods and services (such as drugs and prostitution), but trade in legal goods and services when income is not reported and consequently taxation is avoided. The term underground economy typically is not used to refer to trade in stolen goods or other coercive activities, which may more appropriately fall under the definition of the "black market." Underground economy transactions are typically cash transactions to avoid traceability by governments.
Estimates of the size of the United States portion alone of the underground economy range from $500 billion to $1 trillion.
The underground economy, when trading decisions are not the result of coercion, is arguably a free market, since, by definition, it lacks government intervention. --http://en.wikipedia.org/wiki/Underground_economy [Feb 2005]
The black market is the sector of economic activity involving illegal economic dealings, typically the buying and selling of merchandise illegally. The goods may be themselves illegal, such as the sale of prohibited weapons or the illegal drug trade; the merchandise may be stolen; or the merchandise may be otherwise legal goods sold illicitly to avoid tax payments or licensing requirements, such as cigarettes or unregistered firearms. It is so called because "black economy" or "black market" affairs are conducted outside the law, and so are necessarily conducted "in the dark", out of the sight of the law.
Black markets are said to develop when the state places restrictions on the production or provision of goods and services that come into conflict with market demands. These markets prosper, then, when state restrictions are heavy, such as during prohibition or rationing. However, black markets are normally present in any given economy. --http://en.wikipedia.org/wiki/Black_market [Feb 2005]
A free market is an idealized market, where all economic decisions and actions by individuals regarding transfer of money, goods, and services are voluntary, and are therefore devoid of coercion and theft (some definitions of "coercion" are inclusive of "theft"). Colloquially and loosely, a free market economy is an economy where the market is relatively free, as in an economy overseen by a government that practices a laissez-faire, rather than either a mixed or statist economic policy. Within economics the more usual term is simply "the market", or "the market mechanism", to mean the allocation of production through supply and demand.
Free markets are advocated by proponents of economic liberalism. --http://en.wikipedia.org/wiki/Free_market [Feb 2005]
Organized crime is crime carried out systematically by formal criminal organizations. The Organized Crime Control Act (U.S. - 1970) defines organized crime as: "The unlawful activities of...a highly organized, disciplined association...". Some Criminal Organizations, such as terrorist organizations, are politically motivated. Mafias are criminal organizations whose primary motivation is profit. Gangs sometimes become "disciplined" enough to be considered "organized". The act of engaging in criminal activity as a structured group is referred to in the U.S. as racketeering.
Criminal organizations keep their illicit actions secret, and members communicate by word of mouth. Many organized crime operations have substantial legitimate businesses, such as licensed gambling, building construction, trash hauling or dockloading which operate in parallel with and provide "cover" for drug trafficking, money laundering, prostitution, extortion and insider trading.
In order for a criminal organization to prosper, some degree of support is required from the society in which it lives. Thus, it is often necessary to corrupt some of its respected members, which is most commonly achieved through bribery, blackmail, and the establishment of symbiotic relationships with legitimate businesses. People in the judiciary, police forces, and legislature are especially targeted for control by organized crime via bribes, threats, or a combination. Financing is made easier by the development of a customer base inside or outside the local population, as occurs for instance in the case of drug trafficking.
In addition, criminal organizations also benefit if there is social distrust of the government or the police. As a consequence, criminal organizations sometimes arise in closely-knit immigrant groups who do not trust the local police. Conversely, as an immigrant group begins to integrate into the wider society, this generally causes the organized crime group to weaken.
Lacking much of the paperwork that is common to legitimate organizations, criminal organizations can usually evolve and reorganize much more quickly when the need arises. They are quick to capitalize on newly-opened markets, and quick to rebuild themselves under another guise when caught by authorities.
Globalization occurs in crime as much as it does in business. Criminal organizations easily cross boundaries between countries. This is especially true of organized crime groups that engage in human trafficking.
The newest growth sectors for organized crime are identity theft and online extortion. These activities are troubling because they discourage consumers from using the Internet for e-commerce. Furthermore, e-commerce was supposed to level the playing ground between small and large businesses, but the growth of online organized crime is leading to the opposite effect; large businesses are able to afford more bandwidth (in order to resist denial-of-service attacks) and superior security. --http://en.wikipedia.org/wiki/Organized_crime [Feb 2005]
Reefer Madness: Sex, Drugs, and Cheap Labor in the American Black Market () - Eric Schlosser
Reefer Madness: Sex, Drugs, and Cheap Labor in the American Black Market () - Eric Schlosser [FR] [DE] [UK]
Eric Schlosser's Reefer Madness: Sex, Drugs, and Cheap Labor in the American Black Market (2003) is a look behind the 10% underground economy of the U.S. that includes marijuana, migrant labor, and pornography. --http://en.wikipedia.org/wiki/Reefer_Madness [Feb 2005]
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