The Phaserl


How the Black Market Is Saving Two Countries from Their Governments

by Shaun Bradley, The Anti Media:

Ever since governments began banning and licensing different parts of the economy, the black market has made sure people still have access to the things they need. Unstable governments always turn on their own citizens by using price controls, heavy taxes, and even the threat of imprisonment to prop up their failing systems. As conditions inevitably deteriorate, as they have in Venezuela and Greece, the underground economy becomes invaluable to those living through the crisis.

The shadow economy refers to more than just the trade of illegal goods. A grey market, for example, provides legal products that have become difficult to find. Since basic things like toilet paper, medicine, and even food have disappeared from store shelves in Venezuela, the peer-to-peer network has become the only reliable way to secure life’s necessities. In desperate situations like this, the existence of independent merchants can mean the difference between life and death.

Even the value of Venezuela’s currency has started to move away from the government’s control. At one point, the official exchange rate was fraudulently set at 10 bolivars per U.S. dollar, while on the black market it was trading at 1,000 to one. This action hurt millions by suppressing wages across the country and eroding any remaining trust. Inflation has quickly become the most imminent threat to the Venezuelan people, stealing the value of their labor and savings. For years, the bolivar has experienced hyperinflation, increasing the cost of living almost exponentially.

The State’s desperate response was to institute price controls, but that has only led to shortages across the board. Luckily, the unregulated markets have been able to determine the true value of goods and provide vital support for the struggling communities. Many people think that so-called price gouging is unethical, but isn’t it better to buy what you need at twice the price than to not be able to get it at all?

Greece is going through a transformation of its own — but in response to a very different set of circumstances. The Greek people have endured a series of tax increases and pension cuts over the past several years to fund debts owed to the European Union. These austerity measures have created a dire situation for those trying to secure their financial independence. The result has been widespread tax evasion, which has helped grow Greece’s underground economy to nearly 25% of the country’s GDP.

Surprisingly, it’s not only the poor who are utilizing the shadow economy in Greece, but also the professional class. Those earning large amounts of money are subjected to extremely high tax rates, driving many business owners and entrepreneurs to either seek better opportunities abroad or take steps to conceal their income.

By persecuting the most successful members of society and not allowing them to keep what they earn, authorities are only encouraging disregard for the law. Without the grey market in Greece, many more skilled workers would have already left the country. Even though the black market is consistently blamed for taking away tax revenues, it ironically may be the only thing keeping the debt crisis from spiraling even further out of control.

Scarcity is more than just a mindset; it’s a harsh reality that people born in developed nations rarely see firsthand. But any time a bankrupt government seizes control over their citizens’ lives and the economy, the end result is always despotism. The consolidation of power into the hands of a few is rationalized during chaotic times but ultimately puts the rights of all citizens at risk.

Just last year, Venezuelan law enforcement carried out raids that killed 245 people. There was no accountability regarding whether the shootings were justified, but reports claim that many of the victims posed no threat and some were even killed after being taken into custody. Such violent crackdowns are the inevitable result of governments attempting to maintain control amid the chaos of broken economic systems.

In 2011, Robert Neuwirth wrote a report for Foreign Policy that highlighted the importance of this untaxed, unlicensed, and unregulated global marketplace. He called it “System D.”

“They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes are part of ‘l’economie de la débrouillardise.’ or, for street use, ‘Systeme D.’ This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy.”

The nanny state has done an excellent job attacking anything outside of the government’s jurisdiction, but a lack of regulation is what allows for the most rapid growth and productivity. Legislators notoriously overestimate their influence on the millions of people they attempt to rule over, but ultimately, grassroots decisions made by individuals have the greatest impact. People who rely on their own skills and reputation rather than a bureaucratic stamp of approval are labeled criminals, but they’re the ones providing real value to society in many cases.

Merchants in these off-grid markets are often associated with danger and violence, but in reality, they provide the purest form of voluntary transactions. Negative aspects, like organized crime, are only made possible because of the profits created as a result of prohibition. Without the State intimidating the public at gunpoint, there would be no incentive for people to seek out the services of nefarious organizations.

These organic free markets are only strengthened with the circulation of assets like cash, bitcoin, and precious metals. Anonymity mixed with technology is empowering people in ways never imagined. The adoption of cryptocurrencies is bringing the shadow economy into the digital age and expanding its reach internationally. This new economic system represents a very real threat to the current financial and political structures.

However, innovators in this environment have to be careful, and after the Silk Road was taken down, real legal implications became apparent. Most famously, Silk Road co-founder Ross Ulbricht was sentenced to life in prison and targeted specifically for challenging the existing system.

The growing progression towards decentralization he attempted to catalyze is on a direct collision course with the central banks and their war on cash. As the public’s faith in fiat money continues to wane, there will be more and more opportunities to show the benefits that come from peer-to-peer networks over central planning. Those who recognize the inherent extortion of the old system have to lead by example and educate others, regardless of which tactics of intimidation are deployed against them.

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1 comment to How the Black Market Is Saving Two Countries from Their Governments

  • Craig Escaped Detroit

    Very good lessons to be learned. STOCK up on everything you need for daily living. Venezuela has been going thru this for MORE than 3 years.

    Do you have 3yrs worth of toilet paper, soap, garden seeds & fertilizers? How about canning jars, lids, vinegar, spices, 100 pounds (or more) of sugar, salt, etc?

    No matter WHERE you live (in the USA, Canada, etc), even if you don’t need propane for anything, it’s a GREAT idea to have a few FULL bottles of propane (for the gas grill), because there will always be somebody who desperately needs it for cooking, heating, etc. If you never need it, then you can TRADE it.

    Or how about a cold winter month and the power goes out? Remember, many wise people follow this LIFE saving advice.

    Plan for the WORST, and Hope for the Best. (don’t get this reversed or it can kill you.)

    Plan on using your “camper” for those bugout emergencies, or when the city sewer system stops working and ALL the homes fill with back-up’d sewage and become UNlivable? Your camper probably needs NEW batteries, more propane and a FRESH fillup of GOOD water, and make sure everything WORKS well.

    Install some solar panels on the roof, of home & camper.

    Wanna be ready for the “barter economy”? PLenty of things will be handy. Seeds, solar, fuels, kerosene lamps, booze, tobacco, poppy seeds (grow you own pain killers), Weed seeds, tobabcco seeds, garden seeds, etc.

    Buy enough loose tobacco to make 30 packs of cigarettes with THIS for just $10. (papers and rolling or injecting machines are extra)

    This is labeled & sold as “Pipe Tobacco” because if it was Labeled as “Cigarette tobacco” there would be about $40 or $50 of Federal taxes added onto it.

    The large, ONE POUND bag.

    They have “full flavored, mild, menthol, etc”. Pick up a supply of extra “tube injectors” flat paper rolling machines, extra boxes of tubes and extra boxes of flat rolling papers.
    Store your tobacco in the DEEP Freezer to keep it more fresh for a long long time.

    Buy some booze in big, cheap brand bottles, and buy a bunch in the 8-16 ounce sizes too.

    Get a 100 rolls of single ply toilet tissue (depending on the brand, SOME rolls have 1250 sheets, which is like having 625 sheets on a double-ply roll.) I buy the Dollar General 4 pak (these are 1250 sheets per roll), and STOMP them FLAT at home so they store in a smaller space.
    Toilet paper does NOT spoil as long as you keep it dry and free of bugs, mice, etc.

    It will always have value. What you don’t need, you can trade, BUT, if you ever run out, then you’ll wish you’d bought more.

    Another LIFE saving item? for you or for TRADE? Laundry bleach, as well as Swimming pool shock (powdered bleach).
    When the SHTF, it may be impossible to get SAFE drinking water, and bleach will make it safe. In bad situations, bleach can save entire families from water-borne diseases. How much is it worth to be able to save 10-50 people from diseases that will kill them?

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