The Underground Economy: Crash Course Economics #32
ฝัง
- เผยแพร่เมื่อ 6 พ.ค. 2016
- What is an underground economy? Whether you call it a black market, a grey market, or just the shop down the street, its about connecting people with goods outside of official channels. Some stuff happens in the underground economy because it's illegal, but a lot of the money that moves around this way is exchanged for pretty mundane goods and services. We'll talk about how these things work, and the awesome ways that economists figure out where all that money is.
Yes, I was a black market lemonade dealer at the tender age of 7, but you can call me Addison.
+BakedpotatQ you little criminal.
How to join shadow economy
And what ever gets sold on Craigslist.
This has nothing to do with the video, but I was just thinking that you should totally do a crash course series for computer programming! It would be so helpful since a lot of people would benefit from knowing some basics, but a lot of schools don't offer it.
Yeaaah !
I 2nd this!
I agree! :D I know nothing and it would be very interesting.
Yesssss
+Jane Doe Didn't someone say during the Patreon livestream that they wanted to do this series?
"It's not like most street vendors are set up to use apple pay"...
LOLOLOLOL OMG the year 2016 is so precious
Okay I just wanted to comment and tell you how very very thankful I am that you guys have started making these videos. I literally wait for the Crash Course Economics episodes to come out eagerly every week. I've watched all of them... and if there were 100 more I would just sit and binge watch them.
As dramatic as this sounds, the videos have really changed my life. They've changed the way I look at my money, business, and the world. Before I was never able to save money and after watching these videos it was like a paradigm shift ( a huge one). I hated work with a firey passion prior to these videos, and as a result could not keep jobs for a long time which is one of the reasons I wanted to become an entrepreneur. These videos have helped me see work as a "trade" for labour vs money. I provide a service and if I am being fairly compensated it should be a quality service. I think about opportunity cost now all the time. I think of myself on a large/longer timeline. I don't seek instant gratification anymore. I understand that If I put it work now it will result in a much larger happiness later (temporary pain for long term gain).
And I think Adrian Hill is amazing! I love her and wouldn't chose anyone else to do these videos... I follow her really well and she speaks very clearly. Plus you gotta love that upbeat attitude.
Anyways, thanks again for making these. If I could donate a million dollars just to ensure that you guys never stop making videos on economics I 100% would! In fact, *if* one day I do succeed in business, and truly make something for myself I would look back and attribute much of that to these videos..... as theyve made a huge impact on my thoughts, habits, and actions which we all know become who we are.
It'd be super cool too if you guys did maybe some videos related to businesses, starting a business, or just general other topics like you did in that one where you talked about "How to know when to stop hiring workers, specialization in making pizza."
It'd be cool to do a video on Lotto tickets and gambling.
So, when you buy a lemonade from a little girl on the sidewalk, it's black market? Neat. Back Market Lemonade.
Any transaction that isn't taxes or kept track of is black market. Things like paying someone cash to cut your grass, baby sit, or do Any work; granny giving you $50 for your birthday, playing poker (or anything) for money, etc; selling lemonade, drugs, homemade crafts, having a yard sale, etc.... These things are All part of the underground economy and are technically supposed to be accounted for on your taxes or are just illegal. The govt turns a blind eye to most bc it's too hard to track and enforce and pretty much everybody would be guilty but they are technically illegal to do and not report and pay taxes on... And some are just illegal anyway!!
David Belcher I know, dude. I was making a joke. :)
+David Belcher Some activities are illegal by themselves (being defined as illegal by law) like drug dealing or distributing pirated software copies. Other activities are themselves legal, but tax evasion is always illegal. As you said "they are technically illegal to do and not report and pay taxes on", not the activity is illegal, but only not reporting the income made from this activities.
PaiNExoTiC I wouldn't agree with you. For just one example: some taxes are spent on defense. Would be moral that the army or the navy choose not to defend you or your home just because you're not a tax payer? Russian (or chinese) bombs falling on a city would not target only tax payer homes. :)
SlocketSeven Well, technically, any business for which are not paid taxes is illegal and had to be shut down. But local or federal budget won't be hurt if a lemonade stand or a kid showeling show would not pay proper tax. A local bugdet won't sink into destitute if someone do not pay an income tax on 10 or 20 dollars earned. But it's not the same if Exxon, or Microsoft try to evade any tax. There are a lot of money involved,
Something like.. If you owe a thousand dollars to a bank, you have a problem. If you owe a million dollars to a bank, the bank has a problem. :)
Summary!
XXXII: The Underground Economy
1) Also known as the shadow/informal/unofficial/hidden economy, or black market. When economists talk about the underground economy they are talking about a much wider, less nefarious (like drug dealing, organ black market) group of activities. The informal economy they talk about is all the trade and work that happens off the books, under the table, outside the sight and reach of government rules and taxes - a lot of these are completely mundane (e.g., a nanny or housekeeper’s job).
2) It is estimated to be worth trillions of dollars globally; about 10 - 20% of total GDP in developed countries. In the US the underground economy is probably worth somewhere between 1 and 2 trillion dollars. In developing countries the underground economy often accounts for more than one-third of economic outputs. The international labour organisation says the informal economy also employs half to three-quarters of all non-farm employees in the developing countries.
3) Economist have come up with indirect macroeconomic ways to try and wrap their head around the informal economy.
a. One way to estimate the size of the hidden economy is by looking at the difference between the total income accounting reports and its total expenditures.
b. By looking at the demand for cash - a greater demand for cash in an economy might signal a larger underground economy.
c. By studying electricity usage: electricity is a good indicator of total economic activity.
4) Illegal trade: According to the UN, organised crime is an 870-billion dollar a year business, about one and a half percent of global GDP drug trafficking is a biggest chunk of that - about 320 billion. Others: counterfeiting, smuggling, human trafficking, exploiting the environment (timber trafficking, hunting endangered species)
5) The European Union recently asked member countries to do a better job counting vice in their GDP totals. Spain and Britain also have similar concerns.
6) Because illegal markets are by their nature illegal, they can often be dangerous places to buy or sell.
7) What is wrong (or otherwise) with people doing legal jobs, just working off the books?
Cons: ILO points out that workers in the informal economy don't have the same sort of safety-net (job security and welfare) in place as people who work in regulated jobs. Economists also point out that a big informal economy makes it difficult for the government to get an accurate count of important economic statistics like unemployment and income, which might encourage misguided economy policies. Tax revenues may fall, becoming part of up a negative vicious cycle.
Pros: However it can offer jobs and work where they don't otherwise exist, e.g. during the US financial crisis, where it served as a temporary buffer for individuals, and the economy as a whole.
Leave it to economists to make even the black market unexciting. :P
lol
Black market is boring, unless it's economics. Economics is the only interesting topic.
All hail kek.
Economics is super interesting! You however...
Crash course is made of awesome
+James Dalpe Pure informative awesomeness!
Wow! Incredibly informing! Once again, you nailed it, Crash Course! I just love this channel. Thank you.
'Sorry sir, but we don't take credit cards '
' How about endangered salamanders"
' ... Why would I take that"
' Because you're technically operating in the black market"
" I think you have misunderstood how that works"
Crypto-currency
Thank you for this very thoughtful examination of the underground economy.
Thank you, I don't want this course to end
Crash Course sure do make economy a lot more interesting. Learning economy in high school was boring. Thanks Crash Course! (kudos)
As an ex small time drug dealer i can tell you that the black market is all about trust. You need to trust people before you do business with them. Informal imployment is in a lot of situations better than government work. I made more money than doing honest work. I actually felt more empowered too. Ive also had legal work too like a cashier. I also did under the table landscaping work. Underground work to me was always better because it gave you the ability to negociate with employers and customers. Legal work is like my way or the highway.
I can see what you mean. Though I can think of a few industries that should probably not be under the table.
xenoblad Well in the case of Landscaping, roofing, and construction it is almost a necessity because of how little the workers actually earn. I mean I did a job where I worked for 5 hours cleaning up a yard with one of my buddies (It was backbreaking and there was too much trash) and all I got paid was $15. If you tax that then its 5 hours for $10. I've made more for less work too but the majority is very similar to this.
+Pavel Radev Wow I have to pay $10-$15 an hour for someone to help me do that type stuff and it is usually kids that can't work much more than half as efficiently as I do.
Paul Ewing Yeah I know what you mean. I think I was actually 15 when I had that job. It was a set $30 for the yard clean-up. Me and my buddy split that even. Also it was my buddy's dad who gave the quote. We were working for him. He should have asked for more. Most of the time the workers don't even see the yard until it is time to work. Sometimes it's fair and sometimes you get screwed. What can you do right?
Very true. Trust is the actual basis of economics, not greed.
2:11 The grey market has poor old Uncle Sam sweating. lol.
Best, most engaging and clear episode of this series; something about the single presenter format perhaps.
Great work of reporting. Very educational. I enjoyed it very much. It made me think and I see it around me everyday!
very informative, i always enjoy your videos :)
CrashCourse Algebra! PLEASE!
Algebra is fancy counting. More literally, it is how early businessman wrote down the information for two lines in order to find their intercept. Nearly everything you learn in algebra goes toward that goal, then builds on it so you can also move those lines up and down.
This intersection is important because it helps set the ideal price for goods, the best number of goods to trade at a price, and other happy crap that doesn't help you shopping at Target.
Walmart. Whatever.
There is a special part of algebra called conic sections and logarithm. This is how non-linear lines were made. Like, how fast things grow.
Everything else in algebra is details. Especially rearranging equations. You just gotta figure that shtuff out.
Excellent.
I've seen police shut down a little girl's lemonade stand for being an underground economy. Not even joking.
Wtf 😂
+LunarX
I'm guessing that happened in the US and they body slammed the little girl head first onto the ground, choked her half to death and beat her to within an inch of her life, too, right?
Also, I'm guessing she was white, otherwise she would have been summarily executed on the spot and the police given a paid vacation and a commendation.
Nilguiri
I love you.
LunarX
haha. ;)
+LunarX Can't really blame the police for that -- often, they're told to do things like that by the higher-ups and the politicians.
I heard Mrs. Hill on NPR yesterday! She is so cool!
Awesome as always...!!! tq
All of these hidden gems
This is a very interesting video!
Great video!
This video needs to be added to the economics playlist. It is released for several days but still doesn't appear on the list.
are you going to upload more videos? I really like them.
I love learning.
I also love that nerdy emoji.
🤓
the only crash course eco that i watch
omg this vid is FRICKIN LIT!!! luv economics! crash course u rule!!1!!1!
This was great! If love a crash course on tariff TTP/TTIP 😬👍🏼 Apologies if one already exists, Were working our way through all these LOL 😉
Are you going to do a video on the economics of tourism?
This was great. Please do an episode on Foreign aid.
I'm new and I have already seen a few videos but I still can't figure out what do you work as? Or what you studied in university? I would like to follow your lead and do something where I can receive as much knowledge of everything!!!
Thank you
How do they calculate the underground expenditures??
Ohhey the organ subject that was hit on in my regulatory economy class like...3 weeks ago.
Do you have any sources for this video? I would love to read some more about this topic.
Thanks in advance.
You just made my Spanish presentation on Monday way easier.
I've been there and Kowloon is CRAZY!
I wouldn't mind owning vending machines on the downlow lol
The 500 euros bill just stopped being emitted to prevent its use by the Underground Economy (mainly drug dealers and other smugglers).
I'm Finnish I didn't even know there was a 500 euro note
at 2:19 you talk about how you can measure the demand for cash, I was wondering if nowadays people also measure the demand for bit coin?
The underground economy is not necessarily bad. It is the result of government regulation and taxes. The more the government tries to control the economy, the more people will evade of such control.
That's a stupid idea. Underground economies grow out of underdeveloped societies where the government is already weak. That's also a major point in this video, that higher developed economies don't need underground economies because there's sufficient employment, resources and institutions.
basically hustling
I think, in Paraguay, the informal economy was about 10 times the formal....
Adrien ... will u look into a phenomena called the mandella effect ? its quite topical and out of this world kool
thanks for the video
+Michael Yadchuk
nice first
+supeJC why do you bring this up
+Michael Yadchuk first comment!
Is there a way to mass download these videos so I can listen to it when driving?
Hi Adrienne & Crash Course --
Can economists use changes in unemployment rate to help determine the size of the underground economy?
Also, what's the relationship between the underground economy and the government in countries where the underground economy makes up a large part of GDP? Do you think that provides governments an incentive for ignoring illegal markets?
Thanks!
Ben
PS - An intro to development economics video would be really awesome!
+XZDrake Thanks so much for your reply. I appreciate the information!
Good video; legalizing organ donations is the right decision in my opinion.
Trust is the basis of Economics. When trust is lost then we defer to Justice. Regressive Regulation precludes trust which distorts and calcifies normally fluid market relations.
BLACK MARKET LEMONAID, BUY MINE! come on its only 25 cents!
Shake down time I want 24 cents every time you sell a cup.
+mumbles005 lmao I will pay 23 and a half cents for protection.
+JoJo I'll get a gun and shoot anyone trying to shake me down.
mumbles005 Haha. If you kidnap my cabbage patch kid, I'll take out your whole family of cabbage patch kids.
mumbles005 Please, not the Garbage Pail Kids, anything but that.
7:28 BAH!!! I'd do it in a pinch on the side of the road (while being extremely careful), but for routine work it is a habit that I'd never want to form. car needs to be on jack stands, not a lifting jack.
Hey Crashcourse, Is this course gonna cover econometrics at any point?
it would be great if you guys started doing geography videos
In Portugal informal economy pays much more than formal economy, i would say it pays 2 times more to the works and at the same time delivers much cheaper and quality goods and services.
I have a final essay about thomas de quincey and i would love it if you made a video explaining who he is? His beliefs? Literally everything about him??
+Bash M Who is he if you don't mind me asking?
+Breeze an english author and opium eater
There needs to be an episode of the shadow banking system, mainly about derivatives and swaps. I'd love to see if any economist can justify its huge size.
Of course they can't, would you expect them to be able to justify it?!
+Matthew Greet I'm not an economist (but I play one on the internet): derivatives can be used to hedge price risk. This means that producers (miners, farmers, mid-stream manufacturers) are free to focus on PRODUCTION instead of worrying about price risk.
Example: a forward contract (it is a derivative because the contract terms DERIVE from the price of an underlying asset). Let's say I own a gold mine and that the spot price of gold is $1280. Let's say that my price per ounce of gold produced (actual cash layout) at my mine is $750 per ounce; that's a $530 per ounce profit margin. If I enter into a forward contract to sell my production at $1275 per ounce, then I no longer have to worry about whether the gold price in the near or medium term future will drop below my production cost: I'm free to just operate my mine, which means that I can address issues within my particular skill set (mine safety, maintaining equipment, exploration) instead of worrying about whether I should even be mining in the first place due to price fluxes.
Carlos Lam That explains the usefulness of a derivative but does not explain the usefulness of the derivatives markets' size compared to the world's wealth.
+Matthew Greet Perhaps there are market participants entering derivative contacts without the possibility of settling the contracts.
To go back to my prior gold mining example, let's say my counterparty knows that he will be insolvent if the gold price goes to $1270 but tells me otherwise. This is common law fraud & can be dealt with under current common law principles.
Economists probably would not justify the size of the complex financial instruments in play a the moment. And most agree about their effect on the financial crisis. It is not an economist's prerogative to agree with financial innovation. I don't see the link.
Ooo Nice!
Lmaoooo Daredevil at 4:33
Can you guys made a top 10 needed for self-employed people, like taxes and employe liabilities and business account. Specially the taxes if your self employed.
Hey @CrashCourse, you forgot to add this video to the Crash Course Economics playlist :)
I always have to pause during the intro slides. To read every little bubble
I have a question: how do economists value stay at home parents in GDP calculations?
I really like the show, keep up the good work.
+Eric Roux The stay-at-home day care isn't factored into the GDP at all; however, as a result of the stay-at-home day care, the working spouse can (theoretically) work longer and make more $$$, which is factored into the GDP.
+Eric Roux Or if you're really weird, you could file MFS on your taxes and pay (W2) your spouse for the day care. Be advised this is an astronomically stupid thing to do, tax-wise, 99% pf the time.
You guys should do a video on the largest slave trade the world has ever known . The American Privatised Prison Complex ..
+Daves Reality American prison is internment, not slavery. Prisoners are not property. Slaves are.
+Daves Reality The prisoners work to pay for their own living, so tax payers don't have to.
+Rick Apocalypse And someone is making a killing out of it. Otherwise there would be no private prison companys.
The same someone is also lobbying for incarceration to keep his prisons full. Resulting in unneccessary incarcerations for non-violent crimes and - as a lot of pepole argue - an increased crime rate as smalltimers get into direct contact with more "hardend" criminals and find it harder to find legitimate employment after a stint in prison.
You think "tough on crime" is for the benefit of the pepole? Think again. ;)
Bird_Dog Drug related crimes shouldn't be crimes in the first place. That said, all other crimes should make the criminal work during his time in prison.
+Daves Reality That's a great topic and issue but it's not appropriate or entirely accurate to use the word slave in this context.
3:10
Huge? Or YUUUUUUUUUUGGGGGGGEEEEEE?
Hygueeee hugeeee! Hugh Laurie X-men huge!
Curious to see these numbers here in 2020
8:18 -Agree about the negative cycle part as I am seeing it practically everyday. 90% of the employed are in unorganized sector, making only 0.3% of the population tax-payers. This is further forcing the Government to reduce the funds for social security schemes. Corruption, security and environmental problems are also adding to the miseries of the poor. I wonder where this will end, or is there a 'economic theory or model' which can provide a solution
There is no mention of service industry workers not putting out what they make in tips. How do you measure all cash transactions and tips from someone when a credit card isn't used?
+Henri-Ansel Vallee also the panama papers show that a lot of money is hidden from taxes by corporations and may be brought back into the country through hidden means (bit coin value is increased from this by banks doing illegal things for example).
I've been wondering about these stats...
Fraggles!! Not to be picky, but it was the Doozers that did all the work in the Fraggle underground. (Love to Thought Café)
Adriene is so much more fun to watch than the guy, she just catches your attention with her mild smooth explaining and talking, unlike the guy who speaks way too fast and complicated
I miss john :(
Me too :(
haha at the daredevil reference!
TL;DR banning things never works, and usually just makes things worse.
+tristikov
It can work.
The thing you ban will most likely serve some human need or desire, and so, if you can substitute that need with something else, then the ban will work.
But taking something away without replacing it is often a ham fisted policy that is bound to fail.
Sometimes, it's better to measure electricity usage than money flow to better track economic activity. Considering that electricity, or energy overall, is being used in one form or another.
Also, didn't know the kidney economy was so big. :L
did some one talk about the Kowloon wall city (which is a park now)????
is parallel and underground economy have the same meaning
The Bloody Bazaar, The Mall of Maul, The Ivory Interest, The Bestiality Boutique, The Vice Vending Villians. I could go on.
Was that the daredevil?
+mike jones Yes.
The problem here is the use of an Income Tax instead of a Consumption Tax. This is one of the issues it would fix, but the big one is the off-setting of other distortionary effects like the inherent effect Income Taxes have on savings which limit investment.
I'd say the other issue is that replacing an income tax with a sales tax is regressive.
+WisMicYal11 Yes, but that can be fixed through a progressive redistribution program to compensate. Alternatively through a progressive consumption tax, perhaps with goods typically bought by higher income people being taxed at a higher rate, and some goods bought exclusively by poor people not being taxed.
Erik Nielsen Hm, that's interesting. I wonder if there is any research on that; there likely is. I wonder how anyone would decide how to classify products. Thanks for the thought provoking response!
Evan edinger should do a crashcourse math series!!! is this possible? can this be a thing please
Nature finds a way.
Ese del 6:51 está vendiendo butifarra en Barranquilla, nojoda! :D
you know what'd be neat?
Crash Course Mythology..?
I support this
You are a Guru!!!!!!!!!!!
It's already there!
@@dukevalentino5967 guru is an english word ?
What does it even mean for an economy to be worth a certain amount? The goods on sale keep changing... does a trillion dollar economy mean a trillion dollars pass through it every year? Or have passed since the beginning of history (that wouldn't seem that much)? Or that its combined GDP is worth a trillion dollars?
+Dracarmen Winterspring I'd also like to know that
i guess the tooth fairy buys teeth off of the black market
+xxluigi123 Yes, but the burning question is. What on earth does she do with all those teeth? Is she doing witchcraft with them? Are the fanatics going to have to hunt down the tooth fairy and burn her at the stake?
Janet yes
omg did I just see the flash at 4.35?? 😂🙈
0:45 Aussie money :)
Google Agorism
Let's make that 100%!!!!
Seriously, though, government needs to stay out mass economy, and stick to development.
GOD. Let government spending fall. Less money to corrupt people is always good.
Done
maybe governments can stop lining their pockets with tax dollars, spend responsibly and actually do the jobs that they were elected to do the way that it is mandated... oh ya, what was I thinking...
they would if they where adequately monitored and where punished even they didn't; but such an apparatus would probably be more expensive than just doing away with the state.......
+Wayne Shaw The problem with that line of thinking is that it presupposes that the government is one large entity thinking and acting with one mind, when it is in fact hundreds, even thousands of people who all think and act independently. While graft and corruption are serious issues that need to be addressed, generalizing it in such a way doesn't help anything.
+Deism Drake How would you create an apparatus that does so, is presumably state run, and does not have the same issues? One more reason government is untenable in the long run
+Wayne Shaw what an impressive non sequitur; you must feel smart now.
+monkey314159 TROLL!
Just had a rummage sale =)
What about bars that stayed open against COVID restrictions, is that part of the informal economy?
is there any difference, economically, between a black market and a grey one?
also, it would if been nice if you'd of touched on kidney trading, where you have:
Alice and Ben are happily married, Ben needs a new kidney but Alice isn't a match. But Alice is a match for Catherine who also needs a kidney and Catherine's lover Denis who is not a match for Catherine is a match for Ben so Alice gives 1/2 of her kidneys to Catherine and Denis gives 1/2 of his kidneys to Ben. to the best of my knowledge they haven't developed a debt system yet, but do allow for more complicated trades but they only allow trading one kidney for one kidney.
Electricity is NOT a good indicator of the underground economy. It might work in some states, but the ones close to the north or south pole use a whole lot more of the stuff, without being more corrupt. And yes - it changes due to the weather.
You should write to them - I bet they never thought of adjusting it for temperature.
+Rebaum Give me the bag! I'm packing a lunch!
It all come back to lemonade 1:10