Underground: The Road to Freedom?

Originally published at RevoluTimes on December 10, 2011

With real unemployment nearing a staggering 22% and prices rising throughout the country, many Americans have left the regular market in search of jobs and lower prices. They’re going underground. Many argue this undocumented “shadow” economy is on the rise due to the severe recession of the last few years. The Christian Science Monitor reported in 2009, it was estimated this unspoken market represented nearly 8% of the gross domestic product, amounting to almost $1 trillion. In 2010 it was reported the underground economy was growing faster than the ‘legitimate” economy, at a rate of 5-6% per year. Unfortunately, few realize why this is occurring and even fewer view it as a positive. Many would presume that such a trend would prove detrimental to any hope of economic recovery and some would even go further to the point of calling it criminal; when in reality it’s essential to recovery and the antithesis of a crime.

Contrary to what many would expect, the underground economy is much more than the drug trade or prostitution, (although neither of these are true crimes) but encompasses a multitude of goods and services provided without regulation, or being reported to the IRS. It’s no wonder why businesses and consumers are resorting to such methods when the burden of taxation and government regulations are considered. According to Americans for Prosperity, a recent studyfinds the costs placed on the average American family as a result of higher unemployment, higher wages and production costs due to government regulations are around $15,000. This should be no surprise when viewing the “informal” economies that have formed in the wake of Europe’s economic struggles.

Writes professor of economics, David Howden,

“While the Greek economy has the largest underground estimated at 25.2 percent of GDP, the PIGS countries (Portugal, Italy, Greece, and Spain) average 21.7 percent of their economic activity hidden from the official statistics. For comparison, 14.7 percent of German, and 7.8 percent of American output is estimated to be confined to the underground.”

Concluded Howden,

“The growth of unofficial employment is an entrepreneurial response to unnecessarily rigid labor markets and excess regulation.”

Though America isn’t quite facing the circumstances seen in Europe yet, we’re certainly heading that way; and regrettably, embracing the underground economy hasn’t caught on with most Americans—but it will.

Sadly, many still view the development of a marketplace outside the purview of government as a hindrance to society. In an article published by New America Media, Andrew Leonard writes,

“There are many different names for the realm where taxes aren’t paid, labor laws are ignored, and cash is king. But on at least one point most observers agree: the shadow economy — in the U.S. and abroad — is growing. And that’s not healthy. In a shadow economy, workers are often unsafe and ruthlessly exploited, while governments are deprived of crucial revenue — yet still forced to foot the bill for essential services.”

Such talking points are to be expected from left wingers but even many Republicans share these sentiments. 2012 Republican presidential candidate and so-called conservative, Michelle Bachmann stated in a Las Vegas debate several weeks ago that in regards to taxes, “everyone should pay something.”

But when did you become a servant of government? The notion that not paying taxes is a cost to government is not only fallacious, (as government has no wealth of its own, all expenditures are actually paid for either directly or indirectly by taxpayers) but deeply disturbing. To offer another perspective, when asked his thoughts on the fact that nearly 50% of Americans don’t pay taxes, GOP presidential contender, Congressman Ron Paul answered, “Good, we’re half-way there.”

Leonard’s conclusion that the underground economy’s growth “is not healthy” says it all. Rather than being excited to hear Americans are finding work and buying cheaper goods, he’s more concerned that the State isn’t getting what is owed to it; namely the product of your labor. It’s not only presumed that Americans want services provided by the State (despite the fact they also claim Americans must be compelled to pay for it by force), but furthermore that without the wise minds of Washington, the “necessary” functions of society would fail to exist. For this reason, you are duty bound to sacrifice your income for the “greater good.”

Left-wing statists often claim to be the protectors of the worker and consumer from exploitation; but how is denying someone work or depriving someone from a good or service beneficial? If I offer to pay someone below minimum wage or just in cash for landscaping; how are they being exploited? If a higher paying job were available to them, wouldn’t they have taken it? Wouldn’t forbidding them from earning an income altogether prove to be more harmful? Who was harmed? Did we not both benefit from this trade?

It would be nice to believe only the left has economic statists, but the right has abandoned its laissez-faire roots as well. Aside from its unlawful and futile attempts to legislate virtue by prohibiting the use of drugs or prostitution, many on the right seem to have adopted the dogma of left-liberals that they as Americans have a “right” to a job. This underlying belief comes to light under the guise of illegal immigration “taking American jobs”. To be sure, an individual benefiting from the welfare state without paying taxes is unjust to say the least; but the cause of this problem is the welfare state and taxation, not illegal immigration. For all their talk of revering free markets and property rights, conservatives seem to throw them out the window when it comes to the idea of illegal immigrants being hired for jobs because they’ll work for lower pay. Is this not the most fundamental principle of capitalism; being free to contract? No one has a “right” to a job. Yet again, government intervention in the form of minimum wage laws and payroll taxes drive businesses to look for employees under the table; as is their right. Though few conservatives would admit it, the concept that immigrants “steal their jobs” is predicated on the same collectivist notion as the left’s desire for the “greater good”. This is the notion that you are to serve the State and its stipulations.

In a truly free market of tax-free and unregulated trade, individuals come to agreements voluntarily only because the trade benefits both parties; otherwise why would they do it? This enables entrepreneurship, wealth creation, job opportunities and increased production. So why is this black market opposed so strongly by much of society, and particularly government?

It’s because it creates competition against government institutions or subsidized businesses that are politically-connected. A classic example of this is the case of American legal theorist, political philosopher and entrepreneur, Lysander Spooner who in 1844 began competing with the United States Post Office. The American Letter Mail Company successfully provided mail at lower rates and more efficiently, until the U.S. government forced Spooner to stop operations in 1851.

Most importantly however, the truly freed market is considered deplorable by the establishment because it undermines the authority of the State. If individuals not only have the right but the ability to trade and contract freely, the apparatus of government bureaucracy, corporatism and State dependency becomes irrelevant. The escalating police state and debasement of the dollar are leading many to look for alternative currencies and even some to providing their own forms of local defense and arbitration.

Rather than entrusting a system that deliberately plunders and persecutes its own people; a growing number of Americans are investing and trading in precious metals, and creating community-based solutions to resolving disputes and providing goods and services—without permission.

The ability to trade promotes independence, individual sovereignty and empowerment in a peaceful, productive and socially cooperative manner; and for those reasons it poses the greatest threat to the power of the State.