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September 1, 2011

The Shadow Economy

The more rules a system has, the likelier it is to have a larger government.
Since larger governments require more resources, they also depend on a larger tax base. The more governments impose taxes and regulations however, the more resource transactions move from the light side and into the Shadow Economy, making it more difficult for governments to take their cut, without themselves becoming involved in the black market. As increased taxation and regulation shrinks the revenue base, governments begin squeezing the shrinking businesses and citizens even harder. This further inflates the Shadow Economy. As those governments attempt to crack down on and control the Shadow Economy, they only make it more profitable, and those profits are used to entangle and corrupt the government officials who are supposed to regulate them. As a result, free enterprise is destroyed and replaced by the black market. The light side of the economy dies and an entire country becomes a Shadow Economy. -- Liberal Apocalypse by Daniel Greenfield

Posted by Vanderleun at September 1, 2011 12:38 PM. This is an entry on the sideblog of American Digest: Check it out.

Your Say

It's beginning to sound a lot like Italy.

Posted by: f1guyus at September 1, 2011 1:00 PM

I have referred to the shadow economy as a form of internal secession by like-minded and like-acting individuals.

Posted by: Don Rodrigo at September 1, 2011 1:04 PM

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