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Black money is the proceeds of an illegal transaction, on which income and other taxes have not been paid, and which can only be legitimised by some form of money laundering. Because of the clandestine nature of the black economy it is not possible to determine its size and scope. The literature on the black market has not established a common terminology and has instead offered many synonyms including: There is no single underground economy; there are many.
These underground economies are omnipresent, existing in market oriented as well as in centrally planned nations, be they developed or developing. Those engaged in underground activities circumvent, escape or are excluded from the institutional system of rules, rights, regulations and enforcement penalties that govern formal agents engaged in production and exchange.
Different types of underground activities are distinguished according to the particular institutional rules that they violate. Four major underground economies can be identified: The "illegal economy" consists of the income produced by those economic activities pursued in violation of legal statutes defining the scope of legitimate forms of commerce. Illegal economy participants engage in the production and distribution of prohibited goods and services , such as drug trafficking , arms trafficking , and prostitution.
The "unreported economy" consists of those economic activities that circumvent or evade the institutionally established fiscal rules as codified in the tax code. A summary measure of the unreported economy is the amount of income that should be reported to the tax authority but is not so reported. A complementary measure of the unreported economy is the " tax gap ", namely the difference between the amount of tax revenues due the fiscal authority and the amount of tax revenue actually collected.
The "unrecorded economy" consists of those economic activities that circumvent the institutional rules that define the reporting requirements of government statistical agencies. National Income and Product Accounts but is not. Unrecorded income is a particular problem in transition countries that switched from a socialist accounting system to UN standard national accounting. New methods have been proposed for estimating the size of the unrecorded non-observed economy.
The " informal economy " comprises those economic activities that circumvent the costs and are excluded from the benefits and rights incorporated in the laws and administrative rules covering property relationships, commercial licensing, labor contracts, torts, financial credit and social security systems.
In developed countries the informal sector is characterized by unreported employment. This is hidden from the state for tax, social security or labour law purposes but is legal in all other aspects.
Even when the underground market offers lower prices, consumers still have an incentive to buy on the legal market when possible, because:. However, in some limited situations, consumers conclude that they are actually better off using black market services, particularly when government regulations hinder what would otherwise be a legitimate competitive service. Prostitution is illegal or highly regulated in many countries across the world. These places form a classic study of the underground economy, because of consistent high demand from customers, relatively high pay, but labor-intensive and low skilled work, which attracts a continual supply of workers.
While prostitution exists in every country, studies show that it tends to flourish more in poorer countries, and in areas with large numbers of unattached men, such as around military bases. Prostitutes in the black market generally operate with some degree of secrecy, sometimes negotiating prices and activities through codewords and subtle gestures.
In countries such as Germany or the Netherlands , where prostitution is legal but regulated, illegal prostitutes exist whose services are offered cheaper without regard for the legal requirements or procedures—health checks, standards of accommodation, and so on.
In other countries, such as Nicaragua , where legal prostitution is regulated, hotels may require both parties to identify themselves, to prevent the rise of child prostitution. Personally identifying information , financial information like credit card and bank account information, and medical data is bought and sold, mostly in darknet markets.
From the late 19th and early 20th centuries, many countries began to ban the keeping or using of some recreational drugs , such as the United States' war on drugs. Many people nonetheless continue to use illegal drugs, and a black market exists to supply them. Despite law enforcement efforts to intercept them, demand remains high, providing a large profit motive for organized criminal groups to keep drugs supplied. Although law enforcement agencies intercept a fraction of the illegal drugs, and incarcerate hundreds of thousands of wholesale and retail sellers, the very stable demand for such drugs and the high profit margins encourages new distributors to enter the market without a decrease in the retail price.
Many drug legalization activists draw parallels between the illegal drug trade and the Prohibition of alcohol in the United States in the s. The legislatures of many countries forbid or restrict the personal ownership of weapons.
These restrictions can range from small knives to firearms , either altogether or by classification e. The black market supplies the demands for weaponry that can not be obtained legally, or may only be obtained legally after obtaining permits and paying fees. This may be by smuggling the arms from countries where they were bought legally or stolen, or by stealing from arms manufacturers within the country itself, using insiders.
In cases where the underground economy is unable to smuggle firearms, they can also satisfy requests by gunsmithing their own firearms. Those who may buy this way include criminals to use for illegal activities, gun collectors, and otherwise law-abiding citizens interested in protecting their dwellings, families or businesses. In England and Wales, certain categories of weapons used for hunting may be owned by qualified residents but must be registered with the local police force and kept within a locked cabinet.
Another segment of the population who may purchase weapons on the black market are individuals who are unable to pass the legal requirements for registration—convicted felons or those suffering from mental illness for example. In a few jurisdictions, collectors may legally keep antique weapons made incapable of being readily restored to a firing condition. The illegal logging of timber has posed as an issue. According to Interpol, the illegal logging industry is worth almost as much as drug production industry, in some countries.
In many developing countries, living animals are captured in the wild and sold as pets. Wild animals are also hunted and killed for their meat , hide, and organs, the latter of which and other animal parts are sold for use in traditional medicine.
In several of the states within the United States , laws requiring the pasteurization of milk has created black market situations involving the transport and sale of raw milk , and sometimes raw milk cheese which is legal in a number of EU countries but banned in the US if aged less than 60 days .
Rum-running , or bootlegging, is the illegal business of transporting smuggling alcoholic beverages where such transportation is forbidden by law. Smuggling is usually done to circumvent taxation or prohibition laws within a particular jurisdiction.
The term rum-running is more commonly applied to smuggling over water; bootlegging is applied to smuggling over land. According to the PBS documentary Prohibition , the term "bootlegging" was popularized when thousands of city dwellers would sell liquor from flasks they kept in their boot leg all across major cities and rural areas.
But rum 's cheapness made it a low-profit item for the rum-runners, and they soon moved on to smuggling Canadian whisky , French champagne , and English gin to major cities like New York City and Boston , where prices ran high.
North Carolina eventually agreed to raise its taxes from 5 cents to 35 cents per pack of 20 cigarettes, although this remains far below the national average.
According to the World Health Organization WHO , illegal organ trade occurs when organs are removed from the body for the purpose of commercial transactions. A racket is a service that is fraudulently offered to solve a problem, such as for a problem that does not actually exist, that will not be put into effect, or that would not otherwise exist if the racket did not exist.
Conducting a racket is racketeering. An archetype is the protection racket , wherein a person or group e. Racketeering is often associated with organized crime , and the term was coined by the Employers' Association of Chicago in June in a statement about the influence of organized crime in the Teamsters union.
Where taxicabs, buses, and other transportation providers are strictly regulated or monopolized by government, a black market typically flourishes to provide transportation to poorly served or overpriced communities. In the United States, some cities restrict entry to the taxicab market with a medallion system, i. In Baltimore , Maryland , for example, it is not uncommon for private individuals to provide illegal taxicab service  for city residents.
In places where there is rent control there may be a black market for housing. For instance, in the UK there is illegal subletting of social housing homes where the tenant illegally rents out the home at a higher rent.
Specialised black-market dealers assist the property owners with such transactions. Retrieved 28 October Retrieved 15 August Archived from the original on 28 November Der Spiegel in German.
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Süddeutsche Zeitung in German. Die Zeit in German.
I'm very happy for them and it's much easier to play behind them when they are in that kind of form.
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