Disadvantages Of The Underground Economy

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The underground economics of
The term underground economy may be used to refer to transactions that are based on illegality and characterized by noncompliance with the law in economic activities. As such, it involves the illegal sales of goods and service through transactions that do not comply with the government requirements. Such an economy is community-based, and while it is not easy to measure its size, it relies on crime, drugs, and prostitution as well as other illegal activities to generate money. This paper delves into the ideals of such an economy based on an in-depth analysis of the Chicago underground economy in Sudhir Venkatesh Gang Leader for a Day. Based on the scholarly definitions and the suggestion …show more content…

For instance, whereas it is dutiful to pay taxes, such taxes do not benefit communities around whom underground economies are built. Therefore, it is important for them to have a parallel system that offers them such services. Similarly, being majorly weak, the communities benefit from the economy as it provides cheap goods and services as that are majorly untaxed. Despite the minimum wage, it also provides employment to the poor. The disadvantages of such a system include loss of revenue for the government in unpaid taxes. It also encourages criminal activities that are against the set regulations and leads to exploitation through unreported and unrecorded employment and …show more content…

The first and most obvious relationship are between the economies and the police. The mutual dependency sees the police turn a blind eye to the activities of the people within these systems after receiving bribes. It is the same case with most city departments that offer services. For instance, in Gang Leader for a Day, Ms. Bailey, the president of the building has to bribe the officials from Chicago Housing Authority to offer services at the Robert Taylor Homes. Considering the modesty of the lives of the gang members and despite making much money from selling cocaine, it is evident that most of the money streams back to the economy and the indication is that people with the government absorb the money. As such, there are no attempts by the government to shut down the underground economies despite their knowledge of their existence. For instance, they are aware of their activities, but they fail to offer ambulance and police services in the areas around the Robert Taylor Homes. It increases the dominance of the gang and the underground economy. A police officer, Officer Reggie is part of the community and participates in solving feuds, but he does not even attempt to shut down the

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