WHAT IS 'BLACK MARKET?'
BLACK MARKET refers to the underground or 'shadow' economy that exists when a government over taxes, over charges fees or demands that emerging small businesses JUMP THRU HOOPS (License wise or even with new restrictions, like the above JOKE, that they take the GOOD FRIED DANGEROUS FAT out of Fried Chicken and then black market fried chicken shows up...) in other words, when GOV interferes with stuff folks want or outright BANS certain products or services that people want, you get a blackmarket.
In the case of an ordinary little start up business, no entrepreneur could make a successful start if he had to carry the sagging, crooked SYSTEM on his back. Its licensing fees, its taxes, the City's hand in your pocket but unfortunately, nowadays, THEY DO. The city sucks entrepreneurs DRY before the business even gets off the ground.
I have a friend who started a Bed & Breakfast at her own home. For a few years she ran it, website, occasionally had guests even off Craigs list ads in Paris and London as her rates were super cheap. Her mistake was getting VISA and MASTERCARD machines to roll credit cards, and a DBA to do it. So of course, three years later, the CITY OF L.A. Calif sent her a tax bill for 350 thousand bucks, doubled it with FINES totalling 750 thousand dollars, a 'tourist' tax' they called it. My friend almost lost her home as she never has a dollar extra for a lawyer. A beautiful biz was going to hit the graveyard. Tourists from all over the world paying a mere l00 bucks a night for a gorgeous centrally located bedroom in a mansion? She buys real oranges and squeezes juice for her guests. Gives them any breakfast they want, --has a genius Mexican cook to do it.
She was trembling in her boots. An elderly contractor, retired, who'd dealt with city offices and their hard-hit tactics, went to the tax bureau and told her, she has had no revenues. Wait til she's rich. Start fiching her now, she'll be a taxpayer tomorrow, after all, the poor girl just invested a hundred grand in fixing an old house with cracks, turning it into a posh hotel. Get her later." The city changed its mind, charged her 5,000$ taxes on her first few years, and said they'll be watching her earnings. Now, half her guests never even sign in and the hotel goes on.
So the morale of this story is... When you want to FIGHT CITY HALL don't get a lawyer, use a contractor who's fought city officers for decades. Just send him in. The thing you want to have done is to stay off their radar from the gitgo. Words like Black market and underground and Guerilla Capitalism refer to honest businesses that happen to deal in cash so the new entrepreneur can hide part of his profits until he's a success and can come up for air. The terms also refer to downright illegal activities, such as smuggling, drug dealing and prostitution where products or services are paid for in cash. See:
In modern societies the underground economy covers a vast array of activities. BACK STREET MONEY dealings are generally smaller in countries where economic freedom is greater, and becomes progressively larger in those areas where corruption, regulation, or legal monopolies restrict economic activity in various goods, services, or trading groups
Goods acquired illegally take one of two price levels:
* They may be cheaper than legal market prices. For instance, a man with a skiff can do 50 pounds of fish a day and that's about 500$ if he has a route of customers and ice in his truck. It is way way illegal and he'd better not try to supply cafes and hotels, not until he's licensed as there are waybills that are analyzed. If a cafe's putting halibut on the menu and they didn't BUY halibut at ALL, there's no way around it, no explanation the cafe owner can give the taxman. However, the fisherman is a guerilla capitalist and like Polish astronauts went to the sun, (At NIGHT!)
The Guerilla Fisherman knows how to drop off his fifty pounds of assorted fish when the TaxMan isn't likely to be there. AT NIGHT. Bureaucrats go HOME at 5 PM. Also, it could be that his safer, suburban route is his livelihood. It doesn't say JOE'S FRESH FISH on his VAN which is probably a 70's VW BUS. The fisherman supplier does not have to have a posh profile or pay for production costs or taxes. This is always the case in the underground economy. He's cutting corners but whatever he earns he earns from client friends & spends on his family. Criminals steal goods and sell them below the legal market price to other criminals. There is no receipt, no guarantee, no friendship. This is an honest worker selling the fish, the attic nostalgia the light fixtures from demolished buildings that he worked to find. And he is selling to repeat clients who like him.
* SOME BLACK MARKETEERS are more expensive than legal market prices. The product is difficult to acquire or produce, dangerous to handle or not easily available legally, if at all. If goods are illegal, such as some drugs, their prices can be vastly inflated over the costs of production. For instance in the case of pharmaceuticals.
Black markets can form part of border trade near the borders of neighboring jurisdictions with little or no border control if there are substantially different tax rates, or where goods are legal on one side of the border but not on the other. Products that are commonly smuggled like this include alcohol and tobacco. However, not all border trade is illegal.
Even when the underground market offers lower prices, most consumers still buy on the legal market when possible, because:
* They may prefer legal suppliers, as they are easier to contact and can be held accountable for faults
* In some jurisdictions, customers may be charged with a criminal offence if they knowingly participate in the black economy, even as a consumer.
* They may feel in danger of being hurt while making the deal
* They may have a moral dislike of black marketing
* In some jurisdictions (such as England and Wales), consumers in possession of stolen goods will have them taken away if they are traced, even if they did not know they were stolen. Though they themselves commit no offence, they are still left with no goods and no money back. This risk makes some averse to buying goods that they think may be from the underground market, even if in fact they are legitimate (for example, items sold at a car boot sale).
But some actively prefer the underground market, particularly when government regulations and monopolies hinder what would otherwise be a legitimate competitive service. For example:
* Unlicensed taxicabs. In Baltimore, it has been reported that many consumers actively prefer illegal taxis, citing that they are more available, convenient, and priced fairly.
Traded goods and services Largest black markets Estimated annual market value
Counterfeit technology products 100
Counterfeit pharmaceutical drugs 75
Prescription drugs 73
Opium and heroin 65
Web Video piracy 60
Software piracy 53
Cigarette smuggling 50
In developed countries, some examples of underground economic activities include:
Where taxicabs, buses, and other transportation providers are strictly regulated or monopolised 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— that is, taxicabs must get a special license and display it on a medallion in the vehicle. This has led to a market in Carpooling/illegal taxicab operation.
Illegal drug trade
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. The United Nations has reported that the retail market value of illegal drugs is $321.6 billion USD.
Although law enforcement officers do capture a small proportion of the illegal drugs, the high and very stable demand for such drugs ensures that black market prices will simply rise in response to the decrease in supply—encouraging new distributors to enter the market. Many drug legalisation activists draw parallels between the illegal drug trade and the Prohibition of alcohol in the United States in the 1920s.
In the United Kingdom, it is not illegal to take drugs, but it is illegal to possess them. This can lead to the unintended consequence that those in possession may swallow the evidence; once in the body they are committing no crime.
Prostitution is illegal or highly regulated in most 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 almost 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
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 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.  Weaponry
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.g. caliber,
automation, etc), to explosives. 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, those who
wish to use them for illegal activities, and collectors.
In England and Wales some kinds of arms designed for shooting animals
may be kept at home but must be registered with the local police force
and kept in a locked cabinet. Some people buy on the black market if
they would not meet the conditions for registration— for example if they
have a record of committing a criminal offense, however minor.
In some jurisdictions, collectors may legally keep antique weapons.
Sometimes they must be disarmed (incapable of being fired); but
sometimes they are so ineffective by modern standards that they are
allowed to be kept intact. For example a blunderbuss or cannon is hardly
likely to be used for a drive-by shooting.  Alcohol and tobacco
It has been reported that smuggling one truckload of cigarettes from a low-tax US state to a high-tax state can lead to a profit of up to $2 million The low-tax states are generally the major tobacco producers, and have come under enormous criticism for their reluctance to increase taxes. 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. But South Carolina has so far refused to follow suit and raise taxes from seven cents per pack (the lowest in the USA).
In the UK it has been reported that "27% of cigarettes and 68% of roll
your own tobacco [is] purchased on the black market".  Booze
Cruise Main article: Booze Cruise
In the UK, the Booze Cruise— a day-trip ferry to continental Europe
simply to get alcohol and tobacco at lower tax rates— is still very
popular. Its popularity varies on the Euro to Sterling exchange rate,
and the relative tax rates between the different countries. Some people
do not even bother to get off the boat, they buy their stock on board
and sail straight back. Ferry companies offer extremely low fares, in
the expectation that they will make the money up in sales on the boat.
The same system exists for boats between Liverpool and Dublin, Ireland.
Providing the goods are for personal consumption, "Booze Cruises" are
entirely legal. Because there are no customs restrictions between
European Union countries it is not strictly a black market, but closer
to a grey market. The UK and Ireland are both European Union members and
are both in a Common Travel Area so there are neither customs nor
passport checks between the two countries.  Copyrighted media
Street vendors in countries where there is scant enforcement of
copyright law, particularly in Asia, often sell deeply discounted copies
of films, music CDs, and computer software such as video games,
sometimes even before the official release of the title. Anyone with a
few hundred dollars can make copies that are digitally identical to an
original and suffer no loss in quality; innovations in consumer DVD and
CD writers and the widespread availability of cracks on the Internet for
most forms of copy protection technology make this cheap and easy to do.
This has proved very difficult for copyright holders to combat through
the law courts, because the operations are distributed and widespread—
there is no "Mr. Big". Since digital information can be duplicated
repeatedly with no loss of quality, and distributed electronically at
little to no cost, the effective underground market value of media is
zero, differentiating it from nearly all other forms of underground
economic activity. The issue is compounded by widespread indifference to
enforcing copyright law, both with governments and the public at large.
To steal a car is seen as a crime in most people's eyes, but to obtain
illicit copies of music or a game is not.
If an economic good is illegal but not seen by many in society as particularly harmful, such as alcohol under prohibition in the United States, the black market prospers. Black marketeers can reinvest profits in diverse legal or illegal activities, well beyond the original source of profit.
Some, for example in the marijuana-trade debate, argue for removing the underground markets by making illegal products legal. This would, in their view:
* decrease the illegal cashflow, thus making the performance of other, potentially more harmful, activities financially harder
* allow quality and safety controls on the traded goods, thus reducing harm to consumers
* let the goods be taxed, providing a source of revenue
* free up court time and prison space and save taxpayer money.
Black markets flourish in most countries during wartime. States that are engaged in total war or other large-scale, extended wars must necessarily impose restrictions on home use of critical resources that are needed for the war effort, such as food, gasoline, rubber, metal, etc., typically through rationing. In most cases, a black market develops to supply rationed goods at exorbitant prices. The rationing and price controls enforced in many countries during World War II encouraged widespread black market activity. One source of black-market meat under wartime rationing was by farmers declaring fewer domestic animal births to the Ministry of Food than actually happened. Another in Britain was supplies from the USA, intended only for use in USA army bases on British land, but leaked into the local native British black market.
During the Vietnam war, soldiers would spend Military Payment Certificates on maid service and sexual entertainment, thus supporting their partners and their families. If the Vietnamese civilian wanted something that was hard to get, he would purchase it at double the price from one of the soldiers, who had a monthly ration card and thus had access to the military stores. The transactions ran through the on-base maids to the local populace. Despite the fact that these activities were illegal, only flagrant or large-scale black marketeers were prosecuted by the military.
 Prohibition in the United States
Main article: Prohibition in the United States
See also: Legal drinking age
A classic example of creating a black market is the Prohibition of alcohol during the 1920s in the United States. Many organized crime syndicates took advantage of the lucrative opportunities in the resulting black market in banned alcohol production and sale. Most people did not think drinking alcohol was particularly harmful nor that its buyers and sellers should be treated like common criminals. So illegal speakeasies prospered, and organizations such as the Mafia grew tremendously more powerful through their black market activities distributing alcohol. This lasted until repeal of Prohibition.
Although Prohibition ended in 1933, there are still some parallels today with evasion of the drinking age of 21 in the United States, which is high compared to other industrialized countries and three years above the age of majority in nearly all states. Like Prohibition, this law is widely (but more covertly) disobeyed as well. Though social sources of supply predominate for underage drinkers, some bars and stores knowingly serve and sell to those who are underage, and some may even make deals with local police. Many college towns especially have a vast network of fraternities and sororities (and others) that run what can be considered modern-day speakeasies in their houses, in which age is irrelevant. Since the substance in question, alcohol, is legal for those over 21, it can be considered more of a gray market than a black market.
This effect is seen similarly today, when jurisdictions pass bans on smoking in bars and restaurants. In these jurisdictions, smokeasies arise which allow smoking despite the legal prohibition. In a sense the owner is not a black marketeer since he is not necessarily selling tobacco, but he profits by the sale of other goods on his premises (typically alcohol). This phenomenon is very prevalent in many US state jurisdictions with smoking bans, including California, Philadelphia, Utah, Seattle, Ohio, and Washington, D.C.
Proponents of the free market argue that the black market is themost free market. It offers consumers something they want at a low price. Transnational corporations PUNISH their clients. Black market entrepreneurs do not. Regulated markets, they claim, suffer one way or another from undue interference in the general working of a free market.
Others argue that black markets are often controlled by offbeat parties — such as a gang that aggressively regulates the drug trade in its territory — in a similar fashion to the government control of white markets, and are therefore not truly free markets. Agorists, however, use the term "red market" to distinguish between black markets in general and those based on violence and theft. But I'd use the term PINK MARKET. SEE THE HAPPIEST SIDE OF THE FREE STREET ENTREPRENEUR.
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