http://www.economist.com/blogs/graphicdetail/2013/04/daily-chart-19
This article shows estimated values of some of the largest illegal markets in the world. This is a short article but the graphs have some significant economic and ethical implications. The markets listed add up to an estimated $650 billion, drug trafficking being the largest at $320 billion. This results in huge losses for companies on the legitimate side of some of these markets- given that some, obviously, do not have a "legitimate side", like human trafficking for example. The market for counterfeit and pirated goods is estimated at $250 billion annually, meaning that some industries are losing a large chunk of income because of this. For example, things like designer clothing or watches are commonly counterfeited and sold at a much cheaper price than the real product. This causes demand to fall in those markets because people sometimes buy the cheaper, fake product instead of the real thing- leading to a loss in total output. In addition, the government loses tax revenue because people do not pay sales taxes in these markets for obvious reasons (nor do they usually report the income and pay income tax). Economics aside, the size and nature of some of these markets present some pretty serious ethical issues. It's shocking to see that an estimated $32 billion is made in a year from human trafficking, or that there is even a market for human organs. These illegal markets can cause anything from billions in lost profits to ruining peoples' lives, and obviously we should continue to do what we can to fight them.
Illegal markets are obviously not good but sometimes it is a good question to see how the economy would do without it as there is a lot of cash flow in and out of the "black market."
ReplyDeleteI believe there are some markets that should be illegal, but then there are some we could benefit from. It is interesting to see that the consumption for organs is so high. Maybe this is a market we could look into possibly. It is weird to say, but it is a $32 billion industry.
ReplyDelete^ Will Delorey you are a sick individual. I believe this article is almost an argue for the legalization of marijuana. There are plenty of lucrative illegal markets that go untapped because they are deemed illegal. There is potential for growth with the legalization of some of these items. Sure plenty of these markets pose moral conflicts such as human trafficking and the selling of human organs. But there are some borderline illegal activities that if passed could prove to be extremely beneficial to growth in our recovering economy.
ReplyDeleteMost economists would say, "legalize everything." This article would be a good argument for such a statement. More markets that become legalized will increase consumption and GDP but there are also obvious negative effects in legalizing black markets.
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