According to Rick Newman of US News and World Report, America’s consumer confidence continues to rise, and their out of pocket spending has been solid. Yet credit card spending has not risen, and incomes have not risen either. So what’s going on? Newman explains: “The answer may lie in the large ‘underground’ economy that doesn’t show up in official statistics.”
In others words, Americans, tired of taxation, may be engaging in an enormous black market. Newman quotes Bernard Baumohl of the Economic Outlook Group stating, “We suspect the destructive nature of the last downturn and the prolonged weak recovery pushed a record number of people into that murky world of cash transactions.” The American black market economy may comprise between 8 and 14 percent of total Gross Domestic Product. In California, the country’s leading tax-and-spend state, over $6.5 billion in taxes may be lost thanks to the black market.
Across the globe, failing tax-and-spend economies breed gigantic black markets. Italy’s black market supposedly covers some 20 percent of its economy. The same is true in Spain. In Brazil, that statistic may be up to 27.1 percent. In Israel, the statistic could be up to 25 percent. For member countries of the Organisation for Economic Cooperation and Development, 17 percent of national wealth on average is invested in the black market.
With the growth of the regulatory state and the growing fear that governments will seize personal wealth at every turn, more and more people are stowing cash in their mattress and buying products with it. The spirit of entrepreneurialism cannot be quashed by the zealously burdensome state. And if America pursues the path of the European economies, it can expect tax revenues to remain subpar and illegal fortunes to change hands.
Ben Shapiro is Editor-At-Large of Breitbart News and author of the book “Bullies: How the Left’s Culture of Fear and Intimidation Silences America” (Threshold Editions, January 8, 2013).