Bryan Silva  

Black Market  

Burns 

Per.1  

Passages 1 
 The Black market is a market where people can buy illegal things or buy things

that are legal but in an illegal way. For example; drugs, kidneys, weapons, human

trafficking and many more. The Black market affects the world population both in a

positive and negative way. For example, the black market supplies those in need of an

organ transplant. Not only does it save the person's life, but it won’t be priced at a

ridiculous value. The Black Market also affects the people in a negative way through

unemployment and crime development. It puts a lot of people out of work. This passage

is going to talk about how more regulation leads to black markets, therefore regulations

should be reduced in helpful markets such as food, clothing, and medicine, but

monitored in harmful markets like weapons and animal poaching. Depending on how a

a black market is managed, it can either be correct or wrong in a person's point of view.

Many people depend on black markets to get money. Some people use black markets in

a negative way and others use it in a way that will benefit themselves and their families.

With the wide range of black markets operating in the world, there are many

methods by which black market activity is conducted. The most common factor is that

black market sales are kept clandestine for the protection of buyers and sellers alike. In

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order to purchase black market goods, a buyer may have to have the right contacts or

know specific locations to find sellers. The difficulty of finding such information also

varies widely depending on the market and the goods involved. Finding a seller for

street drugs is relatively easy whereas finding a seller of stolen rare art or collectibles

may be considerably more difficult.

This infograph shows that most of the donor countries are developing and the red

pianos of those donors are part of the developed world. This leads to trade dependence.

The more poor a country is, the more likely it is to turn towards the black market for

resources. The countries who are in the dark portion of the infographic are in more

poverty which is why they would practice organ trafficking. For example,Egypt has no

current laws to prevent organ harvesters. In fact there’s been 500 unlicensed kidney

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transplants reported each year. Almost 30 million people live in poverty and thats why

its a hot place for the Black Market . Organ traffickers span as far as Europe in the

hopes to find many victims to buy organs from and bring them back to Egypt.

Something that makes Egypt unique to other countries is that the law does not punish

organ harvesters. The law is still being discussed, whether organ trafficking will be

banned or not.

There are cases where black market activity happens more or less in the open.

Some stolen goods may find their ways to street fairs or open markets, for example,

where they are sold at steep discounts to buyers who have no idea they are purchasing

stolen goods. In other cases, black market goods may be sold by openly recognized

sellers and purchased by buyers alike if there is a sufficiently low chance of interference

from law enforcement officers. A noted modern example of this is China, where there is

a burgeoning market in counterfeit goods.

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Although the black market can be favorable, it is detrimental to the unseen effects of the

native population, such as the rhino and other animals. Animal trafficking includes

exotic animals such as rhinos where there are poachers who illegally hunt down rhinos

for their ivory horns. One problem is catching poachers, it can require unusual levels of

experience in animal life, In the website Nature World News, it said that “ Government

officials and local law enforcements may be trained to detect counterfeiting, human

trafficking and even different kinds of drugs, but is a local official going to be able to

distinguish one particular cat skull from another ? Usually that is left up to people at

universities, who can’t even usually do that.”

Black markets, also called shadow markets, come about when people want to

exchange goods or services that are prohibited by governments. Black markets skew

economic data, as transactions are unrecorded. Black markets also arise when people

don't want to pay taxes on the transaction for legal or illegal goods or services. Some

black markets exist simply because people don't realize there are laws they aren't

following. Such as bartering and not reporting the taxable value of the transaction, or

hiring a regular housekeeper or babysitter, but failing to pay employment taxes.

Sometimes participants in black market don't want to act illegally, but sometimes

with the inability to work legally and the need for money, they don't report their jobs or

income to the government. Undocumented migrants that come to the United States

have hardships finding legal jobs, therefore, the black market is the only way to sustain

their family. There are many underground markets in everyday life that advertise lower

quality products where people can extract maximum profit.

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 This picture below shows the trafficking of drugs, guns, and sex between

different cities in America. From this

you can see a trend and notice hotspots

for the Black Market trade.

By this image, it’s noticeable that

depending on the city, there are

different demands. For example,

Atlanta, Georgia has 290 million dollars

in sex trafficking and this is due to extreme poverty.

Rationing is common in wartime in order to equalize the distribution of scarce

goods and services. Black market activity may consist of charging more than the legal

prizes or charging or counterfeiting ration currency. Also, government policy consists of

planned and restrictive allocation of scarce resources and consumer goods.

Black market can also appear when when government imposed price ceilings

create shortages. For example, if the government caps the price at which a grocery store

may sell bottled water after a natural disaster, the store will quickly run out of water,

then vendors will later appear selling that water at the higher prices people are actually

willing to pay in black markets.

Developing economies often have a bigger black market, the reason of this is

because of existence of a barter economy which falls outside the remit if the

government. A barter economy is an economy that lacks a commonly accepted

currency, so all exchanges must be made with goods and services because money does

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not exist in these economies. Barter economies are thought to be inefficient compared to

those that use currency for exchange because a “ double coincidence of wants” is needed

in order to make transactions happen; both parties need to want what the other party

can produce and trade.

The legal penalties associated with black market crime depend on what the crime

was and in which country the crime was done. Sometimes, even if there are serious

penalties for the crimes done, they are not always enforced. There are cases where

police, agencies, or other regulators accept bribes or other incentives to avoid pursuing

black market activity.

The political stability of many governments in the developing countries is often at

stake when the government decides to devalue currency, even when the decision is

economically sound. The developing countries cannot follow an independent course in

today's world regarding the exchange rate of their currencies. What the developing

countries fear the most is the speculation with the exchange rate of their currencies , if

that happens the country loses valuable foreign exchange. The country chooses a fixed

exchange rate regime to safeguard national interests. In many developing countries

political liberalization can lead to economic growth. As an example countries that have a

greater level of political freedom may not implement policies such as trade liberalization

that could have beneficial effect on growth. This can be illustrated by examining the

situation that South Korea faced during the late 1980’s when its government tried to

move forwards not only greater political freedom but also economic freedom.

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 The openness of an economy depends primarily on the decision of the

government. This variable has been chosen as a system variable since the extent of

democracy has little effect on the openness of an economy. For example China is

totalitarian and India is a democracy, but they both have roughly the same level of

economic freedom. Economic freedom measures the number and/or effectiveness of

trade barriers such as trade restrictions, monetary policy, and restrictions on capital

flows and investments in a particular country.

Government effectiveness made available by the World Bank to indicate

the ability of the government to formulate and implement policies. This variable

measures, the quality of public service provision, the quality of the bureaucracy, and the

competence of civil servants. In other words, this variable measures the government's

ability to produce and implement policies and deliver public goods. Like the democracy

index, economic freedom index, and the political stability index, this index is also

averaged over a period of 5 years.

The probability of losing power is associated directly with the degree of political

instability in the country. Such instability can have serious consequences on economic

growth as there is a direct connection between capital flight and political instability

which compels consumers to increase spending as their savings could become worthless.

Savings also become redundant with political instability. Even when investors do invest,

they tend to favor industries and investment opportunities that are the liquidable.

Investments in such countries tends towards low productivity industries that are not

capital intensive which would provide the foundation for their development. As a result,

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two of the most essential factors that sustain economic growth, investment and savings,

are affected adversely by political upheavals.

Numerous studies have documented a robust positive effect of economic freedom

on economic growth. Economic freedom can be described simply as a measure that

characterizes the degree to which an economy is a market economy. In other words, it is

a measurement of the ability to enter into voluntary contracts with limited government

intervention in the form of regulation, taxes, and rule of law which upholds contracts

and protects private property.

Economic freedom increases growth through its effects on the neoclassical

growth factors, physical capital and human capital. According to Douglass North, the

type of institutions in place has an important effect on the incentives of economic

factors to be more efficient or inefficient. Theoretically, institutions that promote

economic freedom also have the capacity to promote incentives which in turn promotes

productivity.

China has been running the world's largest and most successful eugenics program

for more than thirty years, driving China's ever-faster rise as the global superpower.

Geoffry Miller said “I worry that this poses some existential threat to Western

civilization. Yet the most likely result is that America and Europe linger around a few

hundred more years as also-rans on the world-historical stage, nursing our

anti-hereditarian political correctness to the bitter end.”

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 Buying a rabies vaccine for pets online in China is quick and cheap. The problem

is that products are being sold illegally and some could be fake. The same applies to the

vaccines sold by local pet shops, grooming salons and some animal hospitals. The black

market for rabies vaccines is growing throughout China and elsewhere in Asia, where

thousands of humans die from the viral disease every year. The spread of fake vaccines

has become extremely dangerous, veterinarians say. In China, rabies vaccine

procurement and distribution channels are controlled by the government. Only animal

vaccination hospitals certified and licensed by the Animal Husbandry Bureau, a

subsidiary of the Ministry of Agriculture, can provide rabies and distemper vaccines

legally. And all supplies of rabies vaccines in China come from international

pharmaceutical companies. Illegal rabies vaccines are bad because when the vaccine is

taken illegally, it could lead to serious medical issues and in some cases death which is

why they would be considered experimental drugs.

Virlan Torres said in his article, “BUENOS AIRES, Argentina (BRAIN) — The

Grinch stole Argentina’s bike market this year, but the industry hopes the spirit of

Christmas softens the government’s stance and import laws are softened in time for the

holidays, the traditional start of the Argentine bike season.” Argentina implemented

new import requirements in February that virtually shut down all imports of bikes, as

well as many other consumer products.

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 These graphs are for the Bolivian exchange rates to the dollar after it fell

dramatically. When analyzing this graph, we can see that in the beginning of 2014 the

Bolivian currency compared to the US dollar was average sitting around 100. As the

years progressed, the black market saw a geometrical sequence decrease dropping from

200 to 1,000. This can be caused by many factors which we still might not know. The

black market had a huge part in the down fall because the country’s economy was

expected to contract 10.1 percent this year, up from 5.7 percent in 2015, making it the

worst performer among economies tracked by the world bank. Inflation hovered around

720 percent, and as many as 76 percent of venezuela's live below the poverty line, up

from 52 percent of the population in 2014, according to recent study. Severe food and

medicine shortages, soaring crime rates, and a government crackdown on the

opposition have sparked widespread protests. Between the year 2014 and 2015 the

foreign currency which is built upon gold fell by down to a little above 10 billion when it

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used to be sitting at 15 billion. This is important because it shows that due to the black

market status that it shows it can affect the world's economy by almost 5 billion dollars.

The price point

where the two

intersecting lines it the

market deal where the

demand meets the

supply which give it its

price and value and

worth. In the black

market it sells of a lot of items causing the price to rise and benefiting the sellers with

huge amounts of profit. When both the demand and the supply meet its the ideal

market, but the black market goes for shortages which is what fuels it to be an in

demand market system.

The craziest Black Market in Russia isn’t for oil or guns, it's for dissertations. Late

last year, Russian newspaper reported what would have qualified as a stunning piece of

news almost everywhere, the country's largest parliamentary body had been exposed as

a plagiarist. The former chief of staff in Vladimir Putin’s administration and a

prominent member of his United Russia party were accused of receiving the Russian

equivalent of a doctoral degree on the strength of a dissertation in which more than half

of the pages contained material lifted from other sources. Also in Russia, over the past

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25 years, many of these boards have become corrupt, faculty members and academic

advisers taking bribes in exchange for rubber - stamping or stolen work. According to

Leon Neyfakh , “Everyone wants to get his cut. You bought a dissertation, you still have

to pay the people on the board to let his dissertation go through. At the universities,

everyone needs money they’re all overworked and underpaid.” They also do academic

frauds some of them are places where fake degrees are manufactured, they usually do

their business out in the open and are easy to find. The reason that advanced degrees are

in such high demand in Russia is because they can bring tangibility. That is monetary

benefits to those who acquire them, in some sectors of the economy, only the ones with

doctorates can be promoted to to the highest ranks. Also, medicine and an advanced

degrees allow practitioners to charge more for his services.

In the United States, government efforts to regulate and micro-manage the

economy have historically been much less extensive than in communist or socialist

countries. The US government has typically been more ambitious and aggressive in its

attempts to regulate and control economic activities during times of perceived national

crisis especially during war time. Heavy rates of taxation on legitimate wages, salaries

and small business profits. Currently a minimum federal tax take of 18% for income tax

plus more than 15% for social security tax, even before beginning to tally up state and

local income taxes and license fees. Putting even an approximate number on the full

extent of black market activity in the US or in any country is very hard to do and

necessarily rather imprecise. But economists who have made serious and systematic

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efforts at estimation claim that black market activity probably amounts to at least 10%

of US GNP (Gross National Product).

In China the Global of Informal Economy, book buissneses collectively account

for trillions of dollars in commerce and employ fully half the world's workers. These

enterprises are critical sources of entrepreneurialism, innovation, and self reliance. Also

the globes gray and black markets have grown during the international recession,

adding jobs, increasing sales, and improving the lives of hundreds of millions.

During the 1980s, El Salvador was the single largest recipient of U.S. military

hardware and weaponry in the Western Hemisphere. Although the Central American

country's civil war ended in 1992, the guns, grenades and bullets linger, as do their

murderous effects. In September, a U.S. official from the Bureau of Alcohol, Tobacco,

Firearms and Explosives estimated that half the weapons available on El Salvador's

vibrant black market were made in the United States. (The Latin American Gun Leak)

Although some arms and ammunition were undoubtedly illegally trafficked from

the United States, and Latin American authorities routinely blame shadowy foreign

arms dealers for running guns to Central and South America, the real source is probably

much closer to home: local military and police arsenals. A good example of this can be

found in the case of a Salvadoran officer who was sentenced in November for selling

about 50 weapons on the black market, including four AR-15s, the commercial version

of the U.S.-made M16 assault rifle. All of them were siphoned from Salvadoran army

stores.

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 For decades, many Central and South American countries were devoted

consumers of U.S. military- and civilian-issue hardware, while a handful of leftist

governments were supplied Russian assault rifles and munitions. These U.S. and

Russian exports continue, but now dozens of countries, led by Austria, Belgium, Czech

Republic, Germany, Israel, Italy, Spain and Turkey export weapons to Latin America.

Regional imports of all arms and ammunition skyrocketed by almost 400% between

1992 and 2012, with Brazil, Colombia and Venezuela among the leading purchasers.

Not surprisingly, these same countries — Brazil, Colombia and Venezuela — also

register some of the highest homicide rates in the world. Notwithstanding variations in

lethal violence between and within countries, the regional homicide rate is 28.5 per

100,000. The global average hovers around 7 per 100,000.

Latin American statistics on gun violence are breathtaking. Its residents account

for just 8.5% of the world's population, but 27% of its homicides. According to one

recent survey, 34 of 50 of the most violent cities in the world are in the Americas.

Firearms play an important role in shaping the lethality of everyday violence.

Roughly 75% of all homicides in the region are a result of gunshot injuries. The global

average is around 50%. In Brazil, Colombia, Guatemala and Honduras, the rate exceeds

90%. As the world's largest arms exporter and importer, the United States still plays an

important role in facilitating the continued supply of guns to the rest of the Americas.

The closer one's border is to the United States, the greater the likely inflow of arms.

Mexico, for example, has an estimated influx of more than 212,000 illegal firearms from

the U.S. each year owing to straw purchases. “Latin American statistics on gun violence

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are breathtaking. Its residents account for just 8.5% of the world's population, but 27%

of its homicides.” (LA Latin Times, January 16, 2015)

The U.S has the largest black market in the world, amounting to $625.5 billion.

According to information gathered by HavoScope, a researcher firm focused on

measuring the size of illegal markets around the world. China comes in second, with a

black market size of $261 billion, followed by Mexico with a value of $126 billion.

Counterfeit drugs, prostitution, and counterfeit electronics are the most trafficked illegal

products worldwide, accounting for a combined $355 billion.

During the early years of the Cuban revolution shortages could be attributed to

the United States embargo, but today Cuba has trade relations worldwide and can

purchase the products people need in other markets.

It doesn’t even seem there is a financial problem because the products are there and

disappear intermittently. Many employees receive commissions from suppliers so they

do not prioritize national interest but those of their own pocket. They were paid by those

corrupt foreign businessmen recently tried and sentenced to jail. Sometimes the chaos

has high costs for the economy as when the buses are stopped because they didn’t buy

the parts on time wood for boxes to harvest crops gets scarce or a sugar mill is stopped

for lack of foresight. Even in the sale of school uniforms, at state-subsidized prices,

unrest is created by the lack of sizes. One problem that the shopkeepers are always ready

to solve by charging the child’s parents an extra bit of money.

Illegal street vendors, and unlicensed road side hawkers as a major economic

players. According to journalist Robert Neuwirth, that's exactly what they’ve become. In

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his new book, Stealth of Nations: The Global Rise of the Informal Economy, Neuwirth

points out, “The small, illegal , off the books businesses collectively account for trillions

of dollars in commerce and employe fully half the world's workers.” Further he says,

“These enterprises are critical sources of entrepreneurialism, innovation, and self-

reliance. And the globe’s gray and black markets have grown during the international

recession, adding jobs, increasing sales, and improving the lives of hundreds of

millions.” Neuwirth says, “It’s time for the developed world to wake up to what those

who are working in the shadows of globalization have to offer.”

Black markets typically exist because the regular markets do not provide a seller

the highest possible revenue for an item he has for sale. The reasons for regular markets

to not support the higher price would be that the item being sold in an illegal way or that

it has a price control that prevents sellers from getting the full amount a buyer is willing

to pay. Some examples of banned items are certain arms and ammunition, drugs, books,

videos and information, or ideas that have been prohibited. Some goods that have been

stolen might be food or essential items in the area where they cannot be produced or

imported legally. This happens during natural disasters or outbreaks of unrest that can

result in refugees fleeing to areas where insufficient resources for survival are presented

locally. Price controls can be established in an effort to make sure that lower income

people retain access to essential items, but sellers seek to circumvent the price controls

and find the highest bidders through the black market.

A future solution to stop these activities requires different actions, depending on

the circumstances in play at the time. Some solutions could include increasing the cost

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of doing business in the black market, for example such as the sellers of legal goods find

the legal market to be the highest net revenue path again. Some methods can include

choking off the supply of goods to black market sellers, and only allowing regulated and

licensed sellers with something to lose to be able to receive the goods that are being sold.

Another method can be to destroy contraband more effectively, so it does not make its

way to the black markets.

Works Cited

http://study.com/academy/lesson/black-market-definition-effects-on-the-economy.html

https://www.google.com/search?q=what+is+black+market&rlz=1CASMAE_enUS716US71
6&oq=what+is+black+market+&aqs=chrome..69i57.4344j0j1&sourceid=chrome&ie=UTF-8

http://www.investopedia.com/articles/economics/12/mechanics-black-market.asp

http://www.economicshelp.org/blog/glossary/black-market/

http://www.yurtopic.com/money/marketing/black-market-facts.html

http://www.natureworldnews.com/articles/19764/20160208/trading-extinction-reducing-illegal-ani
mal-poaching-trafficking.htm

http://www.cfr.org/economics/venezuelas-economic-fractures/p32853

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