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My ECON Professor always said that the Black Market Economy always influences the legal economy. Is this actually true? Does this not mean the legal economy is making money on criminals?

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Submitted ⁨⁨4⁩ ⁨days⁩ ago⁩ by ⁨Patnou@lemmy.world⁩ to ⁨[deleted]⁩

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  • SpruceBringsteen@lemmy.world ⁨4⁩ ⁨days⁩ ago

    Running guns and drugs is very lucrative, but it leaves you with the problem of dirty money. So you start/buy a bunch of banks in places like the Bahamas, the Caymans, Libya, Switzerland, and transfer money between them to wash it making its origin hard to trace. Those same banks are also the places the rich like to hide from taxes.

    Look into guys like Michele Sindona, Wild Bill Donovan, Meyer Lansky, Willis Bird (Mr Opium), and Otto Skorzeny. Or The Safari Club, The World Commerce Corporation, Merex, and Paladin Group. Or how the KMT rebels funded themselves. There’s a network of actors post WWII who have used the proceeds of gun/drug running to help place their fingers on the scales of politics the world over, overstepping legal and national boundaries.

    Probably the most well known example is the Iran-Contra affair where Reagan sold arms to Iran in order to fund rebels in Nicaragua.

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  • Postmortal_Pop@lemmy.world ⁨3⁩ ⁨days⁩ ago

    Think about it like this, your pot dealer isn’t spending all that money on more pot, that’s they’re primary income. That pays their rent, utilities, groceries, etc.

    If you’re a dealer, that can make a lot more money than most entry level careers and that income is relatively economically detached so it’s not going to change too much during economic downturns. So that means while the rest of the area is struggling they’re going to still have a steady income. In that situation, the purchases made by drug dealers will remain consistent while the rest of the population cuts back and this skews the data that companies use to decide what they stock.

    Decades back I worked at a Walmart that had a disproportionate stock of huge TVs and Xbox stuff because this guy would be in to buy a 360, TV, and a new phone every other week. We’d shoot the shit about different tech, I talked him into trying new Vegas when he got bored of CoD. We both fan-boyed over the twist in BioShock. Heard his name dropped while visiting my stoner friend and his dealer informed me that I’d been offering game suggestions to the guy responsible for basically all the drugs in the county. Regional distributor for the drug trade was maybe laundering money by flipping all the consoles at Walmart? I don’t know, but he was definitely skewing the orders of that Walmart.

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  • Skyrmir@lemmy.world ⁨3⁩ ⁨days⁩ ago

    Economic activity is economic activity. Laws are regulations are just expenses that lead to market distortions. If all works as planned, the cost of violating the law minimizes the size of the black market, but it’s always going to be there. Because of that, spending will get shaped around not only that market, but legal avoidance as well.

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  • Lemvi@piefed.zip ⁨3⁩ ⁨days⁩ ago

    With these things, it often makes sense to ask the opposite question. Would it be possible for one to not affect the other? Legal and illegal markets would have to be completely separated, meaning money used in one couldn’t be used in the other, and entities participating in one couldn’t participate in the other.

    That is obviously not true, so yeah, black markets influence the legal economy.

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