From time to time I like to check the Google to find the latest info on the shadow or underground economy, both in the U.S. and abroad. For some reason, academics in the euro zone seem more interested in this phenomenon than their U.S. counterparts. In Russia the issue is being actively addressed by their central bank to counter bankers converting accounts to cash and then smuggling the money out of the country. Of course, they don't call it smuggling; "dubious financial operations" has a more modern ring.
Modernity seems to be the flavor of the year. A study, (pdf) conducted by one Dr. Friederich Schneider at the University of Linz under the auspices of Visa Europe and A.T. Kearney is also concerned with modernity.
As his second paragraph explains:
Paradoxically, as consumers achieve this “modernity,” they still rely primarily on old-fashioned cash for most of their transactions. Dirty and heavy, cash is also easy to hide from authorities, fuelling one of society’s most damaging phenomena: the shadow economy—that blurry area of commerce that includes legal activity hidden deliberately from public authorities.Regardless of the copy right claims at the end of this study, I really have little inclination to quote extensively. Of more interest are the preconceived notions (a phrase I prefer to "prejudice") embedded in just that little paragraph, because it continues the long and apparently valued habit by economists of proceeding from false assumptions.
Let's start with the characterization of cash as "old-fashioned" as if "new" were better and "fashion" were a concept that even applies to currency. That currency, a utilitarian measure of relative value, ought to be standardized and as readily available as the inch is obviously not to be considered. That a "transaction" involves a person acting doesn't seem to register either. If it did, people handing over cash for what they receive in exchange would not come as a surprise.
"Hide from authorities" is, at least, honest and illuminates the sudden preference for "transparency" on the part of public officials. "We're just going to look through what you're doing; no need to be alarmed." That individual privacy is to be respected and that public officials are to be scrutinized simply can't be accepted. What good is authority if people can hide from the all-seeing eye?
So, transactions that can't be easily tracked are now "one of society's most damaging phenomena," as if society and keeping records were one and the same and all of the trade and exchange that developed before writing and reading became ubiquitous counted for naught. Or, perhaps, we are to conclude that human societies are defined by the extent to which symbols supplant what people actually do. I suppose that's the preferred definition for people who do nothing but manipulate symbols from morning to night. That somebody is actually fixing lunch doesn't even register with the virtual crowd.
Who puts the food on the good professor's table? Does he even notice?
In the beginning, economic theory proposed that
"Man prefers leisure and must be bribed to work."
That man's transactions aren't valid unless they can be tracked is not far off the mark. What's still important is that somebody be in charge. Otherwise, who will fix the authorities' lunch?