Without such schemes, both society and the economy would be under threat. Businesses that are still limping on by selling their wares online or as take-out would have even fewer customers with money to spend. And people who can’t pay their rent or buy food for their families are unlikely to stay quietly at home for long. That’s why some people are worried that these government schemes leave certain groups of people out. In particular, they do nothing for those who work in the underground economy (sometimes also referred to as the informal sector, shadow economy or black market).
The underground economy is all the bits of the economy that operate without the oversight or knowledge of the government. That means it isn’t bound by government regulation like the minimum wage and it pays no tax. Underground economy workers include straight-up criminals like drug traffickers, but also plenty of people who are doing things like running a small fruit and veg stall without a permit or doing cash-in-hand building work.
Although we don’t know exactly how many people work in the underground economy, we know it’s a lot. The International Labour Organisation reckons that it’s about 2 billion people worldwide, which is 60 percent of all workers. Some of these people’s primary motivation for working in the underground economy may be to avoid giving money to the state. But others may simply find the formal economy too hard to enter, perhaps because of their immigration status or education level or just the availability of jobs. Some of them may simply not be aware that they’re doing anything wrong.
Italy, which has been on strict lockdown for a month, has a large underground economy. Many of these workers have seen their incomes drastically reduced - after all, not many people are buying cocaine or roadside strawberries right now. But because the government doesn’t formally know about this income, it isn’t offering to replace any of it in the same way formal sector employees are entitled to.
…and more importantly, what on earth is economics? This whole website is about starting a conversation about what economics is and could be. To work that out, we’ll need to look back at how this discipline emerged in the first place, what so-called ‘economists’ do, and what the future of economists could look like if we all became ‘citizen economists’.