As this Wall Street Journal article recently noted,

Economists have long thought the underground economy — the vast, unregulated market encompassing everything from street vendors to unlicensed cab drivers — was bad news for the world economy. Now it’s taking on a new role as one of the last safe havens in a darkening financial climate, forcing analysts to rethink their views.

Informal jobs “will absorb a lot of people and offer them a source of income” over the next year, says W.F. Maloney, an economist at the World Bank in Washington. Indeed, the jobs are “one reason that the situation in desperately poor countries isn’t as bad as you’d think,” says Simon Johnson, a former chief economist at the International Monetary Fund.

Is it really that surprising? That, when government-created hurdles such as occupational licensing laws, price controls and entry barriers are removed (or ignored) individuals are able to engage in peaceful voluntary exchange, thus increasing wealth and prosperity? That individuals, who have an incentive to increase their standard of living, will seek to supply goods that are in demand, and through competition the quality of said goods will increase and the cost decrease, thus benefiting the consumer?

But just how extensive is the informal economy?

According to Nation Master, a very robust site that aggregates all sort of macro-level data, pretty damn extensive.

It’s a bit difficult to see but there are a dozen countries in which the informal economy accounts for over half of business done (Georgia, Bolivia, Panama, Azerbaijan, Peru, Zimbabwe, Tanzania, Nigeria, Thailand, Ukraine, Guatemala, Uruguay) and over 60 countries with 30% or more in the informal economy.

What does this mean?

Since transactions done in the informal economy are “off the books” they’re not reported to the government. Which governments don’t like, as it means less money in their own pockets and less money for their pet projects (which I’d argue they have no right to, as it’s theft). Is it any wonder then, why some governments go to great lengths to try to dissuade such activity? Though this often involves the use of force (i.e. SWAT guys breaking down doors and pointing guns at people) one recent example from the Canada Revenue Service shows a gentler approach — a PR campaign to shame those not “paying their fair share” into handing over their hard-earned dollars to politicians and bureaucrats who believe they have a right to the money.

Ridiculous.

For more check out the Tax Slavery Sucks overview and start a conversation with the good folks in the Agora! group on Bureaucrash Social.

Thanks to Isaac Moorehouse for putting the WSJ article on my radar.