Another Side of Illegality

As a general rule, a large informal sector is a sign of poor governance. (I used to hear people say, “Oh, those people understand capitalism so well. I went to a bazaar and, gosh, can they haggle!” When most transactions are subject to costly negotiations and most transactions are spot-transactions, that is, cash for goods, it’s a sign of an underdeveloped legal system.) In any case, this article from the Wall Street Journal may help us to understand a little better how the informal sector functions: “The Rise of the Underground.”

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