The black economy is not something that appeared recently a few years ago. Nor is it exclusive to Spain; it's actually been around the world for a long, long time. However, this way of moving money can end up bringing very negative consequences to a country.
But What exactly is the black economy? How is it different from the illegal or informal economy? What effects does it have? We are going to deal with all that and much more below.
What is the black economy
The black economy has to be understood as the way in which "black money" moves through a country. In other words, it makes mention of the different economic transactions that are carried out between companies, individuals, etc. and that they are not declared to the competent fiscal or monetary authorities.
Un example of black economy it can be the following:
Imagine that you are a painter. You do that and you have clients that you charge for your services. However, one of the clients decides to pay you in cash and does not want an invoice or anything that indicates you have worked for him. And you accept it, but you don't declare that money because you don't have to justify it.
This is related, therefore, to the "payment in B", as money received "under the hood" or by a means that is much more difficult to trace (usually money in hand, since this is how you don't have to justify it).
And although at first the underground economy was the one that focused its activities on the sale of drugs, human trafficking and commercial transactions in which taxes were not paid, now they also point to other more common sectors: services, food, etc.
Submerged, illegal and informal economy
One of the failures when it comes to understanding the concept of the shadow economy is to confuse the type of transactions that can be found in the "black market", that is to say:
- The illegal economy, that they are transactions that are carried out with things that are prohibited, such as weapons, people, drugs ...
- The informal economy, which would be transactions that, despite being legal, are not declared.
Actually, the underground economy is all of them, both the illegal and the informal, because they are part of the larger group that forms it, and although the term "black market" refers more to the illegal economy, the truth is that in the everyday market there is also a strong presence of the informal (and therefore submerged) economy.
Causes of economy B
Why did the black economy emerge? This is a great question, and there will be many who are in favor and others against it. The reasons will also differ depending on whether you are on one side or the other, that is, depending on whether you are a buyer or a seller.
If you are a buyer, the reasons why you would opt for the black economy are:
- Get a product at a lower cost.
- Obtain products that cannot otherwise be purchased (legally).
How to Live Aligned with seller, the reasons are similar:
- Sell cheaper and therefore a larger quantity.
- Not having to justify that amount of money.
- Do not pay taxes on that money, which remains "everything" for the seller.
Despite all the above, we must remember what we said at the beginning: the black economy can have very negative consequences for the country. And we will tell you which ones.
The consequences that can end a country
For many, the fact of charging for something and knowing that you do not have to declare it or pay taxes for something whose work and physical effort has been done by yourself makes a lot of sense. The problem is that, if we all did that, then there would be no hospitals, no roads, no health ... Because nobody would contribute to the country so that these things were done.
And that is precisely one of the greatest consequences of the underground economy, not the fact that taxes are collected per se, but in the loss of that money that is collected in order to be able to invest it in developing the country and creating improvements for the common good.
Clearly the underground economy itself generates work; but at the cost of other jobs that disappear. And it is that companies, and workers that act legitimately, that comply with taxes, payments, etc. They cannot compete with others that have lower costs, forcing themselves to close down, to give up.
In the case of the government, it loses income, those that could be used for services for citizens, and, as a result, the country begins to lack what a person may need the most.
But also at the individual level there are bad consequences. And is that Those people who work do not have the right to unemployment, or to retirement if necessary, since, for Social Security, that person has not worked and, therefore, nothing corresponds to him.
Obviously, if you are 'caught' committing a black economy fraud it will not imply a 'soft' penalty. You can face fines and even prison terms for using these illegal practices. And no, the service you offer is not illegal (except for the examples we have seen of illegal economy), but it is, in all cases, evading taxes.
Another of the consequences generated by the underground economy directly affects buyers; and is that They cannot claim anything from the seller because they have no guarantees nor do receipts for that service or product, so if it fails, is broken, counterfeited or stolen, they become victims of their own "fraud."
The black economy in Spain
Spain, a few years ago, it had more than 21% of the black economy GDP, which is a fairly high figure (and we usually speak of an estimate since we do not know exactly the percentage of something that cannot be justified). Crises aggravate this underground economy, not only in illegal products, but also in informal ones, since they seek to obtain money without having to pay taxes.
Despite the fact that defense mechanisms have been established and it is more thoroughly controlled to prevent the existence of this type of economy, it continues to be present in the country and, since world governments put their "eye" on ending it, the position of Spain with respect to the others has not varied much. Does that mean we are still the same? Yes and no.
There is an estimate that, between two and five million people work in the underground economy, Either because they do jobs that later they do not declare, or because they sell illegal products. The fact of evading taxes, as well as labor regulations can cause negative effects in the country, since it becomes poorer.
Currently, there are measures against bank fraud, the elimination of high-value bills, periodic inspections in accounting, elimination of cash payments, etc. All of this slows down the black economy. And although that has reduced and slowed down transactions a bit, it is still very present in Spain, as in the rest of the countries of the world.