The Underground Economy

If you’re interested in the effects of long-term unemployment and the ways that out-of-work people manage to get by, I highly recommend the Longreads selection that was Freshly Pressed this past week:  “Mango, Mango! A Family, a Fruit Stand and Survival on $4.50 a Day.”  Douglas Haynes, whose piece was originally published in Orion magazine, takes us through a day in the life of families who eke out a living by selling snacks in the squalor of Managua, Nicaragua’s sprawling Mercado Oriental.  While some of the tiny businesses that set up folding tables are licensed, most are not.  With so many thousands of stands cropping up and disappearing daily, selling everything imaginable, the government can’t even begin to keep track.  For most of these mom and pop entrepreneurs, the profits are barely enough to feed their families.

In Nicaragua, as in the United States, working “under the table” means that nothing is put into the government’s established economic institutions and nothing is taken out of them.  These are people who work without paying taxes into the public coffers and without the ability to draw social security benefits once they are no longer able to work.  And, as Haynes point out, they suffer all the disadvantages of the self-employed — no paid vacation, no sick leave, no health insurance.  Still, in societies in which there are tens of thousands of people out of work, it is a way to survive.

Several years ago, I read an excellent book about residents of the South Side of Chicago who provide goods and services to the community on street corners, in alleyways, out of parking lots and abandoned buildings.  In Off the Books, author Sudhir Venkatesh refers to this phenomenon as “the underground economy.”  Operating in the shadows, these informal businesses fill a void in that they provide a way to obtain desired goods and services in areas that may be underserved due to a deteriorating economic establishment in the wake of poverty, crime and the participation of “legitimate” business owners in white flight.

In the public eye, the underground economy is often associated with illegal activity.  Indeed, criminal enterprises, such as prostitution or the sale of drugs, necessarily remain outside of the mainstream.  But the fact that they’re not counted by the government doesn’t make them any less a part of our economy.  As long as there are those willing to pay cash or barter for these goods and services, there will be enterprising folks willing to evade the law to sell them.  I think of when I lived on Broad Street in downtown Hartford, where cars would slowly approach each other from opposite directions and stop for just a moment, in broad daylight right in front of the brownstone I called home, to make their exchanges through open windows.

However, a significant part of the underground economy consists of legal activity, such as the sale of sliced watermelon, bottles of Coke and fried platanos in Managua or the automotive repair and oil change businesses that operate out of back alleys in Chicago.  In an economy in which there aren’t enough jobs to go around, the point of such efforts is to earn a dollar or two in profit to allow one to get through another day — to put some kind of food on the table for the family, even if it’s just rice and beans in Nicaragua or peanut butter and jelly in the United States.

Indeed, it’s sad to say that unemployment is starting to make the United States look more and more like Latin America or Africa.  With a large segment of our population descending into third world conditions, it’s no wonder that the Occupy movement railed so mightily against the “one percent” just a few years ago.

In most other parts of the world, the “underground economy” goes by the name “System D.”  The “D” stands for the French term la débrouillardisme, which is most often translated as “resourcefulness,” although that word fails to capture the true nuance of the French.  The original phrase embodies some combination of “schemes to get by,” “living by one’s wits,” “knowing how to get around the system” and one of my favorite terms from back in the 1970s, “gettin’ over on the man.”  In France, to say that someone is très débrouillard is an expression of high admiration.  It means that you are able to figure out a way to get what you need, even when the odds are stacked against you, wink, wink.

I have come to realize that, here in the United States, System D takes on numerous forms, including learning how to work the system and learning how to live outside it.  Some combination of these is what enables the unemployed to keep going without a steady paycheck.  For example, it is perfectly legal for a person to earn a certain amount of money while drawing Food Stamps.  Your EBT card will rarely feed the family until the end of the month; even if you can supplement it with some canned goods from the local food bank or the occasional dumpster dive, that isn’t going to help if your kid needs a pair of shoes.  So the unemployed frequently supplement whatever kind of benefits they are receiving by selling goods or services on the side.  This could mean anything from setting up a table at a swap meet to babysitting to fixing things as a handyman.  Haynes describes bus drivers who pay a man a few cents to shout out the bus route number in the crowded marketplace.  Such informally obtained income is generally taxable, but of course, most people don’t bother declaring it.

Further strengthening the underground economy, those who find themselves in poverty often exchange good will by patronizing each other.  “I know a guy who knows a guy” is what everyone wants to hear.  And when there’s not enough money to pay the guy, there’s always barter.  Change the oil in my car and I’ll bake you some pies.  Venkatesh mentions Chicago shop owners who can’t afford a security guard and instead “hire” a homeless person to sleep in their tiny storefronts at night.

Understanding how the underground economy works in one’s community often makes it possible for the poor to get hold of the things they need.  The main thing, of course, is that you don’t ask too many questions.  Back in New York, I remember that there were always guys who knew how to get stuff that “fell off a truck.”  The retired guy who might be willing to fix your leak or the out-of-work teacher who can tutor your kid probably doesn’t have ads in the Yellow Pages (although, these days, they might have one on Craigslist).  It’s very much a word of mouth thing.  Here in our little relatively rural community, many people have little gardens where they grow various things — could be cucumbers or cantaloupes or cannabis, you never know.

I think of the three homeless guys who we’ve tried to help out here at the church.  Homeless Guy #1 is in jail, awaiting trial.  His needs are being provided for by the judicial system.  Homeless Guy #2 has done a lot of couch surfing and has now found a place to stay for a month or so.  Sometimes he works as a day laborer or fix-it guy or painter.  Other times, he doesn’t, particularly if there’s alcohol to be had.  He figures out ways to trade his services for whatever he needs.  Homeless Guy #3 sleeps on someone’s porch or under a tree, and begs sandwiches at the door of the parsonage when his Food Stamps run out.

His EBT was replenished yesterday, so we weren’t surprised to see him walking along the road with a full plastic bag from the local dollar store this afternoon.  When he passed by the panhandler who stands at the freeway entrance with the “homeless and hungry” sign, we saw him give the guy some money.

It’s funny how those of us who have the least are often the most generous.

 

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3 thoughts on “The Underground Economy

  1. Thank you for sharing that FP piece. I missed it. When we lived in Malaysia more than a decade ago, there was a place called Pasar Malam, or night market. Every Saturday night, you could go there and eat fresh-cooked or fresh veg, pick up fish or cuts of meat, or even get cheap goods. It was a huge place, and everyone would go! As an expat, we had our favorite kedai makan (food shops) where we would get our food and trade other goods and services to them (kind of like a tip) in exchange for our continued relationship. There, it was all about the people, the locals, and sustaining a tradition AND caring for those who don’t have much. It is one of the things I miss most about the southeast Asian culture.

    It’s all about local relationships, food, and security, because when the economy crashes (and people don’t have jobs), it all goes back to that very basic thing.

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