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Does banning substances make way for large unregulated black markets?

The Black Market is one of the major sources of the Shadow Economy, the Informal Economy, the Hidden Economy, and also the unofficial economy. The black market is the underground economy where the black money flows without any of its parts to the taxes and remains as the very beginning point of substance abuse. Because illegal markets are, by their nature – illegal, they can often be dangerous places to buy or sell. The government, in good faith, could ban substances that are hazardous to the environment, society, and people in the general public interest. Such banned substances make way for large unregulated black markets to bring those banned substances back to use, illicitly. Such trade has a vastly negative impact on a person’s health or a country’s economy, as a whole.

Greater demand for something in an economy might signal a larger underground economy.

Banned Substances and related Economic Data

As of 2017, some of the banned substances are dangerous drugs, e-cigarettes, and vaping substances, plastic materials, alien software and apps that pose a threat to privacy, and data-trafficking, child pornography, guns, and other weapons, Smugglers also hunt for animal trafficking – predominant for flesh or meat, skin, bones from tigers, horns from rhinos and ivories from elephants, Smuggling ancient artefacts and endangered animals including salamander and other rare species. Committing murders for human organs which include eyeballs, kidneys, etc. were hugely smuggled by kidnapping, abducting or coercing, to pose a threat to society. In Iran, kidneys are donated for money, in a poor household to meet the monetary needs, while they are never provided with proper medical care, as they should be taken care of as assured before surgery, fraudulency in this regard is ethically wrong, people in the receiving end of the kidneys, sometimes end up with another disease or non-matching organs.

According to the UN, such aforementioned organized crime is $870-billion a year business, about 1.5% of global GDP. Drug trafficking is the biggest chunk of that, about $320 billion. Counterfeiting earns about $250 billion a year for criminal groups. There are also billions getting made from human trafficking, smuggling people across borders. 

Exploiting the environment is profitable, too. Timber trafficking is a $3.5 billion business. The EU recently asked member countries to do a better country-wide GDP total. According to the New York Times, statisticians in Spain tried to pin-point the average price of a room at a Spain brothel, and what prostitutes charged, which in turn, is illegal in many countries. Britain also tried to put numbers on its sex and drug trade, its office of National Statistics thinks prostitution and drug sale added about 10 billion pounds, which is $17 billion to the country’s GDP in 2009.

The sportsperson faces a lot of side effects after having used certain steroids that are readily available in the nearby pharmacy and stores, such athletes faced physical struggles and had undergone multiple surgeries facing many abnormalities, yet. This led to the ban on certain steroids to protect people, who would potentially consume those to support their energy level and to cope with their bodybuilding, are prone to be affected badly with adverse effects.

Black Market and the Economy

When we talk about the black market and its underground economy, the first thing that comes to the mind is illegal to trade and other bad stuff like making and dealing drugs or selling human and animal organs including kidneys. But, when it is taken from an economist’s point of view, it is about a much wider, less-nefarious group of activities. The economy they talk about is all the trade and work that happens off the records, under the table, outside of the sight and reach of government rules and taxes. Some of those activities are illegal for sure, but a lot of them are completely mundane. All those work and money made from black markets can be considered part of the economy.

  • It is hard to measure exactly how big this underground economy is. It can be hard to get people who fly under the radar to answer survey questions about their wages. Also, it is not like tax-evaders and rare-animal smugglers and cocaine dealers are going to want to give a completely honest accounting of their finances. But economists are a diligent bunch, so they’ve also come up with indirect macro-economic ways to try to wrap around the economy.
  • One way economists try to estimate the size of the hidden economy is by looking at the difference between the total incomes a country reports and its total expenditures. If there weren’t any black markets, the former and the latter would be equal. But, if people are spending a whole lot more than they’re legally making or borrowing, the money has to be coming from elsewhere. So, the difference between the two might help indicate the size of the economy in a country.
  • Economists also look at the demand for money since many of the transactions that take place otherwise involve cash. It’s not like most street vendors are set up to take online payment methods and probably no one would write a check for an endangered species of animals.
  • Another way economists attempt to measure the size of the economy is by studying electricity use. It turns out electricity is a good indicator of total economic activity. So, if the electricity use is high and the GDP is relatively low, economists estimate the underground economy from Black markets, are doing pretty well.

The Impact of Technology – A Threat!

The development of technology has spread its geotropic roots in the development of online black markets, in the form of the dark web. For example, Silk Road (a dark web) is an anonymous online drug marketplace to buy illicit drugs easily from the web, sent directly to the doorstep and these online bazaars deliver. Here, people can anonymously log into the site, browse, purchase a drug, and even could give a review of the product on the site of such a dark web. It just takes 10 minutes to order a Class-A drug online that delivers the drugs by the first class post. Because ecstasy tablets became unfashionable, people were selling drugs in crystals which are easy as buying an item from eBay or Amazon, just about any illicit drug was available and they were categorized.

Counterfeit goods, murderers for hire, hacking services were also offered up and someone could freely ask for it and someone out there is willing to provide that service for the right amount of money. The deals are done on the dark web, a network of hidden websites only accessible using special software. People trade with virtual currency that is very difficult to trace and a source close to the FBI has told that they’re facing an exceptionally secure and smart source.

Meanwhile, the sellers are cashing in making huge profits by selling banned substances including heroin (Afghan brown and other flavours were also found), MDMA, opium, crack, ecstasy pills, etc. A Government licensed laboratory in the UK checked the contents arrived by such immediate postal means. John Ramsey, a toxicologist who nearly spent 3 decades analyzing drugs for the police and reported that those substances are crystalline and genuine drugs, so readily available on the internet. Unfortunately, this ready market in legal highs sells illegal compounds, straightforward to buy them across the internet. But it was temporarily shut down and the online smuggler’s identity wasn’t revealed. It’s been coming to light that it’s not secure as the owners maybe thought it was when they set up the site. Now, they are choosing to cut their losses rather than potentially be tracked down, to make them realize that nothing could be sold that would inflict harm to another person.

Bitcoin is an online currency or the cash online, serving as a virtual currency as an anonymous medium of transaction, mostly used in online trade. It is used like cash being paid when we purchase in a store. Here, the money cannot be traced back to the user as it is an anonymous currency that the people have paid. Now, it’s being accepted in many places, if a drug purchaser purchases a drug with bitcoins that would go into the Silk Road and one couldn’t notice how it got mixed around and then those bitcoins would be provided to the drug sellers’ account and no one would be able to know anything about the transaction.

Those leads take money and manpower and while they are in short supply, the deliveries kept coming. Whatever is fueling these drug-friendly shopping sites, they’re causing a headache for law enforcement. Home Office consultants have spent years tracking them, with the software they use has left behind some digital evidence.

Lockdown and the suffering addicts

The effects on addicts during lockdown are worse than a person suffers and puts the surrounding into huge trouble. The scarcity of alcohol and drugs is causing tremendous mental trauma on the addicts and they are desperate to seek substances and supplements. Due to lockdown, it is tedious to help the addicts to get rehabilitated and recover them from such troubling addiction. They tend to seek those substances available in the black market, and such illicit vendors take advantage of such desperate addicts and had raised the prices of the illegal substances.

The addicts who are unable to avail of them are at a high risk of getting engaged in criminal activities. In 2020, State Governments in India have opened the liquor shops, even after the massive protests. Since many privately started manufacturing counterfeit alcohol and extracted addictives from the palm tree as a supplement to cope with their cravings of intractable addiction. The Governments were criticized for using this as its laziest way to retrieve the falling economy, for having increased the tax on the liquor being sold. But this initiative might at least reduce the black markets and would reduce the purchase of hazardous banned substances from black markets, illegally.

Conclusion

The economies arising from the black and unauthorized grey markets are huge-ranging up to trillions of dollars globally. These forms of the economy are less active in developed countries, as they regulate all those to maintain a stable economy, where economists estimate it is between 10 and 20 percent of total GDP, which is undeniably a huge sum. While in developing countries, this accounts for more than one-third of economic output. The UN-ILO says the economy out of black markets also employs half to three quarters and there have even been places where the entire economy was informal, focused on selling or doing things out of sight of the government. Some ethicists and economists argue the markets for organs for transplant should be legalized. They opine that it’s better to allow the government to set some ground rules in a market that would exist with the regulation of its risks, to put unscrupulous organ traffickers out of business. Many, protest against protected rain forests getting chopped down for smuggling.

Whilst, those who work in such markets don’t have a sort of safety-net place or precautions, as people work in regulated jobs. They might not have the privilege of getting sick time, health insurance, or right to sue for not getting paid at all, with poor working conditions and increasing poverty, especially women and migrant workers or people who don’t have access to better jobs is the near victims of such marketing. Thus, it is difficult for the government to get an accurate count of those important economic statistics like unemployment and income and that might encourage a misguided policy, which doubles during the financial crisis with no prospects for formal employment, picked up such odd-jobs to piece together a living. The government can respond with cuts in spending on things like social-safety nets and strive hard to abolish black markets to prevent the economic fall and to restrict people from abusing substances. 

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