The End of GDP
The most frequent tool for the measurement of the wealth of a nation is the gross national product figure (GNP) or gross domestic product (GDP). One central problem of following GDP is that plenty of transactions each and every day take place outside the purview of central authorities. Such transactions, moonlighting and other production, is not taken into consideration. Neither is production done inside a home. If we build our own driveway, garage or repair the gutter, again nothing is registered. In historical peripheral nations, the work of women – cooking and taking care of children, and of course etc. – are not factored in. The United Nation conjectures that as much as one-third of the global production is informal and that women are responsible for more than two-thirds of that work.
The GDP does not factor the underground economy, a growing phenomenon. The underground economy is mysterious, but estimates are that it encompasses 10% or more of the economy in the US, about 15% in the UK and 17% for the entire OECD. Developing country figures for underground transactions are much greater. For instance, the shadow economy in Nigeria is about three-quarters the size of the official GDP for that nation.
GDP also includes welfare, such as payments for the treatment of accident victims, disease, commting costs from increasing distanes between home and work, as well as taking care for the environment. Most of this does not make us any healthier. The colder the nation, for example, the higher the GDP automatically, simply due to heating costs.
These and other problems make GNP and GDP, at least, problematic. Over an extended period of time, GDP and GNP tends to overestimate growth since.
SV covered the underground economy once before:
The underground economy, or black market, has obtained a new moniker: System D. According to Robert Neuwirth, the term stems from French-speaking Africa and the Caribbean. The French use the world débrouillard to describe motivated and effective people. In other words, “To say a man is a débrouillard is to tell people how resourceful and ingenious he is.” The term System D stems from the network of “inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes.” These individuals make up the “l’economie de la débrouillardise.”
In other words, the economy that does not bend over to control and supervision is the ingenious economy. It is the working economy. It is, in the words of Neuwirth, the economy of the future. Do-It-Yourself is no longer an ethos of punkers in 1980 suburbs, but is instead the way of the future world.
“What happens in all the unregistered markets and roadside kiosks of the world is not simply haphazard. It is a product of intelligence, resilience, self-organization, and group solidarity, and it follows a number of well-worn though unwritten rules. It is, in that sense, a system.” A system beyond the traditional suffocating defluence of governments.
In the American psyche, at least in the last century, illegal street vendors and unlicensed business owner were considered the fringe of society. Scraping by, they desired for some strange reason to fly under the radar. Today, these individuals are becoming major economic players and the underground markets have, according to Neuwirth, improved the lives of hundreds of millions. Neuwirth says that “it’s time for the developed world to wake up to what those who are working the shadows of globalization have to offer.” The underground economy is virtually the only economy in the world that is growing.
Although the red-tape and corruption have skidded civilization to a grinding hault, the black and gray markets are still growing, and could help improve the plight of hundreds of millions more in the coming years and decades. Amid a global financial crisis, the underground economy has only grown. Claims have been made that the underground economy is the second largest economy in the world. According to Freakonomics, “In 2009, the OECD concluded that half the world’s workers (almost 1.8 billion people) were working in the black economy. The trend is not poised to slow, for the OECD predicts that come the year 2020, two-thirds of the world workers will be employed by the black economy.” That makes the $10 trillion global underground market the fastest growing economy in the world, no doubt. It is a shadowy superpower, an Empire’s worst nightmare. The U.S.’s GDP is $14 trillion.
Comparing the underground market to the aboveboard US market, Neuwirth maintains that “kids selling lemonade from the sidewalk in front of their houses are part of the black market. Vendors at the flea market are as well. Roadside farm stands – black market. Swap meets – blark market. Neuwirth states that the black market is globalized, moving products all over the world, such as machinery, computers and mobile phones. The underground economy is moving much more than those items. It is powering an entire generation of future markets. Do you think that sane farmer’s market farmers actually report all of their cash transactions? They have no reason to considering the indulgence they are being forced to pay will only go towards more economic destruction and legislation that hurts the family farm.
Neuwirth writes that the underground market “is growing faster than any other part of the economy, and it is an increasing force in world trade.” Therefore, the underground market “will be crucial for the development of cities in the 21st century.”
Though the underground economy has historically been cast in a negative light, Neuwirth believes that System D is giving workers an avenue to embrace their entrepreneurial spirit. Neuwirth: “Even in the most difficult and degraded situation, System D merchants are seeking to better their lives.” And this is an opportunity that staying within the dominant economic paradigm cannot offer, for, within this paradigm, one is made to endure the endless doldrum of repetition, bosses who literally own you, have dominion over you, control you while you are at work – and if you are lucky, only at work – as well as taxes that strip you of a large portion of your wealth – double-slavery.
System D operates on a cash level, and many of the funds passed through these businesses never make their way into accounts. That way the businesses don’t have to pass on exorbitant expenses to their customers due to government regulation, taxes, fines overdraft fees or whatever sorts of nitpicking the powers-that-be wish to subject us to. That is why there have been moves to make society cashless. From mainstream media reports to real-life test areas like the Olympics, cash transactions threaten the ability of governments and transnational corporations to spy and steal.
System D, moreover, has evolved over time, and, although still vastly decentralized, has even seen the spawning of its own potential currency outside of cash. Holding cash might one day be outlawed, which will precipitate the need for another way to run an underground business, the on the free market. Bitcoin can fill this future void of monetary privacy, while still holding relevancy for today. The success of Bitcoin rests on looking not at where the puck, football or baseball is, but knowing where it is heading. That is why Bitcoin holds so much potential.
Humanity is averse to supervision and control. People still, although it is slowly fading, have a sense of their own personal privacy and the desire to preserve it. Also, people gravitate towards diversity and choice, and want to make their own decisions regarding their own lifestyles. That’s why people flock to alternative economies, like the underground economy. Bitcoin fits perfectly within this paradigm and are already being used to keep the Silk Road economy afloat.
As System D evolves and grows the likelihood of it becoming undermined by jealous transnational corporations and governments will increase. That is why it will take a highly evolved, informal, yet efficient network to keep the underground economy strong. Bitcoin can help unify vendors in the underground economy instantly, and allow them to setup private and sophisticated trade networks like the world has never seen. National governments and international organizations are kicking-up spying on humanity, making most e-mail and phone correspondence risky. While still risky, Bitcoin can serve as a beneath-board means of keeping your money safe from a de-evolving dominant economic framework.
And, as this process moves forward, more-and-more people will learn of the need develop a freer, more dynamic and diverse economy. A regrowth of the way the world does business is underway, and it is being accomplished every single day by underground people, living life the way they want to live, and not worrying about what is normal and how they are supposed to be. These individuals, not persons nor masses, are actively working to bring others into their way of life; that is a life of living. As things become more Monty Python and absurd, the argument becomes easier. The underground economy of the future will no longer be an underground economy, but a parallel economy. And, with tireless hours, perhaps one day the only economy, beyond a New World Order.
GDP will cause even more problems in the future as increasing amounts of people turn to alternative currencies, the most popular of which currently being Bitcoin. Bitcoin transactions will happen unreported generally, and thus won’t be counted as part of the GDP. To boot, neither will any off-the-book transactions done in silver.