America’s Growing Informal Economy?

The US government’s deepening embrace of statism particularly economic and political fascism and the fast expanding unsustainable welfare state, financial repression and the burgeoning police state will likely not only fuel a diaspora for the wealthy but likewise drive the average Americans to operate on the informal or shadow economy.

Professor Gary North explains why, (bold emphasis added, hat tip Bob Wenzel)

Americans are learning how to beat the system, cheat the system, and outfox the system. As the bureaucrats tighten their many nooses, Americans are finding ways to slip the noose.

An article in Forbes offers examples. They are everywhere. Businesses are just ignoring the rules. They hire lawyers to help them avoid the law. They are fed up with the federal squid. They are not cooperating.

This is significant for the future. The heart of every legal system is legitimacy. If the government — family, church, or civil — is viewed as legitimate, people who are under its jurisdiction cooperate. They add self-government to external systems of sanctions. If they refuse to do this, the government’s enforcement system cannot force them to obey consistently. The system does not have enough resources to enforce compliance.

At some point, the government loses its ability to gain its goals. Collecting more taxes in Greece is not possible. The Greek government can promise austerity, but it can gain this only by reducing spending, not by collective more taxes. The same is true of Spain. The same is true of Italy.

If the people who live under the regime think the regime is corrupt, they cheat. They feel no guilt. If they think a law is immoral or stupid, they refuse to cooperate. The government can do little to change this outlook, other than shrink. No government does this voluntarily.

The federal government is now at the limit of enforcement. The bureaucrats write 83,000 pages of new rules every year, yet the country changes only slowly. The bureaucrats think they are in charge. They are not.

In reality, the informal sector is a manifestation of government failure. The more the arbitrary laws the lesser chances of enforcement, the susceptibility to corruption and of the gaming of the system by the politically connected all at the expense of society.

Yet if this dynamic should become a reality then this would signify as the Philippinization of the US.

Interesting signs of times.