The Impact of the Underground Economy in U.S

The Impact of the Underground Economy in U.S

Haijia Zuo

University of Victoria

V00812136

Econ 225

June 16, 2015

Abstract

The Impact of the Underground Economy in U.S

In the past few decades, the increase in underground economy has been widely reported in almost all industrial countries, and this phenomenon is particularly serious in United States. What is the underground economy? It’s the business activities that is unreported for taxes purposes, such as drug trafficking, gambling, smuggling, pornography or operating without a license. Although these activities’ final consumption have been provided through market transactions, it’s still difficult to estimate the exact figures of their transactions, and it will resulting the underestimation of GDP. There is a movie that I watched couple days ago, which called “Boiler Room”. The examples in this movie illustrates the issues of underground economy in U.S .

From the movie, I saw all kinds of underground economic activities. First one is the underground casino operated by Seth (Protagonist, a 19 years old students who dropout from college). He earns a successful living by using a sound business model to manage his casino, but also wandering on the edge of law at the same time. Gambling is an ancient human found in most cultures and parts of the world (Custer & Milt, 1985). Studies have shown that 70-90 percent of adults in Canada and Australis gamble at some point during their lives (Ladouceur, 1991; Productivity Commission, 1999). Other studies found high percentages of adolescents engaged in such activity in the USA (Arcuri et al., 1985; Lesieur & Klein, 1987). Most underground casinos were operated by some powerful people or gangsters in the personal places or remote places, because they try to avoid to draw police’s attention. It’s just like Seth, he run his business in his apartment until Greg (a stockbroker from J. T. Marlin) recruits him to join J. T. Marlin, a brokerage firm based...