Stunning New European Strategy Against the Shadow Economy: Study It More


Julien Jorge

Yet another European chattering society chimes in with a report on the shadow economy—business and work performed out of sight of the authorities to escape burdensome taxes and intrusive regulations. This time, the European Economic and Social Committee, "a bridge between Europe and organised civil society," complains that the shadow economy has become so big, so accepted, and so integral to life in European countries. The solution? Well, it's certainly not to lower taxes and repeal regulations. Instead, the EESC wants to study the phenomenon some more.

The group leads its press release on the new report with its complaints:

The EESC has dedicated yet another opinion to combating the shadow economy and undeclared work. Both topics are highly delicate, not least because their extent and impact on the economy differs enormously among Member States and regions, ranging from below 10% to more than 30% of total output. They also vary considerably from one economic sector to another. 

"Unfortunately too many people still view the shadow economy as a normal part of society and lack any remorse about using the 'black market' either to hire/provide cheap workers or buy/sell goods while circumventing taxation. Furthermore, many countries still lack a clear stance on the shadow economy and undeclared work ", says Stefano Palmieri, rapporteur for the own-initiative opinion 'A strategy against the shadow economy and undeclared work'.

The EESC's recommended solution is "adopting the Italian methodology to measure the scale, impact and development of the shadow economy and undeclared work."

Well, that'll learn those bureaucrat-dodging entrepreneurs.

The report itself, A strategy against the shadow economy and undeclared work, has yet to be translated into English, but a perusal of the French version (Une stratégie de lutte contre l'économie souterraine et le travail non déclaré) using my rusty language skills reveals little more than verbiage and charts expanding on the above. The complaining does sound prettier in French, though. The charts are sourced from researchers like Friedrich Schneider, who specializes in studying shadow economic activity. Which is to say, this is not an entirely neglected field of study.

That's fine. Better to have the indignant busybodies unnecessarily crunching numbers that have been crunched many times before than actually hassling people trying to make a buck without being strangled by red tape.

Find a full range of Reason's reporting on issues economic and shadowy here.