ISMAIL LAGARDIEN: Black markets add no value to a political economy and just lift moral hazards
The theft of a car, for example, lifts transaction costs in the transfer of property relative to other modes of transfer because it imposes significant costs on individuals
There’s a theory that all the single missing socks can be found at the edge of the observable universe. OK, it’s not a real theory, it’s more a joke. On a more serious note; where do all the stolen TVs, cars, cameras, computers, jewellery or other personal items go after a burglary or a hijacking? They slip into something akin to a black or shadow market. These are markets where “goods” are traded illegally. As financial transactions they add no value to a country’s political economy but increase moral hazards, and short-term insurance premiums increase.
Anyway, in such transactions the seller has no proof of ownership, and the buyer believes she or he has bought a bargain. There is of course a moral issue involved on both sides (you should not buy stolen property from thieves) but let’s set that aside for now. There is also an ideological issue (the rich have cars or TVs and the trade in stolen goods is merely a form of “redistribution of wealth”). Let’s approach the issue do...
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