I was reading the comments at this Victor Davis Hanson piece and came across an interesting set of observations on the state of the economy.

14. Foobarista

As for the "gray market" in California, I'm convinced that regulators - and politicians - are well aware of its existence and don't want to touch it. My wife sells small businesses and pretty much never sees a little, cash-heavy business that doesn't pocket most or all of the cash - even in otherwise regulated areas like restaurants and dry cleaners.

The sad thing is that my wife occasionally runs into American-born blacks or whites who want to buy a business and whose heads explode when they realize that nearly everything is under the table, and that operating a completely legit business would mean you simply wouldn't make enough money to operate because the market prices in the "grayness" of the market players. Immigrants of all sorts are far more comfortable with these arrangements and often prefer it.

And any business involving lots of manual labor? They're completely under the table, not because the owners are paying sub-minimum wages - the workers are often decently paid - but because regulations and taxes make it impossible to operate legally. And since few American-born people are willing to work under the table, illegals are pretty much the only ones hired.

April 11, 2010 - 10:06 pm

Which explains the title of this post. When the government hand becomes too heavy people no longer use it. And it is not just the people who sell labor. It is also the people who buy it.
15. tryingtodorightthing

I work in law in the San Fernando Valley and can tell you from personal experience that the Los Angeles County Building Code Enforcement does not inspect nor enforce laws such as illegal converted garages or the related building codes. The inspectors will act as if they are going to inspect and then just refuse to do so. I have made complaints of very serious conditions such as exposed wires, gas lines illegally re-routed and the such with no action by the city.

April 11, 2010 - 10:11 pm

That is how you make a third world country. You regulate everything with a heavy hand. If you want to be profitable in such an environment you have some choices. Bribery is one. Ignoring the rules is another. The next comment makes that point.

You're my neighbor. (In a general sense - I live also in the SFV) and you're talking about MY neighbors. (In the specific sense! The house to my right has two illegal 'apartments' in the back yard - the one to the left has a 'converted' garage.) I look at houses and they all have unliscensed contruction. No one cares. The law is a joke. No - worse - the law is predatory. You would actually be in legal trouble if you tried to OBEY the written laws.

April 12, 2010 - 1:47 pm

So who is bypassing the state? Some very nice people.
20. Les Hardie

Dr. Hansen: I and my upscale neighbors are all scofflaws. We live in a village in the Santa Monica mountains just west of Topanga. Most of us are professionals,others academics, scientists, businessmen, some cops and firemen. RE prices are high, but the area is semi-rural--a lot of horses, atvs, trucks, chainsaws. People here are well educated but pride then=mselves on being tougher than city people. Most are still Democrats. But everybody tries to avoid any gov't permitting. The view is that between the county and coastal, nobody can build a dog house, much less a room addition, so f***them and do it anyway. Judges and lawyers do major remodels without permits; pools and spas, sheds and barns, these projects are regularly done subrosa. More than a complete lack of trust that the government will be fair and reasonable, is a belief that govt has no right to tell us what we can and cant do on our property (at least on a small scale). It seems to be a version of "don't tread on me!" It may be the salvation of Ca when those who espouse the regulatory state realize how bad it is in practice, and take real steps to get it off our backs.

April 11, 2010 - 10:39 pm

The next commenter is not so optimistic about the situation in terms of people believing in the regulatory state on the one hand and avoiding it at all costs on the other.

The problem is that those who espouse the regulatory state will never realize how bad it is in practice. When liberal social theories don't work its always because they weren't executed correctly or because of some outside influence. It's never because the theories were wrong-headed or flawed from the outset.

April 12, 2010 - 10:30 am

And of course every one who has watched Star Wars knows the final outcome:
Princess Leia: The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.
Conventional wisdom at its finest.

There are over 170 comments to that post so I'm sure there is more information along the above lines. Not to mention thread drift and thread jacking. I leave it to the reader to ferret out more useful stuff.

Now about the Drug War Black Market.....

Cross Posted at Power and Control

posted by Simon on 05.15.10 at 05:37 AM


The essential problem with having laws on the books that aren't enforced is that if you honk off a bureaucrat, they will suddenly be strictly enforced --- against you. I'm not surprised Les Hardie's neighbors vote Democrat; let your name appear on the wrong primary voting list and the inspectors will be demolishing your house.

SDN   ·  May 15, 2010 8:30 AM

"Ignoring the rules is another."

It's not just citizens. The bureaucrats also ignore the rules to accomplish their task. Not so long ago, when I worked for the government, I was actually admonished in my annual review that I "worried to much about the CFR." I was using the "regulations" to support my attempts to push repairs critical to safety on the facility I ran. Safety violations that would have shut the place down if it'd been private sector.

Government bureaucrats, while imposing rules on others, routinely ignore federal law in their operations. And it is all rewarded until the higher ups turn against you then you're nailed for the most inconsequential violations.

JKB   ·  May 15, 2010 10:07 AM

We are all criminals. Nice way to deter people from being politically outspoken, isn't it? We are Joe the Plumber and they are Mike Nifong.

Eric Scheie   ·  May 15, 2010 1:27 PM

This is one way that states are hollowed out, by losing their legitimacy (see John Robb). The next step is to increase local resilience because there will come a time when the howllowed out state is no longer able to mobilize itself to secure our safety, let alone our freedoms.

ShrinkWrapped   ·  May 15, 2010 1:42 PM

The Soviet Union wouldn't have lasted a decade were it not for its real economy: the black market.

Amusingly, one Russian phrase characterizing under-the-table business was to operate "na levo," literally, "on the left."

Brett   ·  May 15, 2010 1:55 PM

The very essence of tyranny is irregular enforcement of a myriad of laws. "That which is not mandatory is forbidden" is too simple. Rather, real tyrannies have an incredibly large set of laws, many contradictory, that allow selective enforcement.

Maybe someday enough people will understand that to change things. I'm not sanguine about the prospect though.

JorgXMcKie   ·  May 15, 2010 10:37 PM

The very essence of tyranny is irregular enforcement of a myriad of laws.
Precisely. And who is elected to public office? Fucking attorneys. Their whole purpose in life is to make LAWS. Laws to regulate, laws to confiscate, laws to incarcerate.
Hang them all. Better yet, a firing squad.

Frank   ·  May 15, 2010 11:07 PM

And use the detris to plug the BP oil leak.

Frank   ·  May 16, 2010 12:59 AM

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