A colleague of mine pointed out that free traders might think that smuggling is a good thing, in that you remove the deadweight costs to the economy of tariffs and increase consumer welfare as a result.
Roberto Saviano in "Gamorra" describes the huge economic incentive to smuggle.
" Fearing a customs inspection, Xian preferred unloading them on the open sea. That way the merchandise could be put on the market without the burden of taxes, and the wholesalers wouldn't have to pay import fees. You beat the competition on price. Same merchandise quality, but at a 4, 6,10 percent discount. Percentages no sales rep could offer, and percentages are what make or break a store, give birth to new shopping centres, bring in guaranteed earnings and, with them, secure bank loans. Prices have to be lower. Everything has to move quickly and secretly, be squeezed into buying and selling. Unexpected oxygen for Italian and European merchants. Oxygen that enters through the port of Naples"
Saviano talks earlier in the book about his appreciation of his classes on Keynes and marginal values of products (ice creams worth more next to the desert than in Greenland). Here is someone who studied economics and took his field work/writing to the extreme by immersing himself in the black economy. He is now paying the price by living in hiding from the Napoli mafia.
Photo by Mary Sesami, Flickr
No comments:
Post a Comment