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Agreed but tax evasion is not the only crime associated with black markets (especially the drug trade)


Most of the other crimes are associated with prohibition.

When the penalty for drug distribution is a decade in prison which the government then uses as leverage to flip your distributors and then do the same to everyone in your whole organization, it makes it economically viable to use extreme measures to avoid prosecution. Snitches get stitches etc.

Whereas when the consequences of tax evasion are paying what you owe plus penalties and interest, you just pay the money (or go bankrupt). There is no incentive to spend five million dollars to avoid a million dollar penalty as a gesture of loyalty to your people or to keep them from flipping; you just pay the million dollars. There is much less incentive to murder witnesses and risk prison when the alternative was only bankruptcy and not prison to begin with. The violence is primarily attributable to the harshness of the penalties in the War on Drugs and what that justifies in order to avoid them.

Meanwhile prosecuting tax evasion is self-financing whenever tax evasion is prevalent, so it has a natural equilibrium at a low level of tax evasion. Prohibition is the opposite -- the harder you prosecute the higher the street prices get and the more lucrative it is to commit violence to bring in those high prices.


Agreed. I highly recommend Narconomics: How to Run a Drug Cartel[1] for a great look at the economics behind the drug trade. It's remarkable logical when you just consider the facts.

[1]: https://smile.amazon.com/Narconomics-How-Run-Drug-Cartel/dp/...




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