[deMolay]

I posted this here because it pertains to family financial endeavors. Maybe it is the wrong place. But I think it is important to understand how others survive calamity. http://www.verdant.net/informaleconomy.htm

[Gorm]

Yes, there is a lot to be learnt here. Economics are not everything.

[Falconoffury]

The main danger to the economics and livelihoods of developing countries, including the former Soviet Union, is dependency.

This is a key point. I would argue that dependency is a danger even to highly developed countries such as the USA. It can create an imbalance of trade, just as we are seeing with the USA and its trading partners. The USA takes too much and doesn't give enough. The trading partners are finally waking up to this scam, and it will hurt the USA for years to come.

[efarmer]

deMolay,
Thanks for the link to a great article. As long as there
are humans alive they will trade goods and labor on
an ad hoc basis much like weeds fill in every available
niche in the landscape.

Speaking as an easy credit and cheap energy amplified
peasant, I have always held dear a belief that the
economic leaders and hierarchy realized that greed
and ignorance were rampant in the populace and they
had to be more careful with financial policies and
instruments than we peasants wished for and
indeed credit and money was very high on our
wish lists, right up there with good sensations
and jelly donuts.

I also suffered under the illusion that if they cheated
or were inept, they would be subject to consequence,
ideally stripped of many goodies, and would in essence
join our peasant buns sweating and toiling close to the
earth as a way of showing the system has consequences
that are tied to behavior.

I listen to them explain that the root of the problem
is that people will take all the money you provide them
(without collateral recourse) and not pay it back .
They apparently engaged in some of this on an
international basis to experience that their theory
was indeed correct and they would be accurate in
stating this sort of behavior is a root cause and factor.

I am not certain, but I have a hunch they are
perhaps trying to shift blame and avoid punishment,
but being an ignorant and greedy peasant, my opinion
is of little consequence and is very colored by the recent
increase in anxiety and uncertainty that is resulting
from creeping thoughts that those at the top are every
bit as ignorant and greedy as I am.

My final thought is that they might consider getting
new people even if just figureheads, even though
we are ignorant and greedy peasants, we are not
dull enough to grant our renewed confidence to the
same people for a couple of stimulus checks, although
they may be catching on by now that we will gladly
accept their checks and continue to hold them in very
low esteem until a better deal comes along.

[TommyJefferson]

So the "informal economy" is any productive activity not controlled by a government.

The fact that people find this interesting and worthy of study is so sad.

It's they way thing are supposed to work.

[Revi]

"They found that their way of life was completely the opposite of how a human being in an industrial society survives. They didn't have a job, pension, steady place to work or regular flow of income."

Sounds like the way that half the people here in Maine live.

I am always amazed at how the informal economy keeps places going. There are places to the north and east of where I live that are a lot like those peasant villages. People get by with informal jobs. They do some gardening and some hunting. They burn wood and live in small houses that have no mortgage.

It's a hardscrabble life, but it seems like a lot of people are doing it.

Wait... I guess I'm doing it too.

[Narz]

Great link, thanks!

[FlyingBoat]

I wonder how those with some money/resource could do in this type of environment?

I am thinking if you could leave the city with a million or so how could you have a good life for your family among the "peasants"? I don't mean this in a deragatory way. I am thinking if there is a way to survive this in a good way in small town america.

I had been thinking if it would be possible to buy a distressed business for pennies on the dollar in a small town, such as a food processing plant. Then you are able to keep it going with jobs, so people are happy and you live a bit better than the rest of them.

Standard of living could still be worse than what I have in the city. There wouldn't likely be indoor tennis clubs or yearly flights for vacation. But there could be satisfaction in keeping a business a float for the people, and you could have a good relative standing in the community.

The issue with this idea is the govn taxation and control. I am thinking now, how can this be done in the underground community, or perhaps in a low tax and low govn state.

[patience]

FlyingBoat,

The economy in small, poorer areas is, unfortunately, tied to the larger economy insofar as a conventional business is concerned. Big businesses search for these areas to find lower labor costs, then by adding to the local economy, raise the amount of money in the area, and eventually the labor costs go up to some degree.

The informal economy in the areas I have experienced have their strongest basis in family ties and close friends. Membership in those groups doesn't come by just buying property and moving in, but rather is a result of your participation in the community over quite a long time. For this reason, some people who have grown up in such places tend to return there, knowing how the informal economy works, and having ties to it when they get there. It's all about who you know.

Newcomers can join the informal economy, and maybe the best way is to open a small business. If the business is a good fit, supplies a local need or service, and hopefully employs some locals, then you will quickly get involved in the community.

By contrast, if you are less well off and must work a job for someone else, the informal economy is a source of goods and services, but not (immediately, anyway) a source of income.

Example: The guy I buy firewood from in better times does logging and has a sawmill. With that market down to nothing, he has reverted to cutting firewood and sawing low grade pallet lumber. Some his relatives depended on the thriving business, and now are in dire straits the same as him, but the low-paying firewood is keeping them alive, undoubtedly mostly in cash deals. Needless to say, they aren't hiring outsiders. Having some heavy equipment, the man has plowed gardens, gratis, for several neighbors, who give him all the produce he can use in return--a typical informal economy situation. You give and you get. It's not about living well, or "a bit better than others", no, it's about suviving the hard times, and taking care of those close to you.

We moved from a thiving industrial city back to the farming area where we grew up. After many years away, it took a few years to get re-installed in the scheme of things, but not long. We brought the advantage of money from the higher-earning area to the lower income rural area, like Pops did. Having a financial leg up on the local area made it possible for us to get out of debt, by still having a higher paying job, albeit I had to drive 38 miles to work. Once established in the community, we had access to the informal economy as a sort of social safety net, and were solvent so we could live without struggling.

Please note that reversing this sort of move is well-nigh impossible! It would involve getting a job in the big city again, and probably commuting a long way to do so. Not practical now, so do your homework before you take the plunge. When you THINK you know how it works, you'll still have a lot to learn about the small town.

[Blacksmith]

The informal economy up here is alive and well.

(1) The neighbour who comes over in the middle of the night to unblock your toilet or change your water pump.
(2) The neighbour who helps you chop down a tree.
(3) The tradesman who asks to be payed under the table.
(4) The people who look after their own, young, old, infirmed, etc.

To me this is the backbone of America and we seem to have lost our backbone.

[emeraldg40]

The informal economy up here is alive and well.

(1) The neighbour who comes over in the middle of the night to unblock your toilet or change your water pump.
(2) The neighbour who helps you chop down a tree.
(3) The tradesman who asks to be payed under the table.
(4) The people who look after their own, young, old, infirmed, etc.

To me this is the backbone of America and we seem to have lost our backbone.

After making several garage sales last Saturday and getting great deals and no one paying taxes it was so apparent that the informal economy is robust. I have been in this life style for several years. The bottom line is it works! And I cant be Enroned. Ive many friends who dont see this all coming and are no where near prepared. Going to a garage sale is beneath them.....today.