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System D: Where The Tax Man Never Comes

Written by Gary North on November 18, 2011

“System D” is the new term for black markets. Black markets around the world are growing. The estimate is that it accounts for $10 trillion worth of production.

I think this is a low-ball estimate. System D accounts for far more. The heart of these markets is secrecy. If you think you can measure it, you have not understood how effective it is in concealing itself.

Still, at $10 trillion, it is second only to the USA. Only it isn’t second; it’s first. Why? Because the GDP for the USA counts government’s share, which is at least 40%. Then there are the costs of regulation. The System D economy avoids these.

The black market is where people who want to buy get together with people who want to sell. There is no person with a badge and a gun telling them, “You are not allowed to do this.”

The growth of System D appears to be accelerating. In Third World tyrannies, this is where people learn how to meet customer demand.

In the USSR, it was called “Blat.” The black market was where you could get what you wanted.

In the West, the bureaucrats and tax collectors are holding back economic growth. More people conform to the laws. But, in the Third World, the masses have learned how to beat the system. What system? The regulatory system.

This is why the Third World is growing economically. This cannot be stopped. The dictators and their bureaucrats are on the defensive.

In System D, currency is king. Barter is queen.

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