June 4th, 2014
04:58 PM ET

Should U.S. measure the black market?

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The government announced last week that the U.S. economy shrank in the first quarter. That's the first quarter in the red in three years. It's certainly not catastrophic, but it got me wondering whether the mafia might be able to help on this one. No, I'm not suggesting that organized crime make offers that American CEO can't refuse. Instead, I'm suggesting that the U.S. might want to take a page from Italy's book. Let me explain.

Italy's GDP has essentially the opposite track record of the U.S. until recently. The fourth quarter of 2013 was the first time Italy's economy grew in two years. So Italy dipped into the shadows this past week, the shadow economy, that is.

Starting in 2014 and going retroactively, Italy has said it will add the mafia's dealings to its GDP. And not just like Cosa Nostra, but anyone who makes money in the black market, drug dealing, prostitution, smuggling. Analysts expect this accounting change to boost Italy's GDP a good percentage point or two.

You might laugh, but the black market is a big deal. A 2011 analysis found that if the worldwide black market were a national economy, it would trail only the United States in size, totaling some $10 trillion a year. Another study found that America's underground economic activity was worth about $2 trillion. That's more than 10 percent of the legit GDP.

There are, of course, many other countries reported to have large underground economies, like Russia, where the formal economy is also doing badly these days. In fact, maybe adding the mob to the GDP is the one thing that Washington and Moscow could agree on right now.

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Topics: Economy • Last Look

soundoff (53 Responses)
  1. Zo

    "Should U.S. measure the black market?".... why's it gotta be black? why not some other color???? racist article.

    June 4, 2014 at 5:37 pm | Reply
    • Portlandtony

      It's been. called the Black market longer than term had racial connotations.

      June 4, 2014 at 8:42 pm | Reply
      • kayaker

        I believe that Zo is referencing a comedy bit from some black comedian's act – I forget who exactly, maybe Chris Rock or Eddie Murphy.

        June 5, 2014 at 2:41 pm |
      • stuart

        @kayaker. I'm funny? Funny how? Do I amuse you? Am I a clown? Is it the way I talk or what? Am I here to freaking amuse you! Tell me kayaker, just how am I funny!

        June 5, 2014 at 3:24 pm |
      • rupert

        I believe stuart is referencing a scene from that 1991 movie, "Good Fellas" where Joe Pesci is talking to some "good fellas" at a bar and starts to focus on one guy just to freak him out.

        June 5, 2014 at 3:29 pm |
      • racists

        @kayayer: why does the comedy bit have to be from Chris Rock or Eddie Murphy? That's racist.

        June 8, 2014 at 2:57 pm |
    • Pano

      Good idea! Let's count CONgressional wasteful spending too!

      June 5, 2014 at 12:48 pm | Reply
  2. banasy©

    Adding profit from illegal activity to the US's GDP. Really.

    No.

    June 4, 2014 at 7:26 pm | Reply
    • rupert

      @banasy. Hi good looking. Russian babe.

      June 4, 2014 at 9:10 pm | Reply
    • rupert

      Yes banasy, I will go to the movies with you, then Dairy Queen. I only have one condition. We go Dutch.

      June 5, 2014 at 3:33 pm | Reply
    • Mike

      Why not? Our government has supported the black market in the US by leaving drug prohibition in place for the last 80 years . This has led to tremendous growth for the legal profession for lawyers and judges, courtrooms are packed obtaining huge amounts of fees and fines, we now have a private prison industry, law enforcement has become paramilitary operation, the gun industry has become bigger than anytime in our history, and many other great benefits due to prohibition.

      June 5, 2014 at 5:17 pm | Reply
      • banasy©

        No.

        June 5, 2014 at 9:08 pm |
    • Jef

      Really knowledgeable and in depth argument you have there.

      June 8, 2014 at 11:53 am | Reply
  3. rupert

    @Zo. Sup nega.

    June 4, 2014 at 8:16 pm | Reply
  4. Portlandtony

    I've lived all over this country and I would suspect that at least 30% of goods and especially services are done off the books. It's not necessarily an organized Black Market.....but because of the government',at every level, intrusions in commercial activity with taxes, safety standards, permitting and so forth....It make sense to the sellers to sell cheaper and the buyers to buy more off the books.

    June 4, 2014 at 8:39 pm | Reply
  5. Joey Isotta-Fraschini©

    The black market is probably in a recession that parallels reported transactions. Media focus on the shadow economy may be good PR designed to prevent comprehension of the gravity of the situation.
    President Obama did not cause the USA's problems.

    June 5, 2014 at 6:20 am | Reply
    • polite centrist

      Well put, sir. The best way forward is to cut spending And raise taxes. We MUST pay off the national debt. The interest on the borrowed money is bankrupting our country.

      June 5, 2014 at 6:32 pm | Reply
  6. dazzle

    I like pepperoni pizza. Look. That ancient Roman building used to sell pepperoni pizza at half time.

    June 5, 2014 at 8:06 am | Reply
  7. banasy

    Yes, I want pepperoni pizza. I have one siliqua for a slice of pepperoni pizza. And another siliqua for a Roman coca-cola. Add anchovies, please.

    June 5, 2014 at 8:18 am | Reply
  8. Joey Isotta Fraschini

    I have many siliquas. Pizza vendor, sell me two slices of pizza, extra pepperoni, and a Roman big gulp soda. Hurry, I must watch the gladiators. Half time is nearly over.

    June 5, 2014 at 8:21 am | Reply
    • Joey Isotta-Fraschini©

      Actually, pepperoni is my favorite pizza, with no other topping, but I'll probably add red pepper from a shaker and eat far too much.
      A Roma, per favore. Nothing eaten in Rome is bad.

      June 5, 2014 at 6:33 pm | Reply
  9. Mohamud Abdu

    We Muslims are not fat like Americans. We only eat two meals a day as our religion forbids glutney. No all you can eat buffets, you fat diabetic, high cholesterol, high blood pressure infidel fat American pigs.

    June 5, 2014 at 9:14 am | Reply
    • Towel Head Detector

      Warning!!!!!!!............Warning!!!!!!!!!!!.............Warning!!!!!!!!!!......Towel Head detected!!!!!!!!

      June 5, 2014 at 10:55 am | Reply
    • My

      My picture of the holy Muhammad (from the Koran): 8=>(_|_)

      June 5, 2014 at 2:58 pm | Reply
  10. Mohamud Abdu

    Praise Allah.
    Allah is great!

    June 5, 2014 at 9:16 am | Reply
    • Towel Head Detector

      Warning!!!!!!!............Warning!!!!!!!!!!!.............Warning!!!!!!!!!!......Towel Head detected!!!!!!!!

      June 5, 2014 at 10:55 am | Reply
      • Delmar Knudson

        He sounds more like a troll trying to get your goat.

        June 6, 2014 at 1:04 am |
    • My

      My picture of the holy Muhammad (from the Koran): 8=>(_|_)

      June 5, 2014 at 2:58 pm | Reply
    • Joey Isotta-Fraschini©

      -er.

      June 5, 2014 at 5:52 pm | Reply
  11. chrissy

    I am muslim. I mainly eat chapati and brown rice. Only two small meals a day. I am as healthy as a 20 year old.

    June 5, 2014 at 9:35 am | Reply
    • Delmar Knudson

      It's important to keep your right arm and hand and fingers healthy, so you can trigger that suicide bomb before you reach 40 years of age.

      June 6, 2014 at 1:06 am | Reply
  12. Kenny Rogers

    That's nice chrissy.
    Well then, I guess going on that premise, the United States GNP should be adjusted with an extra $2 trillions. Good job President Obama. We have recovered.
    We can also add a few billion dollars to Mexico too. Those drugs are big business.
    Reality check, the b lack market is real. It could be calculated in all the countries, but just how accurate will those numbers be?

    June 5, 2014 at 10:21 am | Reply
    • dazzle

      Recovered, KR come on now. The US has a long way to go.

      June 6, 2014 at 12:26 am | Reply
  13. palintwit

    Sarah Palin believes that early man rode dinosaurs to church every Sunday. Sarah Palin believes that they parked their dinosaurs in the coliseum while they were in church.

    June 5, 2014 at 11:14 am | Reply
    • 'palintwit' is the real twit

      What's it like being stuck in 2008?
      I hear "No Country for Old Men" is a shoe-in for Best Picture Oscar.

      June 5, 2014 at 5:55 pm | Reply
      • Are you still embarrassed

        Are you still embarrassed that you voted for Palin? You should be.

        June 6, 2014 at 11:03 am |
  14. bobcat2u

    An old Italian Mafia Don is dying and he called his grandson to his bed Grandson I wanta you to listen to me. I wanta you to take mya 45 automatic pistol, so you will always remember me. But grandpa I really don't like guns, how about you leaving me your Rolex watch instead.

    You lisina to me, some day you goin a be runna da bussiness, you goina have a beautiful wife, lotsa money, a biga home and maybe a couple od bambino, some-a day you goina come hom and maybe finda you wife in bed with another man. Whata you gonna do then? Pointa to you watch and say, "TIMES UP"?

    June 5, 2014 at 12:35 pm | Reply
  15. paulbern77

    If Italy subsidizes organized crime to the point where their country becomes a haven for it, then they just made a deal with the devil. Bye, bye Italy.

    June 5, 2014 at 1:49 pm | Reply
  16. bobcat2u

    A bus stops and two Italian men get on. They sit down and engage in an animated conversation.
    The lady sitting behind them ignores them at first, but her attention is galvanized when she hears one of the men say the following:

    "Emma come first.
    Den I come.
    Den two asses come together.
    I come once-a-more.
    Two asses, they come together again.
    I come again and pee twice.
    Then I come one lasta time."
    "You foul-mouthed swine, " retorted the lady indignantly. "In this country we don't talk about our se x lives in public!"

    "Hey, coola down lady," said the man.
    "Who talkin' abouta se xa? I'm a justa tellin' my frienda how to spella Mississippi."

    June 5, 2014 at 2:19 pm | Reply
    • Joey Isotta-Fraschini©

      @ bobcat, I come from Mississippi. That is one of the funniest things I've ever heard.

      June 5, 2014 at 5:59 pm | Reply
      • bobcat2u

        @ JIF
        As you know, I've lived down here for about 39 years now. When I ran across this, I had to post it. Using my uncanny ability to mimic accents, I told this one to my class, and I almost lost control. Remember my cajun routine ?

        June 5, 2014 at 7:00 pm |
    • banasy©

      Bravo.

      June 5, 2014 at 9:16 pm | Reply
  17. bobcat2u

    Sophia just got married, and being a traditional Italian was still a virgin. On her wedding night, staying at her mother's house, she was nervous. But mother reassured her. "Don't worry, Sophia. Luigi's a good man. Go upstairs, and he'll take care of you."

    So up she went. When she got upstairs, Luigi took off his shirt and exposed his hairy chest. Sophia ran downstairs to her mother and says, "Mama, Mama, Luigi's got a big hairy chest."

    "Don't worry, Sophia", says the mother, "All good men have hairy chests. Go upstairs. He'll take good care of you."
    So, up she went again. When she got up in the bedroom, Luigi took off his pants exposing his hairy legs. Again Sophia ran downstairs to her mother. "Mama, Mama, Luigi took off his pants, and he's got hairy legs!"

    "Don't worry. All good men have hairy legs. Luigi's a good man. Go upstairs, and he'll take good care of you."
    So, up she went again. When she got up there, Luigi took off his socks, and half his left foot was missing. When Sophia saw this, she ran downstairs.
    "Mama, Mama, Luigi's got a foot and a half!"
    "Stay here and stir the pasta", says the mother. "This is a job for Mama!"

    June 5, 2014 at 2:25 pm | Reply
    • rp1588

      It doesn't take long to cook pasta by boiling. Stir the sauce.

      June 5, 2014 at 3:44 pm | Reply
  18. rp1588

    Zakaria proposes a lie to falsely imply there is GDP growth. I realize this may be tongue in cheek, but still, is says a lot about the integrity of Zakaria.

    Not that this is news to me or many others. Why else would he have a job at CNN?

    June 5, 2014 at 3:43 pm | Reply
  19. Yakobi

    Well, since you can't accurately measure the black market (cuz it operates outside the law, duh!), it makes no sense to add it to the GDP of a country. It also won't give an accurate picture of how that country's economy is doing.

    June 5, 2014 at 5:52 pm | Reply
  20. atheist4thecause

    I wouldn't mind keeping track officially of the black market (maybe that's already being done), so we know how much they are dealing, how big our problem is, how to combat them, etc. I'm not sure I would include it in the GDP, though. It seems like an artificial way to inflate the GDP and I don't see what good that does.

    June 6, 2014 at 5:00 pm | Reply
  21. Pervez

    ....and make USA world biggest mugger ?

    June 6, 2014 at 10:29 pm | Reply
  22. Rick McDaniel

    Well, if we start tallying the results of corruption, and crime, as GDP, that will certainly boost the numbers.

    On the other hand, you also need to tally the negative side of the crime.........and that will negate the other.

    June 7, 2014 at 12:01 pm | Reply
  23. Able

    Interesting

    June 8, 2014 at 2:02 pm | Reply
  24. jz

    Terrible idea.. too many countries already have a soft stance on organized crime.. We certainly dont need the gov supporting them to prop up the GDP

    June 9, 2014 at 2:54 am | Reply
  25. dmf

    This is in reality a premium price for any commodity and service . It would still be Supply and Demand for a commodity / service at a given time , season and market place that would determine price ! There is this funny name " Black Market Price " given for the price of a particular commodity / service , not available in open market place . The supply is limited due to short fall in production , transportation issues , ban or controlled for other reasons . Nevertheless , if there is a demand , necessarily not in open but , in a secondary or through under ground supply net works , the produces / supplier would sell that commodity / service at a premium price . Then there are also subsidized prices , where tax payers or some one else picks up part of the tab for buyers to make gods and services affordable to in a wider market places . The less the government intervenes in market place , the more economy would grow in a free market capitalists system .

    June 11, 2014 at 5:11 pm | Reply

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