Forbes Magazine is running a story this week about peripheral effects of the economic meltdown, and for this they turn to the work of famous sociologist and criminologist Sudhir Venkatesh.
Elizabeth Eaves, for Forbes.com writes,
You may think the economic meltdown is hitting bankers and Realtors hard, but spare a thought for members of the underground economy–prostitutes, drug dealers and purveyors of stolen goods, to name just a few participants. That’s what sociologist Sudhir Venkatesh does, having spent much of the last 15 years studying, and sometimes living within, the underground economies of New York and Chicago.
“The recession is engendering more violence,” says Venkatesh, a professor at Columbia University. “There’s far greater competition for whatever meager resources there are. The folks down on Wall Street peddling drugs, they’re fighting. The sex workers are trying as hard as they can to retain their clients,” he says, sitting in a Mediterranean restaurant a short walk from the Manhattan Criminal Courthouse, where he’s on jury duty. Considering his well-documented friendship with a gang leader–the subject of his bestseller, Gang Leader for a Day–one might have expected the court to disqualify Venkatesh, but no such luck.
About today’s economic situation…
Today Venkatesh is watching black market workers slip into despair along with the rest of the population affected by the economy. Lest legal workers consider this a distant problem, one conclusion of Venkatesh’s work is that the underground and mainstream economies are intimately entwined. “The boundaries are fluid, particularly in the global city where the black market has become instrumental–one might even say vital–to the overall economy,” he says. In New York City illegal workers serve sex, drugs and takeout to the wealthiest members of society–or at least they did until financial sector layoffs began in 2008.
The underground economy includes a vast array of people providing services that are off the books but otherwise legal. Venkatesh enumerates those having a harder time in the face of the recession: office cleaners, squeegee men, informal security guards, “canners” who scavenge for recyclables (there’s less consumption now, so less to recycle) and nannies whose employers have been laid off. And as business contracts, underground workers face certain problems unique to their status. They have no unemployment insurance or other benefits, and, with little protection from law enforcement, they tend to resolve disputes by physical means.
Venkatesh prefers to leave detailed prescriptions to policymakers but nevertheless ventures a few. Microcredit loans, as well as education on risk management and planning, could help shift some black market entrepreneurial zeal above ground. He heartily approves of the proposal by Barack Obama–a fellow pickup basketball player at the University of Chicago when Venkatesh studied there–to expand the Earned Income Tax Credit to give a bigger break to low-income parents. Sales taxes also hit the poor hard, he says; one way to help would be to let them use prepaid cards to buy goods tax free.
Venkatesh is struck by how much the black market resembles the wider society in which it is enmeshed. In the same Parisian banlieues that erupted in riots in 2005, he observed an “almost aristocratic,” highly centralized criminal operation. In the ghettos of Chicago, by contrast, he observed underground workers convene an ad hoc court to solve a dispute. His dismisses the “culture of poverty” theory, which suggests that poor blacks in America don’t work because they don’t value employment. “People in America want to work,” he says. They do so ever so industriously, even when they’re breaking the law.
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