THE SECOND BIGGEST ECONOMY IN THE WORLD—THE UNDERGROUND ECONOMY. The untaxed, unlicensed, and unregulated economies of the world collectively would be the second largest economy in the world, after the United States. That estimate comes from an interview in Wired by Robert Capps with Robert Neuwirth, the author of STEALTH OF NATIONS: THE GLOBAL RISE OF THE INFORMAL ECONOMY. Neuwirth says that today about half the workers in the world are participants in this shadow economy and that that portion will rise to two thirds by 2020. A map accompanying the article shows that the shadow economy is estimated to between 10% and 20% of the United States economy. it is estimated to be between 40 and 50 % of the Russian economy.

Kids, to understand an economic statistic, you need to have an idea of how it is calculated (or compiled). Compiling pricing data or unemployment data or production data requires a lot of work and a lot of assumptions. Here is another example of the difficulties of compiling statistics. The underground economy does not usually figure in the statistics for a country. Omitting even 10 to 20 %—much less 50%—of an economy’s activity introduces error, but collecting information about underground activities is difficult.

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