The fortunes of the world’s legitimate economies may rise and fall, but the global black market is currently booming.
From Somalia’s "pirate stock exchange" to the flourishing illegal organ trade in Egypt, there are some making money hand-over-fist, under the table.
We took a look at nine "alternative economies" – and Greece – to find out how people make do on the margins.
Hackers
According to Wired magazine, the Romanian city of Râmnicu Vâlcea is known “among law enforcement officials around the world” as Hackerville.
Reporter Yudhijit Bhattacharjee maintains that the term is “something of a misnomer; the town is indeed full of online crooks, but only a small percentage of them are actual hackers.”
Explains Bhattacharjee in a feature published last January:
Most specialize in ecommerce scams and malware attacks on businesses. According to authorities, these schemes have brought tens of millions of dollars into the area over the past decade, fueling the development of new apartment buildings, nightclubs, and shopping centers. Râmnicu Vâlcea is a town whose business is cybercrime, and business is booming.
When Bhattacharjee asked a cab driver what all the gold-chained twenty- and thirty-something men he saw around town driving BMWs and Mercedes did for a living, the response was, with a laugh, “They steal money on the Internet.”
But it’s not the “gleaming storefronts” or the new construction which “grinds ahead on nearly every block” that mark Râmnicu Vâlcea as the epicenter of Internet crime. No, it’s the more than two dozen Western Union locations within a four-block area that give Râmnicu Vâlcea’s “secret” away.
Prison
In 2004, smoking was banned in all federal institutions, and cigarettes, which were the de facto currency until then, were replaced by…are you ready for this?
Mackerel.
In a 2008 interview with the Wall Street Journal, Ed Bales, a prison consultant, said that mackerel had become the currency of choice in smoke-free institutions.
These days a haircut goes for two “macks”, which are small pouches of the fish, at about $1 each.
A “Fiend Book”, or a pornographic magazine, goes for as few as 40 macks (if it’s out-of-date and stained …use your imagination) and as many as 100 (if it’s reasonably up-to-date and bodily fluid-free).
Craving a bit of heroin? Be prepared to fork over 50 macks.
And, if it’s a cellphone you’re after, that’ll be 400 macks, please.
Mark Muntz, president of supplier Global Source, told the Journal that his company unloaded about $1 million worth of mackerel to commissaries in federal penitentiaries in 2007, though it’s not particularly popular elsewhere.
“We’ve even tried 99-cent stores," Muntz said. "It never has done very well at all, regardless of the retailer, but it’s very popular in the prisons."
Somali Pirates
Somali pirate hijackings are financed by what may well be the world’s most unusual “stock market.”
A pirate interviewed by Reuters in 2009 says that, in Haradheere, 250 miles northeast of Mogadishu, brigands set up an exchange of sorts to fund their activities.
“Four months ago, during the monsoon rains, we decided to set up this stock exchange," he said. "We started with 15 ‘maritime companies’ and now we are hosting 72. Ten of them have so far been successful at hijacking.”
He explained that, “The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials.”
After a ransom payout for releasing a Spanish vessel, “investor” Sahra Ibrahim, was lined up outside the exchange waiting for her cut.
“I am waiting for my share after I contributed a rocket-propelled grenade for the operation,” she said. “I am really happy and lucky. I have made $75,000 in only 38 days since I joined the company.”
Between June and September every year, the number of hijackings drops, as monsoon season makes it difficult for pirates to operate the small skiffs used in attacks. Come autumn, the attacks begin once again, which are so frequent that Frontline Ltd., the world’s largest operator of oil supertankers, which transports cargo for companies including ExxonMobil, BP, and Chevron, has in the past considered avoiding the Gulf of Aden altogether.
Pirates know that the value of the ship and its cargo are usually worth far more than however much they are demanding, and a few million dollars is a drop in the bucket in relative terms for the ship operator. Whatever risks there are in attacking – like the chance of being caught by the international task force of naval vessels patrolling the area, for one – the risk of not collecting a ransom is lowered still, as corporate “Kidnap & Ransom” insurance today seems to be the rule, not the exception.
North Korea
The North Korean government has reportedly earned itself hard currency over the years by engaging in drug dealing, weapons manufacturing, and top-drawer counterfeiting. But the proletariat makes ends meet in decidedly more pedestrian ways.
"A North Korean family needs 90,000-100,000 North Korean won for living costs per month, but workers at state-run factories or enterprises earn a mere 2,000-8,000 won," one South Korean official told the Chosun Ilbo newspaper this fall. "So North Koreans have no choice but to become market traders, cottage industrialists or transport entrepreneurs to make up for shortages."
With the ration system in tatters, North Korean citizens survive by moonlighting from their state duties as private tutors, carpenters, and taxi drivers.
"Ordinary North Koreans have become so dependent on the private economy that they get 80-90% of daily necessities and 60-70% of food from the markets," the official said.
Public School Cafeterias
Though the Los Angeles Unified School District has received accolades for its new, healthful lunches, the appearance of quinoa and whole wheat bread has created “an underground market for chips, candy, fast-food burgers and other taboo fare.”
Last week, Van Nuys High School juniors Iraides Renteria and Mayra Gutierrez told the LA Times they considered the new school fare "nasty, rotty stuff," as they pulled three bags of Flamin’ Hot Cheetos and soda from their backpacks – which they very well may have purchased from one of the junk food “dealers” on campus.
At Van Nuys High, a Junior ROTC officer and an art teacher have been caught selling candy, chips, and instant noodles to students. And, as Hank Cardello, the author of Stuffed: An Insider’s Look at Who’s (Really) Making America Fat, and a former food executive with Coca-Cola, General Mills, and Cadbury-Schweppes, pointed out in the Atlantic, candy dealers have sprouted up wherever fresh food is sold:
- Following the passage of the Texas Public School Nutrition Policy, which banned candy, enterprising students at Austin High began selling bags full of candy at premium prices, with some reportedly making up to $200 per week.
- Similarly, young entrepreneurs at one Boca Raton (Florida) middle school make runs to the local Costco (COST) and buy candy bars, doughnuts, and other high-calorie snacks in bulk. They then offer these goodies for sale in an environment that has supposedly eradicated such goodies.
- An eighth-grade student body vice president in Connecticut was forced to resign after buying Skittles from an underground "dealer."
- The U.K. has also seen its share of black market trade in banned foods, snacks, and beverages, with schools in Oxford, Dorset, and Essex reporting healthy underground markets trading in food contraband. The plots ranged from kids selling McDonald’s (MCD) hamburgers in playgrounds to bicycle-riding entrepreneurs hauling bags of soft drinks and milk chocolate for sale.
