Everything you need to know about buying and selling real estate in Mexico, Puerto Vallarta, and the Banderas Bay region

Monopolies, Underground Markets, and Ethics

The Color of Financial and Real Estate Markets

Murray N. Rothbard, who died in 1995, was a leading Austrian economist of the last half of the twentieth century.

BLACK MARKET or underground economy, or shadow economy is a marketcharacterized by some form of non-compliant behavior against an institutional set of rules. If the rule defines that a set of goods and services production and distribution is prohibited by law, non-compliance with the rule constitutes a black-market trade, as the transaction itself is illegal.

Parties engaging in the production or distribution of prohibited goods and services are members of the illegal economy. Examples include the drug trade, prostitution, illegal currency transactions and human trafficking. Violations of the tax code involving income tax evasion is really participation in the unreported economy.

Because tax evasion or participation in a black-market activity is illegal, participants will attempt to hide their behavior from the government or regulatory authority. Cash usage is the preferred medium of exchange in illegal transactions since cash usage does not leave a footprint. Common motives for operating in black markets are to trade contraband, avoid taxes and regulations, or skirt price controls or rationing.

The black market is distinct from the grey-market, in which commodities are distributed through channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer The pink-market is defined as when there are state-sanctioned, but immoral activities, such as wars of aggression.  The red market of immoral activities is banned by the state or government authority.

Black markets have online counterparts consisting of darknet market websites such as the Silk Road, individual websites, forums and chat rooms. Cybercrime of data of individuals and their financial resources, is now an everyday occurrence throughout the internet.

MONOPOPOLIES exist when a producer (or a group of producers acting in concert) controls supply of a good or service, and the entry of new producers is prevented or highly restrictedMonopolist firms (in their attempt to maximize profits) keep the price high and restrict the output, and show little or no responsiveness to the needs of their customers.

Most governments try to control monopolies by:

(1) imposing price controls,

(2) taking over their ownership (‘nationalization‘), or

(3) breaking them up into two or more competing firms.


Ethics in the Workplace

It is assumed that local conditions of markets may be different, but ethics and social responsibility principles should be applicable to all markets. It has been proposed that a uniform code of ethics and social responsibility should be created by World Trade Organization and UN organizations work to solve diverse cultural differences to arrive at cooperative strategies in markets.

Lack of ethics includes stealing, buying a buyer, closing out inventory to only builder inventory or agency listings.

Lack of ethics results in market and public damage and creates imbalances from which the public has to protect itself. There is one winner and the rest are losers.  Ultimately, even the winner fails.

A common charge against the free-market society is that its institutes “the law of the jungle,” of “dog eat dog” behavior which spurns human cooperation competition. There is an emphasis on material success as opposed to spiritual values, philosophy, or leisure activities. This jungle is exactly a society of coercion, theft, and parasitism, a society that demolishes lives and living standards.

The peaceful market competition of producers and suppliers is a profoundly cooperative process in which everyone benefits and where everyone’s living standard flourishes (compared with what it would be in an unfree society).

The undoubted material success of free societies provides the general affluence that permits us to enjoy an enormous amount of leisure as compared with other societies, and to pursue matters of the spirit. It is the coercive countries with little or no market activity that are notable examples in the last half of the twentieth century. These are communist countries, where the grind of daily existence not only impoverishes people materially, but also deadens their spirit.

We hope sharing other perspectives helps us re-examine our own viewpoints.







Puerto Vallarta Real Estate Blog published every week
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This article is based upon Flex MLS reporting, legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review. If you have any other questions, contact me through my website.

Harriet Murray



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