Underground

...This is a model of political-economic writing...

...If such trends continue, the underground economy will one day be the center of labor-management struggles...

...In his 1985 inaugural address, President Reagan implicitly excused underground activity as evidence of individual entrepreneurship struggling against the heavy hand of government—a philosophy already embraced by the U.S...

...Although most highly developed in Italy, this trend toward outsourcing, subcontracting, and home production is also on the rise in the United States, where it prompted an ambivalent response from the Reagan Administration...

...In the book's most original chapter, he singles out Italy, the hands-down gold medal winner "if there were an Olympic competition for informal production and tax evasion...

...Part-time jobs, some of them off-the-books, make it possible for many women to gain a measure of economic independence while they are still held responsible for household labor...

...Even when stated in this most positive sense, the underground economy is slippery territory...

...Such activities go unreported, most especially to the Internal Revenue Service, but, as Mattera points out, also to government regulators of minimum wage, health, and safety laws...

...As a result, a dual economy emerged in which Northern Italy's skilled workers, mostly men, boosted their incomes by moonlighting in small, specialized firms, while workers in the South toiled in fly-by-night workshops at extraordinarily low pay (forty cents per hour, according to one study...

...Mattera is on more solid ground when he suggests that the underground economy foreshadows trends for the economy as a whole...

...At that time, wildcat strikes paralyzed the country, prompting industrialists to search for ways to move production out of large factories where workers demanded higher pay, less work, and more autonomy on the job...

...Department of Labor, which lifted restrictions against homework by Vermont knitters...

...Though everyone can point to examples of the underground economy, attempts to measure its size have generated heated debate...

...Mattera provides a useful survey of this dispute, pointing out the methodological problems of measuring that which, by definition, goes unreported...

...Instead of sensationalist estimates of "lost" tax revenues through unreported transactions, or handwringing over the alleged breakdown of civil society because of tax evasion, Mattera combines a comprehensive overview of research on the underground economy with non-doctrinaire insights into the problems and prospects of increased off-the-books activity...

...Whether operating with relatively well-paid skilled labor or under sweatshop conditions, small firms which go underground serve large industry well by permitting production to ebb and flow with the business cycle, unimpeded by job protection measures negotiated by labor unions...

...The most common estimates, based on either the increases in circulating currency (primarily in $100 bills) or discrepancies between reported incomes and actual expenditures, suggest an underground economy of about 10 per cent of GNP, an estimate corroborated by Mattera's own tally of the underground labor force...

...But he recognizes that the individualistic character of most underground work makes collective activity extremely difficult...

...We all know someone in the underground economy: the waiter who neglects to report tips...

...Especially inimical to the union movement may be what Mattera terms "the Italian solution," the breakup of large industries into constituent parts, each operating in an informal market, much like small firms in Japan which also rely on a flexible pool of low-paid female and elderly workers...

...To protect workers from Reagan-style "freedom," labor organizers should assist homeworkers as in the Leicester (England) Outwork Campaign, or help such immigrant farmworker unions as the Maricopa County (Arizona) Organizing Project, Mattera argues...

...Estimated at 30 per cent of GNP, Italy's laverno negro, or "black work," proliferated after the "hot autumn" of 1969...

...At the same time, however, the Administration expressed dismay at the ability of welfare recipients to supplement their benefits with off-the-books income, and the Department of Health and Human Services cracked down on alleged fraud...

...While few would question that the underground economy has increased in relative importance, a review of the literature on this issue would have bolstered his argument...

...the sidewalk jewelry hawker...

...Mattera also offers a two-sided view of the underground economy, but one that stands Reagan's conception on its head...

...Thanks to Philip Mattera, we can begin to stake out the terrain well in advance...

...Mattera asserts that the underground economy is growing, but unfortunately he provides only impressionistic evidence...

...Furthermore, for some young people, underground employment permits a lifestyle based on intermittent work coupled with state assistance...

...the retailer who gives discounts for cash, or the physician who exchanges services with the plumber...

...In his good-humored study, Off the Books: The Rise of the Underground Economy, Philip Mattera avoids the moralisms that taint other books on the subject...

...Mattera does not romanticize this practice, but he commends it as a "search for an alternative way of life in a system that remains crisis-ridden but resistant to fundamental political change...

...Mattera shows that for many workers the underground economy signals a scramble to make ends meet, and for others it affords greater choice...

...Mark H. Maier (Mark H. Maier teaches economics at the College of New Rochelle...