The Underground Economy in the United States: Can We Get a Fix on It?Invisible, Outlawed and Untaxed: America's Underground Economy by Harry I. GreenfieldReview by: Conrad P. RutkowskiPublic Administration Review, Vol. 55, No. 4 (Jul. - Aug., 1995), pp. 390-391Published by: Wiley on behalf of the American Society for Public AdministrationStable URL: http://www.jstor.org/stable/977135 .

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there is enough technical information to satisfy those looking for hard evidence. Determinants is important because it takes a nonideological look at the likely outcomes of cost-containment strategies undertaken in the 1980s. Without preaching, the authors deftly outline which strategies are likely to be valuable in the current push for health care reform, and applicable to all forms of reg- ulation likely to be passed.

The last entry in the series, Medicare Now and in the Future, completes the dis- cussion begun in Balancing. Why would Marilyn Moon want to write yet another book on Medicare, exhaustively research- ing and retrieving facts, ideas, and first- hand war stories associated with the legis- lation? The answer is simply that the problems encountered in framing and implementing Medicare policy are gener- ic to other dysfunctional areas of the U.S. health care system. By recognizing and learning to deal with questions of Medi- care policy and implementation, today's policy makers can better accomplish the task before them. By studying Medicare's current state and troubled history, we can see the larger system in microcosm. We can thus begin to assemble the complex puzzle that is somewhat simplistically called "the U.S. health care crisis." Mari- lyn Moon's book, unobscured by ideolo- gy, highlights particular problems associ- ated with Medicare, such as the disastrous Medicare Catastrophic Cover- age Act (1988), so that we do not repeat that type of scenario. All three volumes, in fact, have the excellent quality of pre- sentation which leads the reader to truths without the use of intellectual bludgeon- ing. In short, these three volumes help explain both the need for and the content of current health-care reform proposals. At the same time, they suggest some of the implementation problems likely to arise as we struggle to control public sec- tor spending on health care, while sus- taining-or even improving-the quality of that care.

The Underground Economy in the United States: Can We Get a Fix on It? by Conrad]? Rutkowski, Institutefor Applied Phenomenology

Harry I. Greenfield, Invisible, Outlawed and Untaxed. America's Underground Economy, (Westport, CT: Praeger, 1993), 152 pp.; $39.95 cloth.

T he initials of this books title-Invisi- lble, Outlawed, and Untaxed-pro-

duce a familiar acronym. Perhaps the underground economy constitutes one big IOU to all conscientious taxpayers who will never realize any public benefit that could flow from collecting the taxes due on such monies. The author, Harry Greenfield, does not take a position on this matter, but rather produces a primer on the underground economy in the United States. He focuses particularly on defining the term, to make measuring the size of the underground economy possi- ble and meaningful.

His definition is neutral, not pejora- tive, for he defines the underground economy as "the production and distri- bution of goods and services, that for the most part, are initially undetected (and therefore unrecorded) in the U.S. nation- al income and product accounts (NIPA)." He emphasizes the initial fail- ure to be included in NIPA because most of the income earned in the underground economy ultimately becomes part of the regular economy. NIPA "Provides us with a single measure of all of the economic activity that takes place in a given period of time, that is, the Gross National Prod- uct (GNP)," and NIPA is incomplete if it misses the underground economy. Thus, Greenfield's definition of the underground economy relies upon and complements the GNP and makes it more whole. This definition is a stan- dard to be used and relied upon by all interested scholars. Without such a com- mon standard, estimates of the under- ground economy's size would vary greatly and would be unlikely to instill confi- dence. Having defined the underground

economy, the author proceeds to deter- mine its nature or content by using it as a screening device to include or exclude various kinds of underground activities.

Some other authorities have tried to get a handle on the underground econo- my by analyzing the money supply. (The key here is to see M 1 as the primary vari- able. Depending upon the degree of liq- uidity, money is graded from Ml to M13, with Ml being the most liquid.) The rationale for this kind of analysis is the belief that denizens of the under- ground prefer cash as the means of exchange because tracking it is hard. Greenfield rejects this approach because the underground economy does not con- sist of all available cash, nor does it con- sist only of cash. In addition, the experts' estimates of cash payments vary signifi- cantly. Finally, Greenfield argues that the money supply, seen as cash in order to quantify the underground economy, is only one of that economy's constituents.

Greenfield analyzes several other approaches to measuring underground economic activity. He reviews the IRS's treatment of this economy, finding it deficient because it deviates from his pre- viously specified definition. In this regard, we should note that the IRS is motivated largely by its desire to identify all sources of income, without consider- ing how it was generated.

The author notes that almost every study of the underground economy, including his own, relies upon three studies when formulating a methodology for esti- mating dollar figures. The first was a 1979 IRS study which took a macroeconomic approach; the second was a study entitled Beating the System by Carl Simon and Ann Witte (1982); and the third was an Abt Associates study, commissioned by the IRS, called "Unreported Taxable Income from Selected Illegal Activities" (1984). Greenfield objects to all of these studies because each one's definition of the under- ground economy differs from his. His apparent goal is to get all these actors to use one definition-his own. He argues convincingly that there is currently little or no agreement about what the underground economy includes, and that agreeing on a definition would help all the parties get a better fix on it and its various components.

390 Public Adminitation Review * July/August 1995, Vol. 55, No. 4

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As a first step, Greenfield's work, with particular emphasis upon his definition of the underground economy, should be put into the hands of those concerned with this subject. The goal is to have Greenfield's definition accepted almost universally, or else to find an alternative definition acceptable to all parties-no mean feat.

Greenfield's efforts to bring order and discipline to the concept of the under- ground economy are laudable. His book's two major points-the need to have a common standard for measuring the underground economy, and the sec- ond is his specific recommendation for standardizing the measurement-are worth making. Whether or not these ideas are accepted, if the book stimulates discussion and encourages agreement, it will serve an important purpose. The IRS, or, if that is viewed as a partisan or otherwise injudicious choice, some other body such as the American Economic Association, should sponsor a high-level forum where the issues Greenfield raises would be given serious, careful considera- tion-and even acted upon.

References Abt Associates, 1984. "Unreported Taxable

Income from Selected Illegal Activities." Washington, DC: Department of the Trea- sury, IRS.

Simon, Carl B. and Ann D. Witte, 1982. Beating the System: The Underground Economy. Boston: Auburn House Publishing Company.

Eschewing Legalese When Talking AIDS by Graham Watt

Allan H. Terl, AIDS and the Law: A Guide for the Nonlawyer, (New York: Hemisphere Publishing Co., 1992), 180 pp.; $45.00 cloth, $19.95 paper.

Jn the ten years since AIDS was identi- lfied as a new medical phenomenon, public administrators, like everyone else, have had to learn about it and how their governmental units should deal with it. The lesson came harder to some than others. Allan Terl's extensive work on AIDS-related legal issues dates back to the 1984 firing of a public employee because he had AIDS, a case which led to the first decision in this country that peo- ple with AIDS are protected from dis- crimination on the basis of handicap. "This volume is written in the hope that an understanding of the legal issues relat- ing to HIV disease will help those with specific rights to be aware of them, to muster courage to insist on them and, if necessary, to pursue them through the courts," states the author in his Preface. "It is written in the hope of avoiding unnecessary infringement on those rights and liability for those who do infringe them because of ignorance of those legal rights." It is from this latter perspective that his book becomes a necessity for public administrators.

A member of the American Bar Asso- ciation's AIDS Coordinating Committee and the American Civil Liberties Union's AIDS Task Force, Terl explains that AIDS is unlike any other illness with which modern society has dealt. "The degree of ignorance is high, and the degree of fear even higher," he points out. The fact that the syndrome originally occurred among gay men and intra- venous drug users in this country also seemed to confirm people's prejudices against these unpopular members of our society.

AIDS and the Law avoids the com- plexities of medical issues. It focuses on legal issues, but successfully avoids legalese. Terl deals with every imaginable subject, from access to the courts to edu- cation to employment, from housing to insurance to public accommodations to testing. His book provides the most cur- rent survey of the U.S. cases on each sub- ject, and includes chapters on the new Americans with Disabilities Act and the controversial right to know whether a health care worker or patient is HIV pos- itive.

AIDS and the Law is not designed to replace legal advice on specific problems. It will, however, provide a general back- ground and understanding of how HIV disease must be considered as the public administrator approaches everyday tasks, and its careful analyses may well help public administrators not only to avoid liability but to do so with enlightened compassion.

Book Reviews 391

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