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The Shadow Recovery

Stocks in this article: AAPL GOOG

But the shadow recovery is unsustainable. When some are paying half their income in taxes, while others are being paid under-the-table and paying no taxes, or using offshore subsidiaries to evade taxes, those who follow the law become chumps.

It's not just nannies and waiters and drug dealers being paid under the table. Many friends of mine who once had jobs are now "freelancers," or "small businesspeople," and most aren't contributing to benefits that used to be a standard part of employment, like retirement and health care.

What it means is that the economy is much better than it seems, but that the social situation is also more fragile than it has been since the Great Depression. Now, when people get sick they will die. When people get old they will need relief. When people lose work they will starve. So will their children.

And when the shadow recovery turns into a shadow recession, public anger over disparities in wealth could create the same upheaval we saw 80 years ago, when some were outright Communists, others were frankly Fascists, and we wondered whether democracy and capitalism could survive.


I'd rather pay taxes than see that. If you read the personal histories of that time, as my mother lived them, you would too.

At the time of publication the author was long AAPL and GOOG.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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