This report in yesterday’s Times, which describes a thriving black market in China for phony receipts, begins thus:

“To begin to comprehend China’s vast underground economy, one need only visit this city’s major transportation depots and watch as peddlers openly hawk fake receipts. * * * Buyers use them to evade taxes and defraud employers. And in a country rife with corruption, they are the grease for schemes to bribe officials and business partners. Making them and using them is illegal in China … But demand is so strong that a surprising amount of deal-making takes place out in public.”

This fascinating report also raises a larger question about the relation between markets and morality. That is, just because people are trading doesn’t mean such trades are “efficient” or good for society. This is why markets need morality (and law) to work properly.