I admit that I am fairly clueless about economics. Buuuut: I was joking. However, two flaws with the FairTax are that it is only an improvement if the IRS goes away, and it's difficult to imagine folks in DC giving it up, and that underground economies will always exist, in some way or another (there will always be bad guys).
Both of your points are certainly correct - maybe you do understand economics better than you give yourself credit for. :-)
Your 1st point about the IRS is correct and the FairTax would not take effect until the income tax in eliminated via constitutional amendment.
Underground economies will always exist as well, but with the FairTax everyone is really part of an underground economy which is really one of the primary appeals of the system.
Under the FairTax, it doesn’t matter if you make $70K as a engineer, drug dealer or prostitute - everyone is only taxed when they by a retail item.