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    What 1.8 Billion People Do

    What 1.8 Billion People Do

    My friend Zach linked to this amazing article this morning: The Shadow Superpower.

    In many countries — particularly in the developing world — System D [the black market] is growing faster than any other part of the economy, and it is an increasing force in world trade. But even in developed countries, after the financial crisis of 2008-09, System D was revealed to be an important financial coping mechanism. A 2009 study by Deutsche Bank, the huge German commercial lender, suggested that people in the European countries with the largest portions of their economies that were unlicensed and unregulated — in other words, citizens of the countries with the most robust System D — fared better in the economic meltdown of 2008 than folks living in centrally planned and tightly regulated nations. Studies of countries throughout Latin America have shown that desperate people turned to System D to survive during the most recent financial crisis.

    This spontaneous system, ruled by the spirit of organized improvisation, will be crucial for the development of cities in the 21st century. The 20th-century norm — the factory worker who nests at the same firm for his or her entire productive life — has become an endangered species. In China, the world’s current industrial behemoth, workers in the massive factories have low salaries and little job security. Even in Japan, where major corporations have long guaranteed lifetime employment to full-time workers, a consensus is emerging that this system is no longer sustainable in an increasingly mobile and entrepreneurial world.

    Incredible. And it’s not because these people “enjoy” having to evade the law, it’s just that the only ways to legally conduct business in places like the Congo (where it takes 18 forms to import an item) is to either bribe or circumvent the bureaucracy. Africa is the most regulated continent in the world, which is a handsome part of the reason that commerce does not move there readily. The only woman I know with the bravery and strength to deal with these laws is my friend Magatte. Her first company, Adina, is African-produced.


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    System D – For all my Canadian friends who pay cash to avoid getting raped by the GST, PST, HST you’re part of it. I vividly remember there being two prices in Canada for pretty much everything if you asked. The higher taxed price for something if you pay via a traceable financial instrument and then a lower “off the books” cash price. Of course System D really flourishes in places where the regulatory burden is impossible. So for my American friends – Welcome to the future! (That is one of my biggest chuckles when I hear about the 9-9-9 plan. The whole VAT part of it will cause the underground economy in the US to explode)

    Africa is dead. In 50 years it will be a wasteland run by complete despots. It can not be saved. The USA needs to cut foreign aid to Africa by 100%.

    The African continent is endowed with some of the richest treasures, including minerals and arable land, in this world. If not for authoritarian distress, including rebels with a cause and without a clue, they could easily have an economy which could serve the whole continent.

      Owen J in reply to n.n. | November 4, 2011 at 4:56 pm

      Yes, they could — if they could overcome their dysfunctionality which unfortunately hs not looked likely.

      Years ago I read some conference proceedings relating to how to help Africa. One guy (or group) presented a convincing argument that lack of basic infrastructure — roads, rail, enough trucking, adequate fuel distribution, etc — prevented the efficient distribution of goods (esp food) and crippled the emerging economies.

      It sounded really good until a co-worker pointed out that the Africans had no trouble at all moving armies of men in 100-CWT trucks over these self-same roads that were deemed inadequate to transport food and durable goods.

      It’s all a matter of priorities.

    BannedbytheGuardian | November 4, 2011 at 5:55 pm

    I have to commend you Kathleen . You at least attempt to grasp things outside of the USA.

    Everywhere every era is different. Not sure that it can be rolled up into a theory. Where would you place The Opium Wars for example ?

    Seems to me everyone has to pay someone for the right to even exist for existing does not come free. If it is not Caesar then it is a Warlord of God or a Warlord of Just General Stuff( like breathing eating commerce etc )

    3 memos ‘

    Jesus -Give unto Caesar what is Caesar’s..

    Dylan – Everybody got to serve somebody…

    Beatles ..The Taxman

    Me .. I go by the notion that a stationary thief is better than a mobile thief.

    Me – A stationary Thief is better than a mobile thief.

    BannedbytheGuardian | November 4, 2011 at 6:15 pm

    I should edit better but I am laying on the couch looking out the window & thinking -ought I go for a swim in the sea or to the pool. The sea is free but I just splash around.

    The pool costs $4.20 but I like to get my money’s worth & calculate how much per 50mtr lap. My minimum standard is 10 cents per lap (42) or good 84 laps (5 cents ) & 84 + is premium.

    There is a compromise -a 50 mtr sea pool which is free . Here I do a little bit of work & a lot of contemplating the beauty of it all.

    Hey hey its summer !!!

      Liberty in reply to BannedbytheGuardian. | November 5, 2011 at 12:30 pm

      I guess you are Down Under the equator somewhere in the world after being banned by The Guardian since you are enjoying summer type weather. Oh, why choose — just enjoy them both…..the salt water is good for your skin and cardio exercise is good.

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