3.0 out of 5 stars
Informative, although a bit long winded., Nov 25 2011
This review is from: Stealth of Nations: The Global Rise of the Informal Economy (Hardcover)
I am torn. Just finished reading Stealth of Nations.
On one hand, I thought the fresh perspective it gave me on this topic was awesome. I have never thought in much detail about the "informal" economy. And I think if I have thought about it in passing, it was probably in negative terms. The people who work in this informal economy, however, (most in the developing world, while some still in the developed world) are hard working and creative people. They simply cannot afford the cost of licensing, incorporating, tariffs, or taxes that would destroy their razor thin margins.
On the other hand, I think if the author shaved about 100 pages off of the book it would had been more effective. In some chapters he ends up heavily quoting economists and scholars - which I find a bit dry. Some of the quotes are insightful, while others are unnecessary. The net effect being at times this book feels needlessly too academic. But, maybe I'm just a dumb guy.
That being said, the book presents you with some pretty sobering facts. Half of all citizens of the world are employed in this informal economy (or "System D" as the author refers to it as). This equates to an estimated 10 trillion dollars in wealth. The vast majority of people in this informal economy have no other means of employment. And although many still live in substandard conditions, without System D they would live in utter destitution.
This book makes you question the fundamental values upon which modern economic theory is built. In economics there is an emphasis on an efficient market place. It is about building profit for profit's sake. This however leads to two major problems: inequality and unemployment. 10% of the population controls 85% of the wealth. System D, however, creates markets that may be inefficient but maximizes employment and distributes wealth. And although System D workers may not pay taxes because they operate under the radar, they still bring wealth into developing countries that otherwise would not exist. In fact, North America and Europe both had a large System D component to their economies, and it is perhaps because of this they were able to shift into predominantly formal economies.
The author also tells interesting stories about the general perception of System D workers and fundamental biases in developed countries. For example, a 30 year old white woman in San Francisco who bakes cupcakes in her home without a license and sells them to local coffee shops is perceived FAR differently from a 60 year old Mexican who bakes ethnic foods and stands on the street without a license trying to peddle her goods.
The author does also explore other interesting stories of people throughout various developing countries. Though sometimes I find him telling similar stories that just drive home the same point. These are the stories that could probably be cut.
One of the final points driven home in Stealth of Nations is the need for the overall stigma of System D to be lifted and for governments to acknowledge its necessity and find creative ways to work with people in this system to ensure there are no human rights, environmental, corruption, or other abuses being allowed. And of course for governments to over time bring people from informal economies into more formal economies.
Overall, it is a very insightful read that I believe would had done better with further editing.
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