Tuesday, November 01, 2011

Black markets: a global $10 trillion economy

Excellent article from Foreign Policy entitled, "The Shadow Superpower", which examines the world's $10 trillion underground economy.

"You probably have never heard of System D.

Neither had I until I started visiting street markets and unlicensed bazaars around the globe.System D is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards.

To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of "l'economie de la débrouillardise."

Or, sweetened for street use, "Systeme D." This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy..."

Why the attraction to this unlicensed, improvised economy? Because that's where the jobs are, and where flexibility exists for entrepreneurs and traders/merchants to come in and do their thing without burdensome costs of regulation, licensing, and taxation (i.e., red tape). 

"...It used to be that System D was small -- a handful of market women selling a handful of shriveled carrots to earn a handful of pennies. It was the economy of desperation. But as trade has expanded and globalized, System D has scaled up too.

Today, System D is the economy of aspiration. It is where the jobs are. In 2009, the Organisation for Economic Co-operation and Development (OECD), a think tank sponsored by the governments of 30 of the most powerful capitalist countries and dedicated to promoting free-market institutions, concluded that half the workers of the world -- close to 1.8 billion people -- were working in System D: off the books, in jobs that were neither registered nor regulated, getting paid in cash, and, most often, avoiding income taxes. "

This is a trend I've talked about a bit on Twitter, but haven't covered here on the blog. Be sure to check out the full piece. It's well worth your time, and these trends will likely take hold here in the USA for similar reasons.

1 comment:

Dr William J McKibbin said...

Perhaps the government can nationalize black markets...