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Norman Sperling
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The Stealth of Nations: The Global Rise of the Informal Economy, by Robert Neuwirth. Pantheon 2011.

review © Norman Sperling, February 7, 2012

This new book tells nothing new, and offers many examples of no value. Ostensibly celebrating the pirate economy, the author neither self-publishes nor finds street sellers. Instead, he contracts with a name-brand publisher, copyrights his tales of piracy, and repeatedly invalidates his own premises.

The underground and pirate economy is not rising, it's always been around. This "informal economy" is older and far more entrenched than the formal one. In several places the book admits that, but immediately reverts to the fantasy that working "off the books", on the street, on the margins, or not fully licensed, is new, or increasing.

What's newer, and growing far more vigorously, is the formal economy that earns confidence, enforces inspections, builds brands, and does things right. Several times, the narrative brushes up against the roughly-direct relationship between an enterprise's degree of formality (for which the author selects the odd proxies of being licensed, registered, and taxpaying) and its degree of trustworthiness. Trust and confidence are critical in transactions.

That's why customers graduate to more formal levels of the economy as soon as they can. They get better quality and therefore better value: the things they buy are closer to "real" and "working" and "sturdy" and "supported", and therefore worth the higher price. This generates valuable repeat-business, compared to street-hawkers who always need to drum up yet more new customers. Of this, the book gives only the slightest mention.

The author offers several sighs over capitalist misbehavior, while citing far more examples (without sighs) of pirate misbehavior. Almost all the misbehavior is just plain short-sighted: taking an immediate advantage and ignoring its (bigger) long-term consequences. Undermining value, as several chapters on piracy celebrate, undermines confidence. Folks who can't afford the most-trustworthy goods, and therefore take less-trustworthy, discounted street-goods, often live to regret it. Frequently-cheated customers are less eager to buy, which slows the 'speed of money', whose rate tracks the health of economies.

Save your time and money: skip this book. To improve the economy, earn as much confidence as you can (in reality, not just "licenses and registrations"), and do business with others who also earn confidence.

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