Stealth of Nations: The Global Rise of the Informal Economy

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9780375424892: Stealth of Nations: The Global Rise of the Informal Economy

· Thousands of Africans head to China each year to buy cell phones, auto parts, and other products that they will import to their home countries through a clandestine global back channel.
 
· Hundreds of Paraguayan merchants smuggle computers, electronics, and clothing across the border to Brazil.
 
· Scores of laid-off San Franciscans, working without any licenses, use Twitter to sell home-cooked foods.
 
· Dozens of major multinationals sell products through unregistered kiosks and street vendors around the world.

 
When we think of the informal economy, we tend to think of crime: prostitution, gun running, drug trafficking. Stealth of Nations opens up this underground realm, showing how the worldwide informal economy deals mostly in legal products and is, in fact, a ten-trillion-dollar industry, making it the second-largest economy in the world, after that of the United States.
 
Having penetrated this closed world and persuaded its inhabitants to open up to him, Robert Neuwirth makes clear that this informal method of transaction dates back as far as humans have existed and traded, that it provides essential services and crucial employment that fill the gaps in formal systems, and that this unregulated market works smoothly and effectively, with its own codes and unwritten rules.
 
Combining a vivid travelogue with a firm grasp on global economic strategy—along with a healthy dose of irreverence and skepticism toward conventional perceptions—Neuwirth gives us an eye-opening account of a world that is always operating around us, hidden in plain sight.

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About the Author:

Robert Neuwirth is the author of Shadow Cities: A Billion Squatters, a New Urban World. He has received a research and writing grant from the John D. & Catherine T. MacArthur Foundation, appears nationally and internationally as a speaker and on radio, and has written for The New York Times, The Washington Post, Dwell, Fortune, The Nation, and Wired, among many other publications. He lives in Brooklyn.

Excerpt. © Reprinted by permission. All rights reserved.:

The Great Rummage Sale
 
These are the products of some people’s lives. Biscuits, balloons, and battery-powered lint removers. Rag dolls, DVDs, and cut-price datebooks. Individual packets of laundry detergent, roach killer, rat poison, face cream. Fresh fruit and finger puppets. Sunglasses and magnifying glasses. The Un-Bra (a pair of gravity-defying, self-adhesive, strapless silicone push-up cups.) Counterfeit Calvin Klein cologne cling-wrapped in Styrofoam clamshells.
 
A vendor selling slide whistles blasts a mocking trill—several times a minute, seven hours a day. Across the street, a husky man standing in front of a huge heap of clothes hollers, “Cuecas baratas! Cuecas baratas!”—“Cheap underpants! Cheap underpants!”—in an increasingly hoarse tenor. Next to him, a hawker with a tray full of pirated evangelical mix tapes blasts a stereo powered by a car battery. Two women toss tiny toys in the air—twin pinecone-shaped pieces of metal lashed together with elastic. These novas brincadeiras—new jokes—clack together like raucous rattlesnakes, creating a din destined to drive mothers and schoolteachers bonkers. Around the corner, two vendors with plastic windup launchers shoot small helicopters high above them (they drift back down, rotors a-frenzy) while another stands, back to the breeze, and silently releases child-size soap bubbles from a scoop that looks like a giant Ping-Pong paddle. The bubbles squirm after being born, their edges hesitant. They wobble on the weak current and burst an instant before they touch anything.
 
In her office six floors above the everyday economic carnival, Claudia Urias, general secretary of Univinco, a nonprofit dedicated to promoting and improving the market, took in the tumult rising from the street. She shook her head. “É uma confusão total,” she declared. “It’s total confusion.”
 
Despite her up-close knowledge of the street, however, Claudia is wrong. Rua Vinte e Cinco de Março (the street of March 25) in the center of São Paulo, Brazil, only seems like absolute anarchy. The street market here—the largest in the city, where retailers from other markets come to buy, because many of the items you can get on this street are either unavailable or far more expensive elsewhere, even from wholesalers—has unwritten rules and an unofficial schedule, almost as if all its merchants were punching a clock. The chaos here is meticulously organized.
 
Each market day starts well before dawn. At three thirty a.m., four men converge on a short commercial alley just the other side of the Tamanduateí River. Thin sheaths of onion skins crunch under their feet, perfusing the air with their scent. The men, however, seem immune to the acrid atmosphere. They enter a run-down warehouse and emerge with several dozen battered wooden crates and splintered and stained plywood sheets. They rope this haphazard cargo on top of dollies and roll them along Avenida Mercúrio and across the river to Rua 25 de Março. There, they pile the boards on top of the crates to make two rows of makeshift tables along a pedestrian alley that leads from Rua 25 de Março to Rua Comendador Abdo Schahin.
 
This is the opening ritual of a site-specific street performance, the construction of the stage set for São Paulo’s wholesale market for pirated CDs and DVDs. Within a few minutes, several dozen dealers arrive. Some roll up in compact vans and sell their contraband right from the vehicles. Others arrive on foot, carrying duffel bags. They plop the bags on the tables, unzip, and—É isso ai!—as if a starter’s gun has fired, the market has begun. First-run movies are often available a day or two after they open in theaters.
 
By four a.m., Édison Ramos Dattora is on the case. Édison is a camelô—an unlicensed retail street vendor. He came to the big city almost two decades ago and spent fifteen years selling chocolates, clothing, and small gift items on the trains at Estação Júlio Prestes, one of the city’s commuter rail stations. For the past three years, he has moved into the more lucrative trade selling pirated movies and CDs on the city’s streets. Business is so good that his wife, who used to work a sales job in the legal economy, has joined him in the illicit trade. Édison hits the wholesale market for both of them, so his wife can stay home with their young son. They buy movies for fifty centavos each—or thirty cents—and resell them for at least twice as much. Most often they work separately, to maximize the amount of the city they can cover, but when the streets are particularly busy—before a big holiday, for instance—they join forces to handle the demand.
 
Being unlicensed dealers in illegal copies of well-known films may put them at odds with the movie companies and the cops, but Édison is proud of his profession and insists that it is no different from the work his wife used to do in the aboveground economy. “It’s the same as any job, with the same goals, only done differently,” he said. Street peddling has given his family a life that has transcended the dreams he had growing up in Brazil’s agricultural midlands. He now has an apartment in the center of the country’s biggest city, a house in the suburbs (rented out, to bring in extra income), and a bank account and credit card. Édison earns enough money that, a few years back, he traveled to Europe to try his hand at street vending there (though he enjoyed his journey, sales were better in Brazil, he told me.) As he spoke, three members of the Guarda Municipal—the local police force—sauntered by on the Viaduto Santa Ifigênia, one of the long pedestrian bridges that span the low-lying downtown park/plaza called the Anhangabaú. Édison fell silent. His wares were safely zipped inside a pink schoolgirl’s satchel at his feet, but he stared after the cops and waited until they were at the far end of the viaduct before he picked up the thread of the conversation.
 
It takes about an hour for Édison and his fellow camelôs to finish their purchasing. That’s when Jandira pulls up in her small pickup, as she has six days a week for the past ten years. She parks in the same spot every day—a corner next to the pirate market—and does her business right from the back of her truck. Her trade is bolo and pão. Each day she bakes eighteen cakes—usually chocolate, chocolate/vanilla swirl, and orange—and twenty-five loaves of bread, and makes cafezinho (black or with milk, but always heavily dosed with adoçante—artificial sweetener). She sells these items to the street market workers and their customers. At one real per slice and fifty centavos for a coffee, her average sale totals less than a dollar, but her low prices have yielded good profits. “With this clandestine job,” she said as she proffered a slice of orange cake, “I have bought two cars, a house in Minas Gerais [a province about five hundred kilometers north of São Paulo], and sent my kids to private school.”
 
The pirate market ends at sunrise. The haulers, who had disappeared while the market was in full stride, return. There’s some haggling and shouting until the wholesalers hand over the daily “vig,” the extra cash the haulers demand to do their job. Once the dealers ante up and vacate their posts, the haulers toss the crates and boards in piles on the sidewalk. They load up their dollies and roll the crude infrastructure back across the river to the onion broker’s place. A few wholesalers huddle in darkened doorways, making quick transactions with camelôs who were late to the fair. The rest move briskly off. By five thirty, there’s no sign of the presence of the pirates except a thick scattering of plastic DVD wrappers in the gutter.
 
It’s still early. A few catadores—self-employed recyclers who prowl the streets looking for cardboard, plastic, and metal that they can sell to scrap dealers—catch some shut-eye in front of the gated storefronts of the Centro, their half-filled handcarts tilted back so they won’t roll away. Downtown is still dormant, but Rua 25 de Março is already welcoming the next wave of street sellers.
 
Merchants from China dominate this second line of sales. They arrive a little before six a.m., pulling small folding carts on which they have packed their inventory and the spindly accordion-style folding tables that function as their mobile stalls. Each has a different specialty: one bracelets, another backpacks, a third sunglasses. Most cater to the latest fads: New York Yankees caps in camouflage, orange and green plaids, and other unofficial patterns, pirated futebol jerseys for local clubs like Corinthians, Palmeiras, and Santos—some of them indistinguishable from the real McCoy, others with the dripping ink and blurry logos that are the mark of bad knockoffs the world over. They sell their products to street sellers and small-scale retailers who cannot afford to buy in large quantities or don’t have the warehouse space to store excess goods. Street vendors who sell sunglasses, for instance, could buy their wares at one of the wholesale outlets two blocks away on Avenida Senador Queirós, which offer the lowest prices. But these stores don’t open until nine a.m. and you have to purchase at least twenty pairs of each style if you want to shop there. Here on the street, the Chinese will sell you three pairs for five reais—at 1.7 reais to the dollar, that’s about $1 a pair. Roving street retailers resell each pair for three reais, or about $1.75, thus ...

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