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Stealth of Nations: The Global Rise of the Informal Economy [Hardcover]

Robert Neuwirth
4.0 out of 5 stars  See all reviews (1 customer review)
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Book Description

15 Nov 2011

• 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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Product details

  • Hardcover: 304 pages
  • Publisher: Pantheon Books (15 Nov 2011)
  • Language: English
  • ISBN-10: 037542489X
  • ISBN-13: 978-0375424892
  • Product Dimensions: 21.1 x 14.7 x 3.3 cm
  • Average Customer Review: 4.0 out of 5 stars  See all reviews (1 customer review)
  • Amazon Bestsellers Rank: 124,099 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews
4.0 out of 5 stars Informal Economy 7 April 2014
By MFly
Format:Paperback|Verified Purchase
Good read really interesting take on the value of the informal economy from Robert Neuwirth. Particularly like the comparison between informal market places and Borges 'Aleph'.
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Most Helpful Customer Reviews on (beta) 3.9 out of 5 stars  13 reviews
21 of 22 people found the following review helpful
5.0 out of 5 stars Fascinating study of overlooked economy 22 Oct 2011
By Peter Lorenzi - Published on
Format:Hardcover|Verified Purchase
At a time when we have serious concerns over unemployed and underemployed, about regulation that strangles or stifles business, and taxation and tariff rates that drive prices through the roof, this fascinating little gem grabs you from the start with stories and data about the 'real' economy around the world, where currently fifty percent (and moving towards sixty percent) of the billions of working people in the world are doing so in the 'informal' economy, below the radar, off the official record, not part of world GDP. Neuwirth cites an estimate that this 'informal' economy amounts to about $10 trillion dollars annually, or about one-eighth of the world economy. Why so many people and so little economic impact? Because the margins in this business are razor-thin, where unfettered and, yes, in some cases, illegal, immoral and unscrupulous business better expresses capitalism than does the image of the multi-billion dollar global corporation.

Working his way through South America, China and Africa, Neuwirth meets and understands the people, their motives, and their practices. He is not writing about the darkest side of the economy, i.e., sex, drug and nuclear weapons trade, but rather the basic human element of survival, where entrepreneurs with a real flair for business work deals between Nigeria and China, dealing only in cash, bribing and smuggling, and providing a living for tens of millions of people. One can't decide if this is the solution to world economic problems, the 'real' economic problem itself, or just a grey underground world of questionable practices. Yet as scholars and over the years have noted over the years, the practice of these entrepreneurs are not that morally different from that of the established corporations. While I am not ready to go that far, read it and decide for yourself.
7 of 8 people found the following review helpful
5.0 out of 5 stars The Cold Realities of System D 13 Feb 2012
By T. Aossey - Published on
Format:Hardcover|Verified Purchase
After being introduced to Stealth of Nations from a Wired review, I was excited to dive in and was not disappointed. Neuwirth, whose investigative journalism skills and experience were instrumental to the structure and value of the narative, spent time on the ground and clearly did his research on the topic, submitting important data points and compelling details, proposing interesting hypothesis and solution ideas in revealing and discussing the hidden-in-plain-sight world of System D (shortened from "l'economie de la debrouillardise" a slang phrase pirated from French-speaking Africa roughly meaning the ingenuity or DIY economy).

From tours of Rua 25 de Marco in the heart of Sao Paulo, Brazil: a System D-based marketplace consisting of over 8,000 merchants (~80% unlicensed or unregistered) that daily takes on an organization of its own exchanging nearly $10B USD annually, with over a million shoppers per day on important holidays; to the streets, auto part, electronic and computer markets of Lagos, Nigeria; the manufacturing centers of Guangzhou, China, the trading post of Ciudad del Este, Paraguay and the good ole' USA where System D represents the largest unregistered economy in the world worth more than $1Trillion USD annually, Neuwirth provides intimate details of the interactions and inner workings from conversations and time well spent with the players in these "informal" systems.

In addition to the birds eye view of the lives of System D participants, I particularly enjoyed the chapter Against Efficiency where Neuwirth delved into the history and opposing economic thoughts of System D. And being a fan of de Soto, Why Not Formalize the Informal? presented some interesting counterpoints to some of de Soto's key assumptions underlying his books The Other Path and The Mystery of Capital.

The global System D structure employees 50% (and growing) of the world's workforce yet produces just 10% of its wealth. Stealth of Nations provides an entrance into the roots of this economic and social inequality reality and the barriers to individual and international progress it presents. Many would like to relegate these challenges to the developing world, but I (and about 99% of the rest ;) would contend that they are as important in America today as anywhere. For those willing to open mindedly explore this important conversation, Stealth of Nations provides an excellent opportunity to do so. The bibliography is an excellent info source, as well. Happy reading.
1 of 1 people found the following review helpful
5.0 out of 5 stars Highly Readable Introduction to Overlooked Aspect of World Economy 23 Dec 2012
By Reckless Reader - Published on
Format:Hardcover|Verified Purchase
Easy to read, yet profoundly changed my view of the international economy. I had no grasp of the underground economy, the off the books economy, the gray economy, the economy that half the world's people are in - the one where there is no government regulation or control, where people buy and sell and barter and trade without regard for banks, taxes, checkbooks, or double-entry accounting. Neuwirth is excellent in bringing us real people, from the markets of Nigeria to the steaming garbage heaps of Brazil to the high rise electronics economy of China -- the people who keep the entire world economy afloat, the people who survive whatever our sickeningly top-heavy economy leaves them to get through -- and he brings them to us with verve, with excitement, with appreciation for all the wonders that each and every person he meets can achieve. A must read for any lay person really tring to understand the current global economy from the bottom up. Journalists Rule!
1 of 1 people found the following review helpful
4.0 out of 5 stars The 'new' economy spotlighted 1 July 2012
By Uncle Mickey - Published on
Format:Kindle Edition|Verified Purchase
This book is a superb starting point for anyone interested in the non-formal economy(ies). Neuwirth cleanly splices together previously scattered bits of information and confirms and clarifies their importance.

Left to their own devices, the players in system-d created the most responsive and flexible marketplace imaginable.

Read it. Twice.
2 of 3 people found the following review helpful
2.0 out of 5 stars Disappointing 14 Jun 2013
By Robert Fately - Published on
Format:Kindle Edition|Verified Purchase
I had higher hopes for this book, but found myself more put off by Mr. Neuwirth's exuberant praising of what he calls the Stealth Economy (mostly under-the-table stuff) than enthralled by its wonders. Not that I take offense at folks trying to "cheat the system" per se - sometimes "the system" is just stupid (see: ridiculously high tariffs on imported products), but pretty much everything Neuwirth extolls is little more than a spreading out of the distribution chain. And, other than keeping some more middlemen working, this is not the way to create wealth.

If Proctor & Gamble sold Tide detergent in teabag-sized single use containers, they would eliminate one of the "supply chains" Mr. Neuwirth so admires. But they don't, so the container-load they ship to Africa is repeatedly cut by various middlemen until at some point someone is selling such small portions out of their hut. And that's fine - surely most people in that region haven't the resources or need to buy a 60-load portion. But it is not creating something new - only redistributing what is already there.

Likewise with the computer smugglers who take advantage of the easily bribed border guards to sneak products in and avoid local duty rates that are prohibitively high - sure, what they do is noble in some sense perhaps (though if they want help from the police, but don't pay their taxes, is THAT fair?) but again not the creation of something new. Dell and Lenovo are happy; they likely sell more boxes this way, but again I question whether this really adds value to the country at large.

In fact, everything described in the book relates to some product that is invented/created elsewhere and merely being distributed in a manner different than what some authorities would prefer. In the US some decades back, when the US subsidiaries of Japanese camera manufacturers could set "suggested retail prices" that were upheld by the retail community, enterprising souls figured out they could import the exact same products directly from Japan and resell them in the US at lower prices - thus the start of the so-called "gray market" (it wasn't illegal outright , so they weren't considered "black market" products).

So, while his descriptive accounts of what it's like in Rio or Nigeria in the midst of all the hubbub are interesting to read, the entire exercise is, to me, a non-story.
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