Wednesday, December 14, 2011

the canard

One of most common, and most misguided, arguments against System D, the informal economy, is that it evades laws and thus is a threat to public safety.

If anyone thinks criminality is confined to the global underground, read this Guardian piece about PIP, the fully formal and, until 2010, well-respected French company that made breast implants. Money quote:
The company Poly Implant Prosthesis (PIP), based in the south of France, was one of the world's leaders in silicone implant production until last year when it was found to have been cutting corners and saving an estimated €1bn (£840m) a year by using industrial silicone instead of medical-grade fillers in their breast implants. The casing around the filling was also faulty and prone to rupture or leakage. The company has closed and more than 2,000 women have filed legal complaints. A judicial investigation has begun for involuntary homicide over a woman who died from cancer.
Let's put it in bold in case it hasn't sunk in: a formal corporation is under investigation for committing homicide. 

The lesson: criminality exists. Nike's contractors hired child labor until advocacy groups revealed the practice. Siemens paid $1 million in bribes every business day in pursuit of contracts across the developing world. Fully formal firms commit crimes--crimes that harm and, in the extreme, kill.

I don't argue that underground economy is blameless. But let's not pretend formal businesses are clean.

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