Thursday, May 17, 2012

out of the megastore and into the parking lot

That's the journey of a former Ikea worker in Spain, who used to deliver and assemble furniture for the mega furniture retailer but now does the same thing as part of the informal economy, offering his services to people who exit the big box store. He was laid off by the massive retailer, and now makes half as much as he used to earn, but it's off the books.

Flea markets are flourishing, too. Patricia Aragon Llamas, 31, shows up every weekend at the Charco de la Pava market to earn about €50 selling second-hand clothing and shoes.“This market has doubled in size in the past year,” she said. “I’ve got a 3-year-old child and an unemployed husband, so I’m really beyond thinking about what’s legal or not, as long as it brings in a bit more money.” 

According to The International Herald Tribune, the amount of tax money the Spanish government may be losing to System D could amount to €37 billion -- or $47 billion US.

But that shouldn't be the major concern. People's survival should be. As I reported a few weeks back, Spain has turned into Europe's developing world economy, with an economic outlook that is worse than Nigeria's. Now the official world is recognizing the fact.

“Without the underground economy, we would be in a situation of probably violent social unrest,” Robert Tornabell, a professor and former dean of the Esade business school in Barcelona, told the IHT. “A lot of people are now staying afloat only thanks to the underground economy, as well as the support of their family network.”

Another professor who has studied the parallel economy in Spain suggests that the government needs to work with it: “Much of the informal economy is nothing but the normal reaction of low-skilled people who have no alternative once they lose their job,” said Michele Boldrin, an economics professor at Washington University in Saint Louis, Missouri, who co-authored a study in May on Spain’s underground economy on behalf of Fedea, an economic research group in Madrid. “What the government should focus on is reforming the formal economy to make it more efficient and competitive rather than focus on pursuing such people.”

But the people in the IHT article are not necessarily low-skilled. And reforming the economy takes a stimulus, not austerity. In the absence of sensible government, System D is the way forward. If the people will lead, the leaders must follow.

[Once again, all hail Zach C for sending this to me]

1 comment:

Anonymous said...

Dear Mister Neuwirth,

I´d like to interview you, about your book "Stealth of nations". Is it possible to talk via skype about piracy, the informal markets and other aspects of your work via skype?

I`m an german journalist and working for the Bayerischer Rundfunk in munich. Right now I´m preparing a Feature about "Post Colonial Piracy".

It would be great, if its possible.

All the best form germany.

Matthias Leitner
@mtleitner via twitter