Stealth of Nations

After reading Stealth of Nations, a reader might feel no qualms about buying pirated DVDs or a "Gucci" handbag from the nearest street vendor. The reader might even be inspired to head to a wholesaler, pick up a few gross of cheap wind-up toys and open a stall at a flea market to resell the trinkets, marked up 50 per cent. Why resist such an opportunity? According to the author Robert Neuwirth, this business of fake and semi-legal goods - variously known as the grey market, the unlicensed street market, the underground economy, the DIY economy, intellectual piracy, smuggling, the informal economy of the book's subtitle or, the author's favourite, System D - is an economic and sociological wonder. It employs half the population of the planet, efficiently recycles waste, offers financial opportunity to the underprivileged, provides needed infrastructure and is far more egalitarian than the classic economic models.Not only that, this arrangement also fights corporate behemoths more effectively than customer boycotts. "Street peddling, and all of System D, serves to open the market to a larger group of people," Neuwirth writes. "It may be inefficient ... but at least they [the participants] can earn, and in that sense, System D makes the world a less unequal place," all the while, of course, giving consumers in both developed and developing countries big discounts. Given such a cornucopia of apparent benefits, it seems petty to mention concerns such as tax evasion, crime and poorly made merchandise. Neuwirth, a veteran journalist who has written for The New York Times and Fortune magazine, raises valid points as he traces the geographical routes and historical roots of this economy, including denunciations by Martin Luther and Karl Marx. He has done impressive research, travelling from Nigeria to China to Brazil to New York. The $10 trillion world he describes is fascinating. The goods are not always illegal copies, for one thing - many are simply sold through unlicensed channels or have expired warranties. The customers range from chic young New Yorkers to impoverished neighbours of the peddlers themselves.There are strict rules, hierarchies and organisational structures. True, their main purpose is often to avoid taxes and customs duties but also they can establish a smooth flow of commerce. The sacoleiros who smuggle "blankets, plastic bins, brooms, underwear, perfume, liquor, beer, toys" from Paraguay to Brazil board chartered buses at a preset location in Brazil every Monday evening to arrive at a particular spot in Paraguay 16 hours later. There, they produce their shopping lists, "prowl the streets and malls" of Ciudad del Este to carry out their assignments, return to the arrival spot, store the purchases at makeshift warehouses and repeat the process until Wednesday afternoon. Then they reboard the buses to return to Brazil by midday Thursday, so that "the goods the sacoleiros buy will be on the streets and in the stores by the time Friday and Saturday - the big shopping days in the market on Rua 25 de Marco - roll around". In the process, they have skirted Brazil's value-added tax, customs duties and licensing requirements for cross-border trading. Clearly, such ad hoc arrangements fulfil important unmet needs. Cardboard and styrofoam would pile up in the streets of Guangzhou, China, if System D recyclers didn't scavenge and sell the stuff.The grey market provides phone services, electricity and even bridges in Nigeria, where official public services are virtually non-existent. For high-end global clothing manufacturers, Neuwirth argues that "piracy actually helps the fashion houses because it spurs demand for new styles".Once the pirated versions of hot-off-the-runway Paris designs spread to the mass market, these designs are obviously outdated, and thus the super-fashionable must immediately have fresh ones. Working in the underground system is undeniably rigorous, whether it involves pulling a heavy cart by hand 18 kilometres every day in China, or cooking 18 cakes and 25 loaves of bread and brewing litres of sweetened coffee to bring to market by dawn in Brazil. From / The National