Lessons from the informal economy | Diana Enriquez | TEDxMünchen

I'm an investigator but not in any traditional sense I spent the past couple years memorizing the streets and geo-tagging businesses Mumbai I also spent some time trying to define the line between formal and informal product lines for Colombia's cartels sometimes that line is pretty hard to define I spend as much time as possible in areas with high levels of informal economic activity what does this look like this is a street scene from a city in Hong Kong or a part of Hong Kong these markets are pretty common across China but also around the world people go every day to buy things like groceries or basic household items this is where the informal economy meets consumers and there's nothing sinister about it in India about 84 percent of employment comes from the informal economy that's a little bit more than four out of five jobs we see them working and manufacturing producing a lot of the clothes that we buy from retailers around the world we see them working in food services in construction they make pottery for tiles on roofs we see them everywhere and we see the informal economy in the United States as well industries like childcare are very easy to keep off record paid in cash tax-free informal businesses are businesses that operate outside of government regulation either completely or in some small capacity and honestly sometimes business regulation is really hard to follow banks have entire departments devoted to following legal regulation in the United States for example and there are some industries that are just not very good fits for the laws that exist on the books some informal businesses are massive and very complicated like Mexico's cartels while others are much more local I like to study informal businesses because they teach me about resilience and this is in large part because they are so devoted to their local communities without local communities informal businesses cannot survive the community is at once the customer base and the critics of every business if they lose their support these businesses will no longer prosper they can no longer grow what I see when I do my work is that we find ecosystems we find communities that support business and business that supports the needs of local communities today I would like to share a few examples of where I see reinvention and resilience in the informal economy my first example comes from the United States in many places workers are barred from entry for various reasons thus they carve out their own spaces in the informal economy and create a value-add in their own ecosystems I know this firsthand because I came to the United States from Mexico as a child while I had a pathway to legal citizenship through my American mother a lot of our friends and family members will never have that pathway instead they carve out their own spaces in the economy and develop different types of industries we see undocumented workers in the United States picking fruit working in the service industry on construction sites and so many other places that are so integral to the u.s. economy that we pass them by and they go unnoticed there are eleven point seven million undocumented immigrants in the United States every single one of them working in some capacity in the informal economy the time that we notice the most is when they are no longer there in 2011 Alabama and a series of other southern states passed a series of increasingly restrictive immigration laws overnight it seems children were pulled from schools and the next day when construction workers who we're Americans appeared at some of the construction sites or people in the service industry appeared at the jobs they realized that suddenly a lot of the workforce was gone Alabama had to acknowledge it labor shortage the loss became less restrictive over time and workers came back to work because otherwise this economy was on the verge of collapsing what this lesson teaches us is that informal economies and formal economies coexist they cooperate they learn from each other and as our system stands today one cannot exist without the other my second lesson comes from Yemen in formal businesses that survive and thrive learn to respond very quickly to things that would affect the traditional ecosystem and Yemen this might be political turmoil for example or civil war or natural disaster the businesses that do particularly well respond extremely quickly to these threats sometimes for example gas lines are disturbed and normal citizens have to wait in line for hours or sometimes even days at government sanctioned sites for their ration of gas to run things like the generators in their houses or their cars around these times informal entrepreneurs will set up strategic locations around the city where you can buy gas at a premium price but you get to spend less time waiting in line and the coolest part about these businesses is they appear just as soon as they are needed and disappear just as quickly they're kind of like the perfect employee they notice what you need and solve that need before you can even begin to ask for it my final example is a bit controversial and it's Airbnb the product that it offers is not inherently illegal if I'm renting you my apartment in New York for example for three nights that doesn't seem particularly sinister but governments don't know how to interact with this business several cities in the United States have decided that Airbnb is illegal yet it continues to operate in many of those places because it's offering a product that people would like to pay for the community itself continues to sustain this product and while other governments try to grapple with how to tax this company because yes they can tax the company how do they tax me as someone renting out my apartment they will continue to grapple with these questions while other businesses start to pop up that look like Airbnb for example one fine stay one fine stay has a much better relationship with governments why well they keep everything on the book they actively try to keep a better relationship with the government and the business doesn't look all that different other than the fact that if you stay in my apartment that I maybe I rent on Airbnb for $50.00 on one fine stay you're going to pay somewhere between a couple hundred or a couple thousand dollars to stay in a very high-end apartment the products are not that different there's one that might be considered considered a luxury good and there's another that might be considered an easier buy but for some reason we look at Airbnb very differently than we look at one fine stay so why do we associate informal economies with black markets none of the products that I mentioned today are inherently illegal instead a lot of it revolves around the way that we talk about these businesses a lot of these things a lot of these products and services happen in the background of our everyday life and communities around the world the communities that I study are often outside of government regulation either because they keep intentionally low profiles or because they receive very little attention even when they ask for it but these communities understand what it means to be local they understand what it means to say we have these resources and these man-hours um together we can solve this problem and they can give you solutions to some of the toughest problems on a local level I hope that we can start rethinking the reality that is next to us know all around us because the size of these communities the size of the informal economy of an entire country is massive and I hope that we can start thinking beyond the monetary value and think about the people that come together to build these ecosystems the people that come together to problem-solve in new and interesting ways they have a lot to say most importantly I hope that today you will leave with two questions the first one who makes the rules and the second one for those that are making the rules do they make those rules in the interest of all of our communities or in the interest of just a few thank you

  1. nice talk. easy entry is a defining characteristic of the informal economy; a stark difference with the formal sector that favors the academically superior workforce. also, it relies on personal capacity or 'what one can do' rather than relying on corporations or 'what one can do for the company'.

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