Why you should care
Because sometimes discovering one good fact can turn your world upside down.
Slum, squatter, informal economy: For many, these words summon images of squalid cityscapes, grinding poverty and criminal activity.
And when economists and politicians talk about global development, they often insinuate that the informal economy is an unruly obstacle to be removed or at least tamed. Perhaps most damning of all is the tendency to link the informal economy with work that is “dangerous and morally compromising” — hinting that the people who work in it are, as a rule, both dangerous and morally compromised.
It is this very perception that journalist Robert Neuwirth wants to change. His first book, Shadow Cities (2005), looked at the squatter communities in cities around the world that more than 1 billion people call home. His most recent effort, Stealth of Nations (2011), took him to Nigeria, China, Brazil and Paraguay to get to know some of the 1.8 billion people, according to the OECD, who make their living in the oft-vilified informal economy.
What’s going on in New York City is not the story. What’s happening to one in 10 people on the planet is the story.
— Robert Neuwirth
Neuwirth grew up in Queens and, after studying philosophy in college, became a community organizer because, as he says, “I knew I had to get out of the ivory tower and do something in the world.” Organizing also allowed him to act on convictions that would eventually fuel his forays into the informal world, namely that people on society’s margins ought to have a voice.
He eventually found his way into journalism and was writing about New York City’s housing market when, in the mid-’90s, he came across a single fact that gave him pause: The world’s squatter population (at that point) numbered about 600 million — or more than one in 10 of the total global population.
This, Neuwirth says, sent his head spinning. “I just thought, ‘Donald Trump is so not the story. What’s going on in New York City is not the story. What’s happening to one in 10 people on the planet is the story.’”
Immersing himself in research convinced Neuwirth that the dominant narratives about slums and street markets need changing. “People get pinned with labels based on their material conditions rather than who they are and what they’re trying to do,” he told me. “This is the majority of the workers of the world — are we going to call all of them criminals?”He eventually quit his job working for a business trade magazine. After that, the pieces for Shadow Cities came together pretty quickly, and within a year he had a book deal.
Neuwirth has developed a deep respect for the ingenuity and sheer pluck he’s encountered in the world’s slums and street markets, and he paints a decidedly different portrait of the workers he has met and the system in which they operate. Where a police officer might see an unlicensed street vendor or an economist a competition-threatening smuggler, Neuwirth sees determined, entrepreneurial men and women striving for decent lives in places where aboveboard jobs are in short supply.
In Stealth of Nations, for example, we meet Jandira, a street vendor in São Paulo who used the profits from her cake and coffee stand to buy a house and two cars and send her kids to private school. Her story is the kind Neuwirth delights in telling because he hopes it will help change people’s perception of the informal economy and the people who drive it.
Neuwirth doesn’t even like the phrase “informal economy,” choosing instead to refer to the world his subjects inhabit as System D. The D stands for débrouillard(e), French for a resourceful or ingenious person, and as he frames it, with an insistent edge in his voice, it refers to “real people doing real things that have real value.”
As such, Neuwirth argues that governments should look for ways to engage these people and their businesses and provide them with security and tools to grow, rather than, say, bulldozing the markets where they operate without warning. And since Neuwirth first started exploring the world of System D, the idea that it has something to contribute and ought to be engaged has caught on. Countries from Indonesia to Zimbabwe have acknowledged that most of their workers operate within System D, and even a regional powerhouse like South Africa saw more job growth in the informal sector than the formal economy during the last quarter of 2013.
But not everyone is convinced. In his review of Stealth of Nations, economist Marc Levinson points out that even if Neuwirth’s arguments about the value of System D for creating wealth at the individual level might be true, they are much less convincing at the societal level. “Prosperity requires capital accumulation to finance investment in factories, power grids, highways and the like. System D simply cannot accomplish such things,” Levinson argues.
In response, Neuwirth points out that the formal systems we encourage people to join are themselves often corrupt. He recalls an instance from his time in Nigeria, when he asked a group of merchants why they didn’t band together and pave the road near their market themselves. To his surprise, the merchants said that paving the road would be futile because the government would simply rip up the paving — looking at their action as an intolerable usurpation of local government authority.
His hope for his work is that it persuades those with influence to stop treating squatters and street hawkers like criminals.
Another obstacle for those who try to make a living in System D is their lack of legal protection. Gaining such protection, however, is a lot easier when one is recognized as part of a legitimate group within society — and official recognition is what Neuwirth’s subjects have been loath to seek.
This, Neuwirth says, is the 21st-century challenge for the squatters and street markets he has come to respect: “They have to take the risk and go public. Public in a way that interacts with politics.” But as the proportion of the population in System D continues to rise — the OECD estimates that two-thirds of the world’s workers will be in the informal economy by 2020 — perhaps the sheer number of people involved will diminish that sense of risk.
In the meantime, Neuwirth will keep telling their stories. Having studied informal housing and informal trade, Neuwirth is planning a book on informal governance that would round out his trilogy of informality. And while he can articulate a number of steps that governments might take to embrace the entrepreneurialism that’s thriving in informal sectors, his more immediate hope for his work is that it persuades those with influence to stop treating squatters and street hawkers like criminals.
After all, Neuwirth insists, the vast majority are people making homes and sustaining livelihoods even in the absence of laws that protect their right to do so — a far cry from “dangerous” or “morally compromising.” What’s called for is an attitude shift no more radical than recognizing that the human struggle to build a life stretches across boundaries of class, geography and, sometimes, formal legitimacy.