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Required Reading

May 22nd, 2013 - 11:56 am

Longtime VP reader Toadold sent a link an an Austin Bay piece I somehow missed over at StrategyPage yesterday. It’s column-length, and as always Read the Whole Thing™, but here’s a little something on “System D” and the underground economy to get you started:

Apparently Greece’s government still doesn’t understand that spurring entrepreneurial creativity is absolutely essential to economic recovery. In a recent Bloomberg View economics column, Megan Greene dismissed headlines touting a Greek turnaround. Greece’s business operating environment “remains unattractive because of high levels of red tape, an unstable regulatory environment, an opaque legal system” and judicial corruption.

Greene’s list of Greek business afflictions would resonate with Neuwirth’s System D entrepreneurs. Rejecting poverty, they operate beyond the reach of crooked politicians levying confiscatory taxes. Rejecting poverty, they sidestep expensive legal business registration costs.

Fair bet The Great Recession and our onerous “authorized regulatory administrations” have vexed American debrouillards. Indeed, our System D has grown. In a recent New Yorker column, James Surowiecki asked why Americans didn’t report $2 trillion in income to the IRS. Economist Edgar Feige mentioned red tape and distrust of government. Irked Americans want to avoid regulators’ “elaborate hoops.”

This dovetails perfectly with something Glenn linked to a few years ago, but I can’t find the link. But I do remember the author’s main thrust, which is that when the middle class gives up on lawfulness, then it’s really all over for a country.

What Bay has written is yet another clear sign that that’s exactly where the middle class is headed.

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