|
The exact lunacies and irrationality that this Economist article describes are something that the Peruvian economist Hernando De Soto described in enormous detail in his book "The Other Path" (El Otro Sendero) roughly three decades ago when describing the at the time deeply dysfunctional aspects of regulatory administration in his native country, and in other Latin American states. He later wrote an abbreviated summary of the same findings in a book called "The Mystery of Capital". Either way, (writing this purely from memory, so any mistakes entirely my own) his basic thesis was that states with massive informal markets and underdevelopment often far from having few laws, suffer from a grotesque surfeit of regulations, so many, so arbitrary, haphazard and irrational, that enforcing them all, or complying with them all, becomes completely impossible, and thus they're both enforced selectively, and adhered to selectively, based on convenience for either side of the equation. The result is widespread informality, a chronic inability to create formal capitalization that can be used in sophisticated ways for long-term economic development, and endemic tax evasion (not because almost everyone is a disgusting parasitic tax evader but because not evading while still trying to be entrepreneurial is nearly impossible). EDIT: I can't speak for India, but in the country that I currently live in, Mexico, though things have improved in many ways for regulations around the basic process of starting a business or handling its financial paperwork, they're still totally inadequate for a vast portion of the working-age population, which includes dozens of millions of self-employed people who sustain themselves and a huge part of the economy entirely through informal service and product businesses that it would be extremely difficult for them to ever formalize. At the same time, without these businesses, run by these millions of people, the country's economy and social development would both collapse catastrophically. Very worth reading, the books above, as warnings for any country and as solid analyses of how some countries lurch from economic disaster to economic disaster and never really develop effectively in a thorough way. |