Published On: Mon, Nov 17th, 2014

System-D

dekker_0Ten trillion US-dollars and, according to OECD, over 1.8 billion people are involved in ‘System-D.’

By 2020, OECD predicts System-D will employ two-thirds of the world’s workers. Asinine regulations and senseless bureaucracy by power grabbing governments and civil servants force start-up entrepreneurs worldwide to flee into the shadow economies of System-D.

System-D, comes from French-speaking Africa and Caribbean. The “D” stands for the French word “débrouillard”. To say, a man is a “débrouillard” is to tell people how resourceful and ingenious he is. In "Down and Out in Paris and London" George Orwell called the term "débrouillard" as something the lowest-level kitchen workers, the plongeurs, were called, as people who would get the job done, no matter what.

Self-starting entrepreneurs-on-the-fly are the major part of “l’economie de la debrouillardise”, or “System-D”. System-D forms today’s fast growing shadow economy, which now comprises 25-35% of the formal global economy.

For most of us, System-D is still identified as the black market that stands for selling to unlicensed trade and compensating workers off the grid with under-the-table cash. Also illegal activities, such as burglary, fencing stolen goods, murder, robbery and drug dealings find lucrative commerce in the black market; the black market was the playground of Tony Soprano, Michael Corleone, and Rico Bandello.

But in reality, most of the shadow economy is made up of individuals who are not criminals. Many young start-up entrepreneurs risk to get strangled by power hungry, silly, often lazy and corrupt civil servants who abuse bureaucracy and senseless regulations to their own personal advantage. So fleeing into the obscurity of the shadow economy is for many entrepreneurs the only way out. For hundreds of millions of undocumented immigrants it is the only way to survive, due to dysfunctional immigration laws.

Entrepreneurs become “debrouillard”, ingenious, and find their way around the formal system; they become System-D. Nobel Prize-winning economist Milton Friedman put it bluntly as, “The System-D, or the black market, is a way of getting around government controls. It is a way of enabling the free market to work. It is a way of opening up, enabling people.”

In the present global standoff, there is little doubt that in the long run, the System-D economies will prevail over the formal economy.

If elected governments stand for law and order to continue to rule, and fiscal discipline and contribution by all for the general good to apply, they have no choice but to make the formal economy more attractive.

Government regulations will have to compete with all the incentives that make the System-D economy so very successful, the governments will have to become part of the System-D economy. Do we have politicians who are able to think that far out-of-the-box?

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