The Shadow Superpower

http://www.foreignpolicy.com/articles/2011/10/28/black_market_global_economy

by cs702 • 14 years ago

79 33 14 years ago

foreignpolicy.com

peter_l_downs• 14 years ago

Also described in this excellent wired article, which I think is a more concise overview of the subject:

http://www.wired.com/magazine/2011/12/mf_neuwirth_qa/

cs7025• 14 years ago

Thanks for that link. The Wired article is less in-depth and lacks links to all the external research and data, but it's a good alternative for readers who just want to grok the key points quickly.

rvkennedy• 14 years ago

tl;dr: Having conducted an exhaustive study of the world's economic future, it turns out that it conforms almost exactly to my libertarian worldview!

jerf• 14 years ago

This is just snark. This article is more about the now than the future, and it's about what is, not what "should" be.

You're posting this snark precisely because it does pose a significant challenge to the conventional worldview in which regulation is the answer to everything. Why not address the issues directly with some productive discussion instead of trying to cocoon yourself behind a snarky dismissal? For instance, a starter question from each ideological direction: If the regulatory state is so wonderful, why are so many people being forced to bypass it, or basically starve/stay poor? And how can we bring the benefits of a well-regulated state to these places that aren't exactly rolling in free-flowing cash and can't afford any sort of very expensive regulation? (Because while a small 4 page article may not have discussed it except for an off-hand comment, I'm sure there's rampant abuses and mafia-like organizations in this economy.)

crusso2• 14 years ago

I definitely believe the "dr" part.

The article is just describing an economic ecosystem that is in play today. It reads like someone's attempt to wrap his head around something new and different that needs to be understood.

If this economy is as large and successful as it's claimed to be, then we should be making an effort to understand it as well.

You'd need to be pretty heartless to decry it on face value when it does something so basic in our modern world as provide electrical power for people who have been denied it by their current economic system or government for one reason or another.

If you have a reason to counter the facts in the story, by all means speak up.

stcredzero4• 14 years ago

You'd need to be pretty heartless to decry it on face value when it does something so basic in our modern world as provide electrical power for people

Have you ever been at a large campground with widespread portable generator use? There are >definite< externalities.

I would take steps to further lubricate commerce. Technology that can leapfrog the build-out of infrastructure like roads is one possibility.

sethg• 14 years ago

Libertarian, except for the “gangsters who control the fruit market... running a price-fixing cartel” mentioned on page 3.

tomjen32• 14 years ago

So you are surprised that a system in which there is relatively little government oversight and few people who initiates the use of force resembles a system which is defined by relatively little government oversight and no initiation of force?

oskarth• 14 years ago

Single page view: http://www.foreignpolicy.com/articles/2011/10/28/black_marke...

EDIT: Nevermind my suggestion to post the single page view. It was my belief that readability ought to be valued more than double-submission-prevention mechanisms, but it seems like a lot of people disagree with that notion.

tokenadult• 14 years ago

To the contrary, please post the canonical URL of any article,

http://news.ycombinator.com/item?id=3571353

and let the user decide what page view or what display defaults to show. (On a well designed website, the user's user agent will be autodetected, and the default display will be a reasonable view that leads to options for single-page or other special display formats.) That lets the Hacker News duplicate submission detector do its best work. It is, of course, all right (but not strictly necessary) to mention a link to another view of the article, as you kindly did, in a comment.

corford2• 14 years ago

It's a good read and instantly made me think of Bitcoin. "Bitcoin - The currency for the System D generation"

cs7025• 14 years ago

Agree. An expert on e-money on crypto currencies just articulated exactly the same point here: http://www.forbes.com/sites/jonmatonis/2012/03/19/could-bitc...

corford2• 14 years ago

Thanks for the link! I think he's dead right (the last sentence says everything).

TheAmazingIdiot• 14 years ago

I've considered this very idea.

I've thought of a few legit business ideas that I cannot afford the legal costs of startup. I could, instead, do it without help and rely on system d with multiple payment options. It would most certainly include bitcoin as a payment option.

One of the ideas is effectively is what paypal does with money, but with people. They break state money transmitter laws, yet still stay in business. Mine would break labor laws, only because they are meant for the individual to work for X bigCo.

solson2• 14 years ago

Meanwhile in the highly planned and regulated Swedish economy... they are planning to end cash, a step which the government elites tout as progress and sell as a safety measure. Looks like the underground will need to find an alternative currency. Bitcoin? http://www.newjerseynewsroom.com/economy/voice-of-opposition...

cs7025• 14 years ago

Agree. In the absence of officially sanctioned cash, something like Bitcoin would likely become a viable alternative for System D transactions. See http://news.ycombinator.com/item?id=3735407 elsewhere in this thread.

bilbo0s2• 14 years ago

Hmm...

Not really sure bitcoin could compete well in Systeme D. You are dealing with a lot of people who believe in cash or precious metals. These bring trust in Systeme D.

One thing the article doesn't mention is that the Somalis are actually making a pretty big impact as proprietors of a sort of 'banking' system for these kinds of transactions. If you give a Somali 'banker' ... say ... 2000 Euro in Norway, you can count on your cousin in St. Paul, MN getting 2000 Euro from one of the local Somalis. The same is true if you want money to go from Sao Paolo to Capetown. Or Shanghai to Dubai, etc.

Their system is robust, extremely trustworthy, and most important, quiet. It is DEEPLY lodged in shadow trans african trade, and rapidly growing in shadow global trade. It will be hard to displace a system like that. Unless the world's Governments decide to invade Somalia, which does seem to be the case lately.

One place bitcoin might be useful is in large transactions. The Somalis don't seem to be interested in facilitating these yet, and for obvious reasons, merchants do not want to use cash. If bitcoin builds a reputation for trust on large transactions, perhaps through the convenience of mobile phones it can work its way down the food chain so to speak.

But... yeah ... right now there are a lot of Africans for instance, who trust the Somali networks more than the banks in their own countries. Trust like that is hard to earn...and very expensive to buy. It could happen for bitcoin though if boosters put in the work.

solson2• 14 years ago

Agreed, but if there is no paper or coin cash like Sweden is proposing, how would the "Somali Banker" get digital currency to a party in the jurisdiction without paper currency? I assume it is all done in paper cash today. Barter seems impractical.

cs7025• 14 years ago

Yeah, it comes down to trust, which Bitcoin currently is lacking compared to "hard" paper currencies like the US dollar or precious metals like gold. It could take Bitcoin years or even decades to gain similar credibility.

It also comes down to familiarity, ease of use, and functionality. Bitcoin wins on the latter, but is far behind on the other two dimensions. Paper currency and precious metals are currently far better known and easier to use, and this won't change in the near future.

Over the long run, if Bitcoin continues to gain credibility (and becomes easier to use for regular folk), I'm persuaded it can become a viable alternative to paper currency and precious metals for System D transactions.

286c8cb04bda2• 14 years ago

> One thing the article doesn't mention is that the Somalis are actually making a pretty big impact as proprietors of a sort of 'banking' system for these kinds of transactions.

That system is "hawala"[1]. The Somalian diaspora (caused by perpetual civil war) is spreading the institution into many countries where it's not been practiced historically.

[1] http://en.wikipedia.org/wiki/Hawala

intended• 14 years ago

Isn't that just the hawala system? That's been there in the Arab world, India, Pakistan and Bangladesh from what I remember.

This system is disrupted and imo should be. It's been used as the primary way to funnel 'black money' and criminal organizations.

system D is a sign that the market is not working, and in those situations, hawala and so on are useful tools to avoid getting stuck having to bribe someone.

This would be OK if your government was corrupt (say 60%) - the moment you start reforming though, and actually need things like running electricity, water, mass transit, Roads!, you need governmental income.

It ends up allowing people to dodge paying for basic taxes. - IT assessments are hard when you start with a non formal economy and then have untraceable money changing hands.

In short: hawala is pretty cool, but also an absurdly effective way to hide money and transfer it around the world. Hard to stamp out, and ends up being used by criminal systems.

286c8cb04bda2• 14 years ago

Looks like the underground will need to find an alternative currency. Bitcoin?

In the long term, Bitcoin might be a viable alternative. It really hinges on the adoption of cellphone applications for exchanging them, I think.

In the short term, though, cash is king. If they stop printing paper kronor in Sweden, then the underground will start using somebody else's paper, be that NOK or USD.

As an example, I'd guess there are areas in Mexico where you can get by entirely in USD, because there's so much of it there.

InclinedPlane• 14 years ago

They'll just use dollars and Euros. Why wouldn't they?

tomjen32• 14 years ago

Unlikely. It will properly be gold or silver -- not because they are without their own problems, but because this has been the case historically and humans have an easier time trusting things that aren't new, that they can physically get their heads around and that they can hold in the palm of their hands. Too may people have far too big a distrust in computers to be able to trust bitcoin.

CountHackulus• 14 years ago

Isn't this essentially the Star Trek economy? These people work to improve themselves and their surroundings.

sunir• 14 years ago

The exact opposite. They lack any financial security or a society that protects then so they must hustle to survive.

In Star Trek they live in a society with abundance and so the state can provide everything.

stcredzero4• 14 years ago

That's also the Kim Stanley Robinson Mars trilogy's economy.

stcredzero4• 14 years ago

"Shadow Superpower" is perhaps misleading. To me, a Superpower can project concerted military or economic power over an extended period of time, and has considerable resistance to the tried and true tactics of "divide and conquer."

Then again, perhaps it's not. Is the US so resistant to "divide and conquer?" Can we still project concerted military or economic power over an extended period of time?

xccx• 14 years ago

"Systeme D.", débrouillard, resourceful, ingenious, inventive, self-starting, entrepreneurial, "l'economie de la débrouillardise." ingenuity economy, the economy of improvisation, self-reliance, do-it-yourself, or DIY, economy of skill, joy.

The Shadow Superpower

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