The poor are not the problem but the solution – an exclusive interview with Hernando de Soto

Sunday, March 20th, 2005

In The poor are not the problem but the solution, Hernando de Soto explains that much of the economy in non-Western societies is extralegal:

When I was working in the Middle East, there was an entrepreneur that I got to known so well that I could ask him about corruption and pay-offs — ?baksheesh? is the local word. He explained: ?I love baksheesh because it gives me certainty and predictability.? They change the law continually. We have calculated that the government brings out about 30.000 new rules every year. None of these is enacted in a transparent manner, with public participation. The result is that the law is totally unpredictable and only serves the powerful and those who have the means to remain informed. So, from this point of view, ?baksheesh? gives a kind of predictability. All the entrepreneur had to do was pay-off five key policemen either near his workplace, or where he made his transactions. And he knew what his outcome would be.

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