Stats for nerds
2recommend
8mentions
3people
2012–2025years
63% recommend38% neutral
Mentions per year
What Hacker News says
- The less-developed countries have generally been that way since their independence from colonialism.
The argument that the regulatory burden on small businesses can be bad for economic growth does have some real validity - the great work on this is Hernando De Soto's The Other Path on Peru. However, that's an argument for making the tradeoff in an informed way and exempting small businesses (something the EU is extremely bad at!), while being against severance pay in its entirety is just a profit-before-humans talking point.
- Glad to be of service!
If you want another possibly transformational read, Hernando De Soto's The Other Path has a lot of interesting things to say about rule of law and property rights.
- As someone else says, partnership structures. These have a very limited ability to raise external capital.
I'm slightly surprised to have to argue on a site built on providing venture capital as equity to startups that also issue equity to employees that exposing all those investors to the risk of losing their homes as a result of action by those they have only a very limited control over is a bad idea.
> what do you think happens in countries that don't have limited liability companies?
There is an excellent book on this, The Other Path by the economist Hernando de Soto, on extra-legal systems in Peru.
And in Third World countries where you don't have good formal legal systems, the environmentally destructive exploitation projects still happen, with the complicity of the political structure - and often substantial amounts of extra-legal violence. At least in the US you can sue Cloud Peak Energy without getting your legs broken.
It's also worth looking at what happened to the Lloyds "Names", who were supposed to be unlimited-liability reinsurers.
None of this is to say that coal companies should be allowed to commit environmental damage and get away with it, but it does mean that the system needs to be better in preventing this in the first place.
- I reccomend the work of Hernando de Soto on extralegality: http://www.amazon.com/Other-Path-Hernando-Soto/dp/0465016103...
In a country (Peru) where formal legal systems functioned extremely badly, there was a huge extralegal economy: houses, businesses, transport, etc all of which didn't officially exist and had no legal protection. Providing a route into the legitimate system provided a huge economic benefit for a lot of people and reduced Maoist terrorism.
Bad legal system < Lawlessness / Extralegality < Good legal system.
- Yes yakuza are criminals, but the article also highlights that like many subversive organizations they also provide a number of community functions typically provided by the police (e.g. the article talks about how Yakuza communities tend to have lower crime rates; safety tends to be a service provided by the police). Terrorist organizations often do the same; Hezbollah has been a huge provider of social services in Lebanon, running schools and hospitals: http://en.wikipedia.org/wiki/Hezbollah_social_services
Hernando de Soto talks about how the Shining Path provided social services to build legitimacy in his incredible book, "The Other Path: The Invisible Revolution in the Third World": http://www.amazon.com/The-Other-Path-Invisible-Revolution/dp...
Sudhir Venkatesh also talks in his book about how drug dealers in Chicago provide similar services, in order to be not be rejected by communities inside of public housing projects. http://www.amazon.com/Gang-Leader-Day-Sociologist-Streets/dp...
Yakuza - like drug dealers and terrorists - are capable of great violence, but the photographer's point was that within the yakuza community that he experienced, violence is seen as a last resort. And that community activities that provide legitimacy is an important tool as well, in order to be accepted by the local community and also as a recruitment tool. This is definitely a common theme in the literature and my personal experience as well.
- 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.
