It’s all informal.

There is much talk about the informal sector of the Jamaica economy. This ‘informal’ sector is usually spoken of in a derisive manner as it exists in a grey area that is free from taxes and government regulations. Thus, it seen as parasitic, disorganized, inefficient, and even dangerous by both privately employed and government technocrats. You know, the type that likes to say “stakeholders”, “ICT”, “paradigm shift”, and other such vacuous buzzwords.

Most of the solutions to the “problem” of the informal sector consists of having them register with government to become legitimate. The problem with this solution is that, if it made sense to register a business in Jamaica, there would be no informal sector. The sad fact is, only the most masochistic of our citizens actively choose to interact in anyway with Jamaican government, and when a citizen (inevitably) does deal with the government, he inevitable finds the processes unsafe, the procedures insane and his options non-consensual.

But what of the people and organizations that are legit? Look a little deeper and you realize something interesting – they are almost always extensions of government functions. The most recent industries created in Jamaica are mirror images of government functions that only exist because of the inefficiency, ineptitude and ineffectiveness of the government proper. Just consider

The results of letting the private sector play government? Dangerously overcrowded buses, an underperforming private school system, a security guard industry that treats its dogs better than its employees, among other failures.

The obstacles to legitimize a business in Jamaica can, for the most part, be blamed on the on the government’s inefficiency and bureaucracy.  The only place for one to register a business in Jamaica is a small office on Grenada Way, even though it would take almost nothing to create a website that on could register one’s business with. The very failure of the Jamaican government to carry out its tasks has not only lead to the creation of an informal private sector that consists of 50 percent of Jamaican businesses, but of another informal one that is itself dependent on government being unable to carry out said tasks. If ever the Jamaican government were to be run properly.  During the 1970s we found out the danger of letting government run the private sector. It would seem that in the New Tens, we are finding out the dangers of letting the private sector play government.

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3 thoughts on “It’s all informal.”

  1. Great post to highlight the free market at work in Jamaica’s “informal sector”. These people are highly organized without govt support, security or intervention. Why don’t we release the economics of the country from the GOJ?
    -Kavon Fiennes

    1. I think that the informal sector is quite useful in the case a perfectly competitive market, vending and transport for example. Anything that operates at high fixed cost, especially jobs that require extensive training by the employer, will not be well suited for the informal sector.

      The main thrust of my post is that rent-seekers has come to take over much of the work that is best done by the state, or some other type of organization that can afford the high fixed costs brought about by on-the-job training or expensive research and development.

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