How else? You might ask. But this abstract in McKinsey Quarterly caught my attention with its astounding wrong-headedness:
How Brazil can Grow –
The most important obstacle is Brazil’s huge informal economy which, distorts competition by putting efficient, law-abiding companies at a disadvantage. Macroeconomic instabilityreflected in the high cost of capitalis the second-most-important hurdle, followed by regulations (such as rigid labor laws) that limit productivity.
Could it possibly be that it’s the top-heavy regulatory state and shocking tax rates on officially recognised activities that are keep the poor poor, small companies small, and the poltically unconnected outside the system hoping not to be noticed? It couldn’t be state favouritism and that same capricious regulatory apparatus that keep the risks high and capital proportionately expensive? It would also be interesting to know in what sense ‘efficient’ and ‘law-abiding’ go hand in hand in such circumstances. It is implied that unlawful, invisible, enterprises are inefficient ones (in whatever sense that is). How do they know?