Wednesday, February 8, 2012

System D at Sea

At its core, Seapower involves the defense of economies - large and small. But not all markets work the way we might assume. Journalist Robert Neuwirth describes the $10 trillion globalized black market economy as System D. The concept is worth examining from a maritime perspective, if not for its size and rate of growth alone. The first point to understand is that there is a thin gray line between the informal System D economy and criminal activities. System D maritime businesses include local fishing, oil bunkering (especially in West Africa), and unregistered vessels moving goods and people to undeveloped ports. System D also includes some forms of smuggling at sea, but not obvious maritime crime such as illicit trafficking in narcotics, weapons, or piracy. Perhaps the way one defines System D depends on the scale of the activity. For example, illegal fishing is a 23.5 billion dollar global industry. Clearly, not all of this economic activity is “lost” especially to the persons profiting from it and fishermen selling their catches in local markets.

For an interesting example of System D in action, watch the “River kids” risking their lives trying to make a living in Amazonia. The first two minutes will give you the idea, but the entire story is worth watching.

Budding entrepreneurs or pirates in the making?

Why is it important for naval professionals to understand System D? First World Sailors might view these activities as unusual, but the fact is, paying customs fees, registering motor vessels, licensed and regulated fishing, and other rule of law issues we take for granted are anomalies for most of the world's population.

Modern navies operate around System D whether or not they realize it. MCAST Sailors or Coast Guardsmen working to develop nascent navies must understand that in many cases their counterparts are underpaid by their governments and feed their families by their activities in the shadow economy. They may even use government owned (and even US tax-payer funded…) naval vessels to support their System D businesses. In addition to patrolling coasts and rivers, small craft may be used to catch fish, smuggle goods, or provide private security. Moreover, practically every US Sailor making a port call abroad has participated in System D buying goods from street vendors; some of whom sell licit locally-produced merchandise, while others hawk pirated or counterfeit knock-offs.

In his book, Stealth of Nations: The Global Rise of the Informal Economy, Neuwirth argues that instead of attempting the impossible – to close down these informal economies – that the developed world should co-opt them. Rather than judging the d├ębrouillards making their livings by First World standards, we should realize that the informal economy on the world's waterways is vibrant, necessary, and not going away any time soon.

The opinions and views expressed in this post are those of the author alone and are presented in his personal capacity. They do not necessarily represent the views of U.S. Department of Defense, the US Navy, or any other agency.

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