How many DP readers have tried to walk into Sheraton/Sonargaon* fresh off a ricksha, wearing a plain lungi and a white cotton t-shirt (unless it’s for a performance)? Probably none. How many of us have gone to work in Dhaka that way? Probably the same number. How many of us have seen such a thing? I await the comments with much interest, and anticipate a few stories of 5-star hotel guards swearing at ricksha-pullers and beggars!

I apologise for raising these disturbing (and tasteless to some, I’m sure) questions because nothing highlights the differences between the formal and informal sectors of the economy more than the respective dress codes: trousers and whatever for the former, lungis and whatever for the latter. Why, even Dr. Yunus with all his Grameen checked clothing does not dare to wear a lungi for fear of offending some unspoken agreement made long ago on the fields of Polashi…. but I digress.

Asif Bhai’s post below raises concern that the self-proclaimed “bhodrolokes” are disconnected from the little people below. This does not necessarily mean - as is often repeated with much emotional bluster by critics of all governments - that they don’t know what it’s like to live among the “ordinary” people with ordinary incomes. They probably do: few in their generation were born with silver spoons in their mouth. Some probably even know poverty better than some of their critics do.

The point at which the current CTG is as disconnected from the people as their political predecessors is at the lungi-trousers intersection. They inevitably prefer trousers over lungis. None of them can envision the informal sector of the economy as a potential driving engine for economic growth. And you can blame all bhodrolokes for this, not just the government: the media is guilty too, regularly giving FDI proposals first page coverage and local, small business initiatives little to ZERO coverage. The one section you cannot fault is the microcredit industry, which is geared towards the informal economy.

Formal and Informal

But microcredit is not enough. Enter Peruvian economist, Hernando de Soto, author of “The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else” and “The Other Path”. De Soto basically says that capitalism and markets fail in the developing countries because of a lack of property laws, which makes collateral impossible and as a result capital hard to acquire.

Thomas Sowell writes, “For the entire Third World and the former Communist countries, de Soto’s calculation is that the total value of all the real estate held, but not legally owned, by the poor is more than 20 times all direct foreign investment in the Third World and more than 90 times all the foreign aid to all Third World countries over the past three decades.”

But it doesn’t end there: this lack of formal property rights deprives a section of the economy of much needed government services - utilities, security, etc. - as well as depriving the government of potential revenue. Worst in my opinion, is that policy-makers tend to under-estimate the importance of these sectors when forming fiscal, monetary and social policies.

I said above that I doubt that the honourable members of government do not know what it’s like to live on a budget: we’ve all had to at some point. I also doubt that they know what it’s like to sell tea at the corner shop, potentially squatting on government land that is otherwise lying useless, serving a clientele that would otherwise have no alternative. Nothing better illustrates their under-estimation of the informal sector than their eviction of small street-side shops in Dhaka during a time of high inflation. Those markets were most likely vital for food security, but more importantly for income security for their owners. Neither civil society nor more importantly the government has much research on the urban, informal sector. The result: policies that aggravate an already bad situation.

Those policies were not business-unfriendly. Maybe the “clean” streets might even get us some FDI. That can’t be bad for business. Right? After all, “business” is done by those who wear trousers. The rest is all lungi. Right?

*(onek din Dhakay jay nai, tai notun 5-star gulir naam readily mone ashey na!)