Illegally poor

UNDP has just published a report on Making the Law Work for Everyone. It is the result of 3 years of work. And it seems to entail a lot of compromise among the 21 members of the commission tasked with charting new ways to fight informality, illegality, and judicial systems that cater to the elites only.

The commission members are a veritable "who is who" in development policy: Larry Summers, Hernando de Soto, Fernando Cardoso, Ashraf Ghani, and Ernesto Zedillo. The full list is found on page iv of the report. Interestingly, it does not include a single East Asian or East European--the two regions that have most drastically reduced informality and illegality. Maybe they were too busy reforming.

The main recommendations in the report are found on page 60. These are divided into 4 groups (justice, property, labor and business) and make a formidable list of 21 recommendations. In an apparent nod to de Soto, the property list is 3 times as long (9 recommendations) as the business list.

While most recommendations are intuitive, some are ill-defined and unenforceable. For example, "Fair commercial transactions between informal enterprises and formal firms. Financial, business development, and marketing services for informal enterprises." Who is going to ensure that transactions between formal and informal enterprises are going to be fair? If informal enterprises start marketing, wouldn't they have to become formal? Once the first advertisement hits the radio waves, tax inspectors would easily find and close them.

I like recommendation #1 the most: "improved identity registration systems, without user fees." It will likely take a long time in most developing countries to turn all assets and businesses formal. But giving national identity cards to all citizens should be the priority. These can be used in health, education, and nutrition campaigns.

This is a recommendation worth following. But not with another report, please. Otherwise another 3 years will be lost.