A protégé of Steven "Freakonomics" Levitt gets under the skin of Chicago's underground economy. It's a pity he didn't have a better editorby Diane Coyle / February 25, 2007 / Leave a comment
Off the Books: The Underground Economy of the Urban Poor by Sudhir Alladi Venkatesh Harvard University Press $27.95
Chicago has an irresistible allure for social scientists, and no wonder. Its university, one of the world’s great research institutions, has some of the grimmest of urban ghettoes right on its doorstep on the city’s South Side. Chicago’s most famous (or notorious) economists drew free market lessons from this daily drive-by brush with poverty. Nobel laureates such as Milton Friedman and Gary Becker made Chicago economics a byword for the proposition that the economy and society in general can be understood as the outcome of individual rational choice. Then Steven Levitt, in his bestseller Freakonomics, delved more deeply into the ghetto to debunk the Chicago school free-to-choose account of why so many young African-American men opt for drug dealing as a career (rather than, say, investment banking).
Or rather, Levitt delved by proxy, drawing on the research of a young Chicago sociologist, Sudhir Venkatesh. Venkatesh (now a professor at Columbia) spent years hanging about in the poorest parts of the city. He observed Southsiders at work, at the shops, at home, at play. He conducted surveys among the small businesses. He interviewed pastors and politicians. Off the Books is his account of this detailed web of daily life.
We get our ghetto tour from the perspective of a few key individuals, with whom Venkatesh clearly spent a lot of time. One is a mother and de facto community leader, just about scraping by in a legal job. Another runs an “off the books” auto repair shop. They in turn introduce us to their neighbours, friends and enemies through the recounting of specific incidents, such as the local gang leader’s decision to move his selling operations into a park used by local kids after school. Venkatesh goes on to analyse the implications of each incident through local surveys and further interviews.
The central point of this series of narratives is that economic and physical survival in the inner city is made possible only by operating outside the structures and institutions of the formal economy—and that that necessity in turn traps the community in informal or illegal economic activity. It is not just that many people make their living from drug dealing and extortion. Paying tax, offering vacations and health insurance to workers, satisfying safety regulations—any of these burdens imposed by undertaking otherwise…