That many of the new jobs are formal (ie, legally registered) is despite, rather than because of, the labour laws. The trend to formalisation is largely a result of the greater availability of bank credit and equity capital on the one hand, and recent changes that make it easier to register micro-businesses on the other. …Private enterprise and capital laws in China: “behind China’s remarkable success has been an odd and often unappreciated experiment in laissez-faire capitalism.”
Gustavo Gonzaga, an economist … notes that a remarkable one-third of Brazilian workers are made redundant each year, a fact he attributes in part to the labour laws themselves. These are extraordinarily rigid: they prevent bosses and workers from negotiating changes in terms and conditions, even if they are mutually agreeable. They also give workers powerful incentives to be sacked rather than resign. Generous and poorly designed severance payments cause conflict, Mr Gonzaga says, and encourage workers to move frequently. That churn affects productivity, as employers prefer not to spend on training only to see their investment walk away.
The right of China’s private companies to exist is by no means clear. Private companies with more than eight employees began to emerge only in 1981 and were not officially sanctioned until 1988 (the number was drawn from an essay by Karl Marx on an inflection point for the creation of a rentier class); …And the increasingly antagonistic agricultural labor laws in the US:
No one knows quite how much private companies contribute to China’s fast-growing economy. Chinese firms fall into a bewildering variety of legal categories and their respective contributions to GDP are not reported in official statistics. …
Zhejiang’s scrappy entrepreneurs had already acquired, in the least auspicious circumstances, a culture of opportunity and a belief that anyone could become successful. The anecdotes are almost endless. … [They appear to include a healthy dose of microloans and pay day loans since the] sources [of Chinese capital] are a bit of a mystery: largely unofficial, even secretive … discerning, vibrant, and (depending on the authorities’ sentiment of the moment) even illegal. … The system is entirely informal. Records, he says, are minimal and all investments are in cash. A by-product is a proliferation of vast steel safes in homes and offices. … Although success brings praise, too much of it can invite envy and scrutiny.
This is how our relatively inexpensive food gets to us. The costs, as the economists tell us, are externalized. Here is one of those externalized costs–the potential of those kids to become functioning citizens in our democratic society.