By Jim Bliesner
The informal economy forms a major portion of the day to day economic life of most City Heights residents. It is very visible throughout the neighborhood. Frequent and constant “yard sales” appear daily but more often on weekends. Fruit vendors appear at random locations with everything from oranges, mangos, watermelons to fresh boxes of papaya. Soccer games are sites for icy cones, fruit, and in some cases hot food.
Food vendors circle the soccer field. When school lets out at the Adult Education Building the food is ready. Periodically tamale vendors wander down the street, followed by hand built furniture salesmen in big pickup trucks filled with tables and chairs. Rather than a food truck one may find a push cart parked outside the bars at midnight. Garages serve as sewing factories while kitchens cook tamales, various specialty dishes for local restaurants. There are two full blown Nicaraguan restaurants in someone’s living rooms and yard known only to the special invitees and guests.
The yard man hook up is inevitable when someone does a good job and the fair and effective mechanic has more business than he or she can handle without an advertising budget. Business cards appear overnight in windshields or driver side car windows or hang randomly from fence posts. Renters make a spare room and rent to a family member or friend to help cover the rent.
The informal economy is alive and well in City Heights.
Eighty seven percent (87%) of people in City Heights buy food and clothing outside the supermarket and big box stores according to a new study commissioned by the City Heights Community Development Corporation and the Ford Foundation. They are consumers engaged in the “informal economy” and most of them are low income and need to use the resources of the informal marketplace to survive.
Over 70% of the respondents had incomes below $1500 a month. Car repairs, clothes, food, personal grooming, electronics, home furnishings, maintenance and repairs were just a few of the types of informal business thriving throughout the neighborhood. While some resident groups oppose the informal economy the survey showed that about 91% of survey respondents agree that the informal economy is an important part of their community. 65.3 % of the respondents purchase food from a push cart vendor from time to time. 83.5% agree that it is useful to them and their families for financial survival.
According to Elana Cruz, the Director of the La Maestra Micro Credit program “the informal economy thrives in immigrant and low income communities because people need it to survive. It is the great motivator and a necessity.”
Not only do residents consume in the informal economy they actively work there. 94.2% said they were interested in owning their own business and growing their small informal business into a “formal business”. They are budding entrepreneurs.
Yet most do not know or avail themselves of the non profits that focus on helping businesses grow. While 94.2% of all respondents were interested in owning their own businesses they do not do so because of a lack of money (41%), time (29%), excess regulation (29%) and need for additional training (40.6%).
Organizations such as La Maestra Clinic and the International Rescue Committee provide credit and technical assistance to budding entrepreneurs, most of whom are engaged in informal businesses. These organizations were compared to similar efforts nationwide and found to rank as one of the “best practice” models.
According to Ms Cruz one of the major informal economy businesses is credit. “People bring it with them and it exists across the globe. In Mexico they call it “Cundidos”. In Korea it is called “Kye” and in China “Hui” and Africa “Susu”. It is group lending, for example twelve people who trust each other because the lending is based in trust, each put in $100 per week. They draw numbers to see in what order and each week one person has $1200 to meet their large expense, no interest.”
Her program holds classes in City Heights (as well as Vista, Escondido, El Cajon and Chula Vista) designed to assist informal businesses make the transition to the formal economy. They provide trust based loans as well as financial education on how to run a business, get licenses and pay taxes.
”More than 560 students since 2005 have participated with many now managing prosperous formal businesses throughout San Diego.”
Cindi Fargo, Director of the City Heights CDC “Walk and Shop” program that focuses on formal business development says, “It’s only natural that there would be many informal businesses in City Heights because many of the immigrant populations come from countries where the marketplace is dominated by informal businesses. We had been doing research on formal businesses, types and locations and noticed that there are as many businesses in the residential areas as on the commercial strips
This suggested that there was even a more intense business environment below the licensed ones so we asked Ford to help us analyze this phenomenon with a view toward developing ways to grow the underground. Harnessing the entrepreneurial spirit of the residents and developing it becomes a valuable economic development strategy for the community which faces high levels of unemployment, low incomes, high cost of living and housing, a variety of cultural and language barriers which restrict access to more mainstream employment.”
The researchers recommended a number of possible strategies starting with support for the programs already beginning to address this opportunity, La Maestra Clinic and the International Rescue Committee.
Second it is suggested that an “enterprise zone” be defined and authorized by City Council action to “legalize” informal businesses especially push carts, and develop a community level effort to grow them. For example the cost of getting a incense to operate a push cart is over $5,000 and requires that to stay stationery and attached to an existing business. The study also recommends a live work overlay zone that in certain areas would legalize the businesses operating out of garages and backyards.
The research was implemented by Mirle Bussell PhD and the author of this article (Jim Bliesner M.A.) who teach in the Urban Studies Department at UCSD and designed a special research class for senior level students. Shelby Cramton, Marina Espinoza, Jorge Hernanadez (who grew up in City Heights), Yada Khoongumjorn, Erika Lam, Katie Pope, Bryan Shiang and David Ward worked as Research Assistants for the Center for Urban Economics and Design during the class. The students did an exhaustive literature search and then designed a multi page questionnaire. They stood outside
Vin Dong Supermarket, at the Farmers Market, met with residents of area apartment complexes and surveyed an entrepreneur’s class at La Maestra Clinic to get the survey completed in strict accordance with research requirements.
The 104 respondents mirrored the ethnic makeup of the neighborhood and many came from homes that speak at least two languages. The research was unique among other work done nationally in that little has been done about communities with multiple immigrant groups.
Jim Bliesner
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This is a fabulous article in defense of the of the truly free market. I would argue that the “enterprise zone” be ever expanding and more inclusive. Freedom leads to capitalism which begets prosperity.
Freedom leads to capitalism? Funniest thing I’ve heard in a long time.
Capitalism IS freedom…exemplified through commerce. A person sees a need (food) and a problem (getting food to hungry people). Said person creates a solution (a push cart) to deliver food to hungry people.
When free people are left to their own devices (freedom), they solve problems through commerce. THAT is capitalism. The crony-capitalism that so many of you (and I) decry here is what happens when governments start to “regulate” markets.
The “informal” City Heights economy is capitalism…and it will lift people up from poverty…if we just leave them be. Legalize freedom–it’s the moral thing to do
No. Freedom is freedom. Capitalism is an economic system that enables the rich to exploit the poor. Unregulated capitalism is fascism a la Franco’s Spain and Pinochet’s Chile.
Brent, I’m going to correct you for the sake of the inlookers here because I believe you believe everything you just said.
“Capitalism is an economic system that enables the rich to exploit the poor. ”
That’s simply false. Capitalism is simply an economic system in which the factors of production are privately owned rather the owned by the State. Poor people accumulate capital is through voluntary exchange. Poor people are denied capital is through confiscatory regulation and taxation.
“Unregulated capitalism is fascism a la Franco’s Spain and Pinochet’s Chile.”
Franco’s Spain was originally an autarky (isolationist self-sufficiency). As that failed, he pursued a sort of “neo-liberalism” which privatized some factors of production with centralized planning. Franco resisted international trade (except with the US military) and isolated the country from the rest of Europe. When Franco capitulated to the need for economic liberalization, an astounding amount of foreign investment propelled its economy back into the First World. What inhibited Spain from becoming an economic power was the post-Franco period of Socialist Party rule.
Pinochet made an excellent decision by letting Milton Friedman and “The Chicago Boys” advise him how to liberalize the Chilean economy . He failed because he was a brutal dictator, pursuing vendettas against political dissidents and neglecting to follow the rule of law and property rights. This makes a worthy argument for why economic freedom and personal freedom go hand-in-hand.
Laissez-faire is more than deregulating and lowering taxing. It’s about permitting individuals to pursue their own course while neither subsidizing nor penalizing their activities….and letting them dissent against regimes without retaliation
Kind of like they are pursuing in City Heights. We would do well to let these entrepreneurs be so that they can accumulate the capital do desperately needed for prosperity.
All in all, this may be my favorite article on SDFP. The author is to be commended.
Thanks Brian. The research is descriptive. Not necessarily advocating for any particular economic theory as much as describing a way in which people find ways to survive and working and selling stuff is pretty much all there is. Amazing phenomenon and a testament to ingenuity and perseverance vs a degrading negative characterization that some make of it. Conditions are such that it is necessary.This is descriptive of an economic condition that is expanding and growing in most major US cities out of necessity. We are slowly evolving into what has been described as a “third world” economy.
I hafta come down on Brady’s side in this debate. But not by much.
Brent, capitalism by itself is NOT a boogeyman; not a cause of badness. Any small businessperson isn’t an evil capitalist. Corporate capitalism, as it has been abetted by the government, is the evil.
Brian, please don’t fall into the trap of confusing economic systems (capitalism, socialism) with governmental systems (democracy, fascism). While free enterprise cannot operate without freedom, they don’t always go together. Look at modern China: they are a Communist dictatorship (governement) that is rapidly becomming a capitalist nation (economic).
“Corporate capitalism, as it has been abetted by the government, is the evil.”
I recognized that in my second comment on the thread.
“While free enterprise cannot operate without freedom, they don’t always go together.”
I think I recognized your point in my last comment when I said “Laissez-faire is more than deregulating and lowering taxing”. I think we more agree than don’t
The first comment was directed to Mr. Beltran. But, since you brought it up again, it does NOT happen ‘when governments start to “regulate” markets’ but rather when the market forces take over the government. By what you wrote, the EPA should be abolished and people should suffer e-coli outbreaks in order to have capitalism. That’s not right.
Neither is laissez-faire. This concept takes our economic system back to the days of robber-baron industrialists and virtually INSURES that the middle class disappears and that the rich get richer while the poor get… you know. It is exactly what government is intended to prevent. Remember the ol’ Constitution: “…insure domestic Tranquility, promote the general Welfare…”.
ML: Regulation is usually spearheaded by market participants and is more about protecting market share than the market (customers). I’m not a libertarian purist so we agree that government has a SOME role in consumer protection but I think it’s probably better done by the states than federal government. That insures the market leaders from using the force of government to dissuade competition.
Koch Brothers. Berlusconi in Italy. Enron in California. The falling middle class and the 20 percent whose incomes and holdings total more than the remaining 80 percent’s. The shutting down of government by a minority in one half of the national legislature. Certainly you can’t believe freedom has accomplished these injustices?
Do you believe the Koch Brothers should be rescued from government regulation, allowing them to function more freely and without regulation?
Do you suppose things will become better for ordinary Americans now that there are no practical limits on the amount of money corporations are free to give candidates running for public office?
Brady, some people on this blog seem to think you’re sincere. I don’t. I think you believe in privilege and are just down here having some fun with the lefties. Like a lot of capitalists, you offer laissez faire as a trapping; it’s a contrivance you hope will be accepted as evidence of an even-handedness capitalists don’t aspire to. Greed motivates capitalists. There can never be enough money or power for a capitalist. Probably even the Koch Brothers feel threatened. That’s why they’re trying to buy protection from us hoi polloi through the Tea Party.
Oh, Bob, it’s obvious to most of us that Mr. Brady is here on freep as an agent provocateur. But at least he’s intellegent and civil. I love discussions on political philosophy!
The best part of all this is that Brady, et al, have been over at SD Rostra trumpeting the “fact” that SDFreePress is “endorsing” capitalism as a way up for immigrant populations.
That’s about like us saying SD Rostrarians all favor certain sex acts because they publish stuff by Carl DeMaio.
We’ve made a commitment to report on the neighborhoods in San Diego. This story reports on an aspect of what’s going on in City Heights. I’ve read it and re-read it and can find no language endorsing the informal economy it reports on endorsing or not endorsing the capitalist system.
Despite what these righties fantasize about when they conjure up visions of where we stand ideologically, we (SDFP) don’t have a particularly unified view on economic systems. Saying that everybody on the left side of the political aisle abhors capitalism is just.plain.ignorant.
I’d be willing to bet Mr Brady & crew wouldn’t know a socialist if one bit them on the ass. Or that they could actually define the term, for that matter.
Oh, for sure, I’d keep Brady’s noise on this site if it were my choice, but
I sure do like busting up his sound track.
“socialist”: one who believes in the power of social media. Now, where’s Brady’s ass? (sorry, couldn’t resist :-)
I was conspicuously absent this weekend . My daughter was in a science competition and I have family in town now. I’ll try to answer a few of the comments:
ML: I think I can define socialism well enough and I’ve even met a few of them. Some of my closest friends…
Doug: I am celebrating this article because capitalism is the best way for people to climb the economic ladder. Keep in mind that I’m on the side of the policy suggestions offered in this article; MORE freedom for people to serve one another through commerce, not less.
Bob: I don’t know how to respond to your allegations of insincerity because I don’t understand the term “privilege”. I’d be in your debt if you explained it to me.
Absent that understanding, I find that I agree with a lot of the issues y’all discuss here. I doubt I’ll ever get invited to be in your club but I do enjoy learning from a lot of you.
Although couched as neutrally as could be expected, the writer is pretty clearly in favor of what is going on there. Verbiage like: “The informal economy is alive and well” and “They are budding entrepreneurs” tend to give it away.
I wish Mr. Bliesner had given some data about himself and the study he continually cites.
I teach Urban Studies at UCSD and Woodbury Architectural School and have lived in City Heights since 1975. The study was commissioned by The City Heights CDC and the Ford Foundation who along with the Rockefeller Foundation are deeply into the informal economy and formalizing it all over the world. The fact that the informal economy is such a significant part of the everyday life for very low income people is an illustration of the failure of capitalism actually. Survival has no creed or ideology. You just do what you have to do and selling or bartering whatever you have is as old as the cave people. The study is an analysis of that phenomena in one neighborhood. If you want a copy contact the City heights CDC. It belongs to them. Ask for Cynthis Fargo.
To Jim Bliesner:
What a vivid article about every-day-living USA, a la City Heights! The description of the overt and covert economy is so captivating that you woke up many readers’ conscientousness and now those colonisers are dialoguing to and fro…and quite passionately, I must add. The writer writes effectively when readers’ get involved. You accomplish that time and again.
On dit que (they say that) ” a picture tells a 1,000 words.” Not only do your excellent pictorial capture the essence of hard-working people whose spirits thrive in an economy where unemployment rates are sky high and homelessness abounds. Your photos do tell 1000’s of words and you corroborate these by providing inferential data through your words, photos and statistics. Congratulations!
Survival needs lead to creativity. The people in your article are hard-working people, who are not sitting around waiting for the “que sera,” but who keep creating a “different” reality trying to live the “American” dream in the good old U.S. of A. Jim, once again, thank you for illuminating a common reality in our communities of low economic resources.
To “michael-leonard:” You wrote, “I wish Mr. Bliesner had given some data about himself and the study he continually cites.” Your interest being noted and appreciated, Mr. Bliesner is a contributing writer of the SDFP and his article is about the informal economy in City Heigths not about him. So, all I have to say is “Hey, Sherlock, google Jim Bliesner.” You’ll get an eye-full. About the study, read the first sentence of para. 4 to seek out the source: “…study commissioned by the City Heights Community Development Corporation and the Ford Foundation.” If your interest is still piqued, google City Heights CDC and ask to see the report.
Remy
Thanks, Remy; I missed the citations you quote.
The fact that the neighborhood CDC commissioned the study also gives weight to my guess that this article is in favor of the off-book economy happening there.
By the way, I support it, too.
There is a palpable energy in City Heights and much of that energy derives from the informal economy that Jim describes so well. It is also an economy that is carried out as a collective effort- the whole household bakes flan or tamales or farms fresh food. That collective effort sets it apart in significant ways from the free market/capitalist model. And the income generally benefits more than any one enterprising individual.
Excellent descriptive story and photos — the truck full of oranges! — of how San Diego’s poorest and largest mixed immigrant community keeps body and soul together. Doubtless jobs paying minimum wage,including benefits and sick leave and with union representation would better provide for these workers and their families, but that model is on the wane in this tourist town in the richest nation on earth. And there is some communal upside to the collectivism which is not present in a solitary visit to the public assistance office. But over all, it IS a Third World response to the problem of being poor and uneducated — the shocking new American status quo.
Exactly. Can you imagine pooling together with ten people to make loans to each member of the group over time . Lots of trust with these lending models as well as “car repairs” without a service contract.
This was a very informative article about the underground economy that has existed in San Diego for a long time. During the 8 years when I was operating as a world server without any steady income, I took part, even more than now, in that underground economy. In that connection, I offered a trade in services, such as business planning, for many different things that I needed, e.g., car repair. It worked wonderfully well, no cash was exchanged, so no tax was paid; it was all based on trust, and helped a lot of low income people survive.