Passage A:

To the legal economist, the vast informal sector of many developing cities is best understood not as a pathology but as a rational adaptation. Enterprises operate outside the law - unregistered workshops, unlicensed vendors, untitled dwellings - because the cost of compliance is prohibitive. Where registering a business demands months of filings and fees exceeding a year's wages, evasion is the sensible choice, and the resulting activity is genuinely entrepreneurial. The tragedy, on this account, is not that the poor lack assets but that their assets are legally invisible. A house without a title cannot be mortgaged; an unregistered firm cannot enforce a contract or attract outside investment. Such holdings constitute "dead capital" - real wealth that cannot circulate. The remedy follows directly: simplify registration, extend formal property titles, and lower the regulatory threshold so that extralegal enterprise can migrate into the legal economy. Once the informal worker holds a defensible title, the argument runs, credit and investment will follow, and the latent dynamism of the poor will be released. Critics who see informality as mere subsistence miss its productive character; what the sector wants is not charity but recognition. The state's proper role is therefore modest and enabling - to clear the legal underbrush rather than to redistribute - and the measure of success is the rate at which informal holdings acquire formal, transferable standing.

Passage B:

Ethnographers who have lived among street traders and squatter communities are skeptical of schemes that equate progress with the issuing of titles. Informality, on their account, is not simply the absence of law but a dense fabric of its own rules. A market's stalls are allocated by seniority and kinship; disputes are settled by association elders; credit flows through rotating savings circles whose collateral is reputation, not paper. These arrangements are not primitive holdovers but working institutions, and they perform functions - insurance against illness, smoothing of irregular income - that formal markets serve the poor badly or not at all. Titling programs, imported on the premise that a legal deed unlocks credit, have repeatedly disappointed. Banks decline to lend against the dwellings of the very poor whatever their paper status; meanwhile a transferable title, once granted, can be sold under duress or seized for debt, and newly legible property invites taxation and, at times, eviction by developers. What the reformer reads as liberation the resident may experience as exposure. This is not to romanticize informality, whose hierarchies can be harsh and whose protections are uneven. It is to insist that the social relations sustaining it are the real institutions of the poor, and that a reform which dissolves them in the name of legal clarity may leave its intended beneficiaries with a deed and little else.