Apparently, "poor" people in most countries own vast amounts of property - a fact that simply escaped notice because of the widespread assumption that poverty means lack of resources. It can also mean an inability to use resources to benefit yourself and your family. Only recently have some sampling surveys penetrated this simpleminded stereotype in order to show that simple Third World farmers and fishermen and herders often - (when not enslaved by big time landholding gentry) - own appreciable amounts of land and other holdings. By some estimates, the value of property held by such people exceeds by far all of the world's combined foreign aid, as well as the national budgets of most equatorial nations.
Land that has little value or usefulness at present, for lack of capital investment in such simple things as wells (for clean water) or sewage, or a windmill or a useful road to carry produce to market. Classically, such property is supposedly leveragable by owners, used as collateral for reasonable bank loans that could then be used for development - either by increasing the land's productivity or through business startups. But there is a rub.
Well, actually, a lot of rubs. We'll put aside for now the need to do all of this with an eye for environmental concerns. The biggest foe of peasants uplifting themselves has - throughout history - always been the local gentry who do not want lower orders getting uppity. But even where that is not a problem, there is one crucial stumbling block. Peasants can only use their property as collateral if their title to the property is clearly established and an honest banking system exists to lend money based upon that title.
Leftists may not like all this talk of banking and establishing clear property title and lending through transparent and competitive capital markets. Their laudable instincts are to promote generosity in the form of aid, or debt forgiveness. Still, many moderates among the liberal community are increasingly willing to admit that it is time to start weaving market forces into the development mix. Especially after witnessing the roaring success of "micro lending" among urban and village women.
And then there is history. The richest and happiest nations - including those that care most about the environment today - are those that used this method. Our ancestors lifted themselves from grinding poverty. And they did not get foreign aid. They borrowed, invested, repaid loans, then did it again. Shall we tell the Third World's poor not to do what worked for grandpa?
de Soto's core point: it is arguable that no endeavor could make more of a difference to world development and eliminating poverty that simply improving law, title systems and banking in places where poor people own some capital, but cannot use it for their own benefit. No conceivable combination of national budgets and foreign aid could match the resulting unleashing of capital and market activity.
It is a fascinating concept and one that is related to things I've long said about anti-globalization fetishism on the Left. (Just about the stupidest of many moronic lefty notions has been to claim that globalization hurts the world's poor. Even if Addidas factories are scandalous by our standards, they are scandalous only in comparison to where the workers want to go,. (They want to be more like us.) Those factories are not scandalous compared to where they formerly were... slaving as serfs or sharecroppers for brutal local gentry who often had literal power of life and death over their tenants. Why else would those serfs eagerly flock for jobs at Addidas factories?
(If labor and environment and other abuses linger in globalized factories - and almost certainly they do - then the answer is more law, not less. All of those problems were mostly solved in western countries by more connectivity and more law. Not less. People who truly sympathize with those workers would help them organize to use globalization, rather than reject it and go back to indentured slavery under local thugs.)
Yes, I am in one of my more "conservative-sounding" phases. (Actually Hayekian-libertarian, in that I believe that genuine markets do help to solve human problems with great agility. There are right-handed and left-handed solutions. A modernist will happily listen to both kinds.)
But hold on to your hats. I will veer around very soon. I have no choice. After all, in today's world, the Left is a vapid, emasculated and silly force, without real power or (in the near term) any likely prospect of power.
Under such conditions (and see below for why this may change) any true believer in SOA (Suspicion of Authority) must be honest and turn back toward this decade's livid danger...
...from Monsters of the Right.
Oh, I agree with de Soto that promoting worldwide property law will do a lot of good. But pushing for adequate worldwide property law... without an accompanying that push for property ACCOUNTABILITY... will be self defeating in dozens of ways.
The biggest reason is that it will be viewed as yet another effort by aristocrats to anchor their traditional and age-old dominance.
Of course this is a tragic effect, conflating two things that should not be confused with each other. deSoto is fairly convincing that true property rights law will benefit the poor more than the rich. After all, the rich can already - in most countries - enforce their "rights" through bribery and hired force. A push for explicit legal documentation, court adjudication and banking will help those lower down, in their ongoing struggle to limit capriciousness of power.
But we must recognize that most people will not parse this subtlety.
They won't parse it, because they will increasingly, across the coming decade, see "propertarianism" as the great mystical push by this generation of aristocrats toward justifying a re-institution of aristocratic rule. And if you have not noticed this trend, then you are as blind to history as those on the freaky left who oppose property law.
Tune in. Let's figure this out. Maybe there's a way to separate something that is useful, exciting and good from something that is ancient, banal, boringly predictable... and evil as hell.
==Continue to Part II of this series
==See also: Class War and the Lessons of History