Propertarianism II: Pause to reflect (again) upon the relentless pattern of history

Last time we discussed how - sadly - it is unlikely the world will enact the reforms called for recently by Hernando de Soto, to vest usable property rights in the vast numbers of Third World poor who do own some land, but who cannot now borrow or develop it using capital markets. This seems a wonderfully practical and achievable "right-handed solution" which calls for establishing clear title rights and open, honest banking systems that should benefit everybody.

(This is part of a generalized interest in institutions as facilitators of practical development. According to one of my philanthropy correspondents: "Douglass North, in his recent book Understanding the Process of Economic Change, acknowledges that we just don’t know understand the process of economic change. At the same time, he acknowledges that we have made some substantial progress. Part of the progress that we have made is that we know that institutions matter, but that those institutions are not merely formal institutions such as banking laws and tariffs, but that those institutions include “soft institutions” such as social norms and cognitive styles. It might well turn out to be the case that successful economic development depends on several necessary but not sufficient conditions. Insofar as judicial independence and even property rights enforcement may, at the local level, depend on such soft institutions, it may be very difficult to implement or evaluate the effectiveness of both formal and informal institutions from the outside."

 For a different approach to the same issue, see: "Disputation Arenas: Harnessing Conflict and Competition for Society's Benefit."

Nevertheless, it is unlikely that de Soto will be heeded in any meaningful or large-scale way, because we appear to be headed back into an era of class warfare and radicalization that will increasingly resemble Europe in the 1780s and 1840s and Russia at the dawn of the 20th Century. I know this sounds dour for a "Prince of Optimism". But the very same social features that decreased radicalism in the lower and middle classes, during our lifetimes, do seem to be in retreat, while the inequalities and injustices that exacerbate class bitterness appear to be on the rise.

"Property Rights" movements will be stunted because the world's masses 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.

(The similarity in names encourages conflation of two very different concepts. But then, parasites are like that. They are uncreative, so they develop mimicry in order to live off others.)

In order to properly understand "propertarianism" we must take some asides into human history. We'll begin by confronting, directly, a bald fact that our friends on the right are always at pains to obscure.

==The thing that destroys market competition==

We have been told all our lives that socialism is the chief enemy of markets. Hm, well, that was true for a little while, I guess. Indeed, Ronald Reagan was right to call the Soviet Union an "evil empire." But for how long? From 1917 to 1989?

Big deal!

For most of the rest of human history -- 99% of urban cultures -- the great enemy of accountability and market systems consisted of conspiratorial aristocratism. The deliberate collusion of those with power, money and influence to take over the organs of the state and use the state's power to enforce their family privileges. Their right to cheat and own other people. And then to ensure those privileges would be inherited. This happened so consistently, across all cultures, that it must be one of the core human traits that modern civilization is challenged to overcome.

Seriously, conservative friends, look over the paragraph above and try your best to evade it.

There is no way you can. It is the salient fact concerning every human society that achieved metallurgy and agriculture. Big men - assisted by fast-talking priests or ideologues - picked up iron swords and took other mens' women and wheat, then conspired to arrange things so that their sons could do the same. If you cannot start by admitting this was true 99% of the time... and that we are seeing similar aristocratic moves today... then puh-lease, just go back into your holodeck fantasy.

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A defining moment: Let me make clear something that I've said many times. Being a wealthy "aristocrat" in today's world does not automatically make you a class enemy of everybody below you. Nor does it mean that you are programmed, automatically, to cheat or repress market competition, now that you've got yours. True, this is the historical pattern. But many of today's wealthy seem to 'get it' about the modern world. Elsewhere I have called them the 'satiables' - or those capable of feeling gratitude and loyalty toward a new style of civilization. One that has given them so much. Satiability does not mean they cease seeking even more money! But they tend to do this with a joyful sense of market participation - creating more goods, services and/or financial efficiency - rather than clamoring for state-protected rents and state-subsidized profits. A good example might be the 'world's greatest investor' Warren Buffett. Newer candidates: Jeff Bezos and Sergey Brin. The new-style aristocrat appears to want the rest of us to become ALMOST as rich as they are, and does not mind if his sons and daughters have to compete a little, showing what they've got inside. This isn't simple goodness; they are also smart enough to see what happened to dismal cheaters, like the Czar. Alas, there remain plenty of the old kind, doing what history says they always do, who are too stupid to see where their long term self-interest lies.

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So what about that distinction I made, between a Property Rights Reform Movement and those who might be called Propertarians? It is one more case where superficial left-right differences in dogma are less important than matters of personality.

Property Rights is a movement aimed at pragmatic, modernist reforms that will give poor farmers and tradesmen in the Third World the ability to leverage a bank loan off their collateral in flourishing and creative capital markets. While this concept has been proved and is generating excitement in development circles, it also faces towering difficulties, especially in corruption by local elites. (One reason for my claim that transparency and systems of universal accountability must precede any broad effort to register property titles.)

Propertarianism, in contrast, is a quasi-platonist, quasi-religious, mystical romantic cult with an underlying agenda aimed at destroying markets. The way that aristocratic wealth always destroyed markets, elsewhere and elsewhen.

Go ahead. Ask some of today's "insatiable-style" aristos and propertarian mystics how they can support tax cuts for the rich in good times and in hard times...

...tax cuts for the rich during peace and during war. Tax cuts during huge deficits and tax cuts during surplus...

...tax cuts to "supply side" us into prosperity through investment in research and factories...

... and then -- when the aristocracy demonstrably does not invest their tax gifts in capital -- they switch to "demand side" justifications, calling for yet more tax cuts, so that the aristocracy can spend it all on employment-generating toys.

(Hint, the last thirty years have shown that direct tax cuts to the rich are just about the LEAST effective economic stimulation of any kind. Proportionate to any other social class, they do not spend. (Hence their support of consumption taxes.) And they do not invest in risky factories or startups. (Venture capital languished even as the Bush cuts sent torrents into wealthy pockets.) They most certainly do no research! In fact, they mostly use any fresh infusion of money simply to be richer.)

When you probe through all the contradicting justifications for this universal rationalization of tax cuts for the rich - especially refusing to pay when your country is at war - the surface reasons all unravel and you'll easily get to the reductio answer.

"It's not the government's money. It's my money."

Try it and see. These old-fashioned aristocrats (and their apologist ideologues) are generally pretty honest about it, after a good push, readily admitting that "supply side" and all the other flummeries were just window dressing. To them, "it's our money" is a deeply-felt and indignantly moral position. A platonic essence, grounded on a purely self-referential axiom. And, like all axioms, it is not subject to question or doubt.

Also (like so many fellow hypocrites on the left) they refuse to ever consider how wonderfully convenient it all is. That their principled, moral stand just happens to support their own, personal self interest.

What a coincidence.-

==Continue to Part III  or return to Part I

Property Rights vs Propertarianism: Part I

Here's a shorter series. Less cautiously prepared. More of an entertaining rant, with some insights into history.

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Over on the Philanthropy discussion, we have been touching upon Hernando de Soto's widely discussed proposition, that the poor of the world will be best helped by the establishment of clear property and banking law in all of their own countries. This is a "right-handed" version of modernist-assertive-progressivism that (alas) is all too rare, these days, so I want to tout it before going into WHY such ideas are as rare as hens' teeth, over on the conservative side of the spectrum.

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