The Therapy Sessions
Tuesday, May 06, 2003
I’ve long admired Hernando De Soto. I’ve read one of his books. His ideas on eliminating poverty would work in Africa and South America, if any government there had enough confidence to leave entrepreneurship in the hands of the people.
But that is too much to ask of the dismal governments of the Third World.
De Soto demonstrated that in order to open a business legally in Peru (and throughout the undeveloped world), a prospective businessman would have to get 60 different permits and stand in line at government agencies for several months. Therefore, it wasn’t surprising that few official businesses exist in poor countries. In the unofficial economy of the Third World , the so-called black markets are huge, and extorting money from these unliscensed merchants is big business for the corrupt police. Bad property law is why these governments can't tax, understand or accommodate a private economy.
He generally argues that proving “who owns what” is the first, and most vital, part of economic growth. Americans have tendency to forget this: I think in most schools, the legal issues of land ownership after the American Revolution (land deeds from British royalty, squatters’ rights, the land claims made in the push west) are lightly brushed over. But that was where the foundations of capitalism were built.
De Soto talks about Iraq in this interview: I hope Jay Garner is paying attention to this guy: