Thursday, June 22, 2006

 

The Importance of Property Law

Fellow Milblogger Eagle1 links to a thought-provoking article by Tom Bethel in The American Spectator with this introduction, which I can’t top:

Simple Simon meets a pieman and asks, "Why Isn't the Whole World Developed?" Which is, in fact, the title of this piece from The American Spectator. For those of you who think that the answer is a complicated economic package of mathematical complexity, let me reveal the much less complicated answer: Property law.

The article, taken from the May 2006 issue of The American Spectator, reports on a recent meeting facilitated by famed conservative Grover Norquist, in which Peruvian researcher Hernando de Soto spoke. Who’s de Soto,and what’s his connection to the significance of Property Law and economic development? Bethel explains:

Twenty-five years ago, he founded the Institute for Liberty and Democracy in Lima, Peru. He wrote a book called The Other Path, drawing attention to the failures of economic development. Then he published a second, The Mystery of Capital, elaborating on the first.
De Soto illustrates the point that only outsiders are capable of original ideas in fields dominated by credentialed experts. He addresses a profound failure of conventional economic theory. The problem can be put this way (and once was, by the president of the Economic History Association): Why isn't the whole world developed? According to economic theory it should be. The three "factors of production," according to classical economics, are labor, capital, and natural resources ("land" in some versions). They are all readily available. If capital is in short supply, it can always be transported -- now more easily than ever. The problem is that these factors make no claims about political or legal institutions. Property in particular is overlooked. This missing ingredient accounts for the widespread failure of economic development in most countries in the world.
The legal infrastructure in developed countries is "the hidden architecture of capitalism," de Soto says. It is hard to see because it is buried in thousands of pieces of ancient legislation, legal interpretation, and working institutions. No single person would know enough to explain it fully. Western nations take these institutional arrangements for granted and don't understand how fruitful they have been.
They do not exist in most countries and never have.

Read the whole thing. Bethel goes on to explain how de Soto’s organization was invited to Mexico, and offers thoughts directly relevant to our Immigration problem (and Mexico’s emigration problem).




Links to this post:

Create a Link



<< Home

This page is powered by Blogger. Isn't yours?

Subscribe to Posts [Atom]