Civil Rights

Clearly defined property rights are a worldwide problem

Hernando de Soto

National borders are a contentious topic in electoral politics, with arguments over who should be allowed inside or excluded from a given jurisdiction. An even more pressing problem in most of the world, however, is the widespread lack of clearly defined property rights that allow people to live and work securely, argues Peruvian economist Hernando de Soto, president of Atlas Network partner Instituto Libertad y Democracia (ILD), in a recent commentary for Fortune.

“The issue of is not just an American problem, nor is it only about immigrants,” de Soto writes in his Fortune commentary. “It’s much bigger than that, as 5 billion of the world’s 7 billion people don´t have the documents to live in a particular place. To be precise, they don’t have the legal property rights required to reside, own assets or do business in their own or any other country. That’s 5 billion without any enforceable guarantee that they will not be expropriated or environmentally contaminated by powerful business, government, terrorists or criminals. That also means they will struggle to have access to credit or the ability to raise capital since borrowers typically need to pledge some kind of property in exchange.”

The tendency to focus on national borders in political debates, de Soto points out, largely distracts from the fact that even millions of people living in their own countries lack the necessary recognized and documented property rights that would allow them to build a better life for themselves by, for instance, leveraging their assets even as small-scale entrepreneurs. During his recent visit to Mexico, Pope Francis made a point of singling out exclusionary U.S. political rhetoric — but this very real problem is not unique to America, de Soto points out.

“Moreover, so that his war in favor of the down-trodden should not be confused with anti-Americanism the Pope should challenge the Mexican government to improve property rights for owners of the country’s 10 million urban homes, 137 million hectares and 6 million businesses,” de Soto explains. “Most Latin American countries have yet to document the property rights of their own people. … What Pope Francis can do is to publicly defend the universal right of all people — sanctioned by the U.S. Constitution and the Universal Declaration of Human Rights — to enclose, defend and develop property borders inside their countries, so that they don’t have to migrate to America to get them.”

In his work with the ILD and publications like his best-selling book The Mystery of Capital, de Soto has helped shape the international development discussion, bringing new worldwide attention to the importance of clearly defined property rights, stable social institutions, and a consistent rule of law. These factors make the difference between countries with economies that thrive and lift people out of poverty, and those that stagnate or decline.

“ILD has studied, advised governments, and elaborated policy proposals on some of the main conflicts and problems our world faces today, from the resistance of the indigenous Amazonians of Peru to the Arab Spring,” de Soto said to Atlas Network (translated from Spanish). “In this latest instance, ILD’s work has been covered by more than 178 media outlets in the Middle East, the United States and Europe; and a documentary was produced and transmitted on PBS about the real causes of the Arab Spring, proving that what the poor are demanding is that their property rights be recognized and that they should be given the tools needed to participate in markets.”