David Freddoso profiled de Soto earlier this week at Investor’s Business Daily.
Informality is a central concept in de Soto’s work on poverty. It describes the realm to which the Third World’s poorest are relegated — banished from their nations’ official economies to what he has called “the grubby basement of the precapitalist world.”
He argues that their exclusion — the product of a lack of enforceable property rights — holds back them and the entire world economy. It’s why capitalism, despite its triumph over communism and its wealth generation in America and Western Europe, has failed elsewhere.
Nicholas Eberstadt, an American Enterprise Institute expert on economic development, lauds de Soto for demonstrating how property rights — often disparaged by left-leaning intellectuals as an instrument of the privileged — help the poor: “He has helped explain to convincible readers how radically egalitarian the rule of law and property rights are. Plutocrats, strongmen — they have their muscle. They can take what they choose in lawless situations. But the poor and weak are protected by the rule of law and property rights.”
Americans struggle to understand the plight of the Third World’s poor, de Soto says, because they take for granted the robust U.S. legal system that makes their prosperity possible.
The anarchic Wild West America of squatters and gold rushers gave way long ago to a nation where:
• Ownership is uniformly documented and insured.
• Trustworthy records of transactions are easily accessible.
• People have fixed addresses and recorded credit histories.
• Property titles are sacrosanct.
• Convenient legal instruments exist to limit business liability.
Read “Hernando De Soto Revolutionized Thinking On Poverty” by David Freddoso at Investor’s Business Daily.
