Interview with Hernando De Soto

Author of The Mystery of Capital

Photo from Habitat for Humanity

Date: Wednesday April 17^th, 2002

Location: Westin Hotel, Ottawa, Canada

Sponsored by: Care Canada

Also in attendance: Representatives from Carleton University School of Architecture

1. Legal title to real estate is fundamental to bringing people in LDCs into the commercial market.
2. This requires not only legal title but legalizing in-home work.
3. Legalizing family relationships is another needed factor in terms of getting a system in place that allows the nascent economy to develop.
4. Reasonable not confiscatory taxation levels are also important.
5. The key is taking ‘dead capital’, capital trapped in a legal limbo, into working capital.
6. Legal title is a passport to connect persons in LDCs to world markets.
7. Land---à Homes ---à Legal Title ---à Bank Involvement ---à Mortgage ---à credit worthiness ---à micro business ---à stepping stone to moving out of poverty.
8. Replacing 100 ways to squat and extra legal manoeuvres with legal title.
9. One needs an address to make people accountable.
10. Property rights for a home are the first step to the rule of law.
11. An address is fundamental for property rights—credit only works because you have an address.
12. The LAW is something you discover not something that is written in a vacuum divorced from the practices of a people. Customary law is discovered as opposed to judge or jury created law written by judges (common law).
13. Mortgages are like forced savings and savings are the first requirement for investment and investment creates a dynamic for alleviating poverty.
14. Accumulation of capital through real property leads to the accumulation of capital and releases creativity. This entails a recognition of ‘capital’ as capital including for example the value created in squatter quarters.
15. It also allows the formation of cottage industry in home and creates income security for aging persons.
16. Economic take-off requires a method for bringing extra legal activity and black marketers into the mainstream (for example, how to bring illegal water or gas or electricity sellers into the legal marketplace).
17. Homes should be sanctuaries for human shelter and for cottage industry too. However, Jesus kicked the out the moneylenders from the Temple so there is a view that certain structures must be commerce-free.
18. Private ownership has a better track record of environmental protection than socialist ownership of the means of production and real estate.
19. Respect for property rights is fundamental to human rights. Arbitrary removal of a person’s property is not far removed for arbitrary abrogation of human rights.
20. Perhaps there is a more palatable way of referring to ‘property rights’ so this is less incendiary to left-of-centre politics.
21. If you cannot trade property rights, you can not have a workable market.

Note:

Walt Rostow’s work of the 1950s and 1960s and recent work by De Soto and others suggest that what is needed for economic take-off in LDCs today includes:

1. education
2. health
3. supply of and private ownership of housing (safe, affordable, privately owned)
4. clear title to housing and accurate addressing and surveying
5. mixed use and tolerance of and legalization of cottage industries
6. effective legal system, respect for the rule of law
7. moderate levels of taxation and avoidance of confiscatory levels of taxation
8. re-integration of black and grey markets (deeding of lands and title in squator settlements
)
9. active capital markets (borrowing circles and financial recycling of savings and investment, home mortgage availability)
10. culture of and support for entrepreneurship and innovation
11. wide spread Internet access and effective communications system
12. respect for human rights
13. protection of property rights
14. good government, honest government
15. sound public infrastructure
16. extensive private ownership of economy

Prepared by: Dr. Bruce M. Firestone, Ottawa, Canada. May 2000.

www.dramatispersonae.org