Private Property Rights
The absence of land title absolutely hurts the poorest of the poor... You can't start an economy without ownership not being in question. This is my fundamental.
- Herman Chinery-Hesse
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Hernando de Soto on Property Right Initiating the Rule of Law
A property right initiates the rule of law … makes people interested in the rule of law. The first thing that they understand … is that everybody on this earth lives on a plot of land.More from Hernando de Soto
Hernando de Soto on Private Property Rights Breaking the Back of Poverty and Privilege
When you look at 19th century America or 18th and 16th century Europe, all of a sudden it’ll become clearer that … the thing that broke the back of poverty and privilege in developed countries in the past was when property rights came around and destroyed feudal title.More from Hernando de Soto
Hernando de Soto on the Effect of Private Property Rights in Peru
In the case of Peru you can clearly see that where titling takes place, education is better immediately because more people can get jobs, they feel secure about their homes; they are ready to make more investments in the homes. More kids go to school because many people keep their kids at home just simply to indicate that they have a stake in that place. And now all of a sudden the security is replaced with law. Law has also that function.More from Hernando de Soto
Herman Chinery-Hesse on the Land Problem in Africa
We have a serious land problem here. Nobody’s attacking that, as far as I know. I haven’t heard any NGO. I hear them talking about child labor, gay rights, and so on and so forth. Not to say that they aren’t important. But in the scheme of things, when people need money and a livelihood, we need to focus first on things like property rights so that the land tenure problem is solved, so people can take their ancestral land and borrow money against it to set up businesses and pay tax. That’s where we should be going. That’s where our survival is; that’s where our money is; that’s where our progress will come from.More from Herman Chinery-Hesse
Herman Chinery-Hesse on Why the World Bank Should Focus on Private Property Rights
We haven’t got clean title in Ghana. It’s very, very difficult. You buy land, you have to buy it four, five times. Last time I had a meeting in the World Bank, I asked the World Bank officials, ‘Hey, you’ve been working with our government all these years. You know this is at the bottom of our problems, that fundamental unknown, and what are you doing about it? Are you saying for twenty years you just forgot that we have a situation where anybody’s business, anybody’s house can suddenly come into question, and they might just lose their investment and that it wouldn’t encourage people to invest?’ I don’t see that a lot of work has been done there or a lot of progress has been made there.More from Herman Chinery-Hesse
Herman Chinery-Hesse on Private Property Rights as Fundamental to an Economy
The absence of land title absolutely hurts the poorest of the poor. [About] sixty, seventy percent of our people are farmers. Just imagine, if you have ten million farmers who have no title to the land they are farming on. They can’t take it to the bank to get a loan to get farm implements. Whereas if they were allowed to buy the land, it may take them six years of share cropping to then own the land, then they could take that land out to the bank, get a loan, and get a tractor. Now, if you are stopping them from doing this for generations and generations, it’s chronic poverty. You are creating chronic poverty. They need to own their land and trade their land. The good ones amongst them will become large farmers, the ones that are not so good will become medium sized farmers, and the bad ones will end up working for the large and medium farmers. And they’ll have good jobs that pay them, like America, a good job that pays them a good decent wage every month. Maybe they are not entrepreneurial, but they will get a job … You can’t start an economy without ownership not being in question. This is my fundamental.More from Herman Chinery-Hesse
Kirtee Shah on Public Policy and the Importance of Property Rights in India
An enormously important sanction has just come in from a major policy initiative on slum. This policy initiative was announced 3 years ago, where government said that government will provide property rights to slum dwellers as a way to make India slum-free. What they’re saying is this: that those people who have solved their housing problem, they have illegally encroached upon lands, taken someone lands, we will [instead] provide those lands to people so that they become official, they become legal, and once they become legal, they have the wherewithal and motivation and capability to improve their houses. Yes, State and the government will have to intervene, develop to provide services, hopefully they will provide capital, they will provide loan facility, but if you do that, people will start solving the problem.
So you are essentially, in my understanding, not building through houses; you are creating a large support for the people in the form of a policy so that they can start solving their problem, they could start a legitimate existence in the cities. They become new citizens.
Property right is very important. You look upon [slum dwellers] as illegal encroaches. These are the people who are taking over someone’s land illegally. They are unauthorized. They don’t have address. In India, they’re allowed to kind of work… but otherwise you don’t have address in a city, you are not a legitimate citizen. Property right would give them a new citizenship.
That citizenship will do two things. They will start living with dignity, because they’re no longer called illegitimate and no longer called illegal and no longer called unauthorized. Second important thing that will happen is this: giving them property right will start the whole second cycle what I call of investments by communities. People are very keen to improve their settlements. They’re very, very keen to see that they’s children live in better house. They are very keen that the children go to school so that their children do not see the same fate, the same conditions that they lived in. They want to get away from poverty. They are very motivated.
So property rights start the whole process of new citizenship, their foothold on the city, they’re becoming legal, and then creating a situation where they would invest. These poor people, the slum dwellers are not there just for the sake of living there. They are the engines of growth of the cities, their own informal sector. In country like India, 80% of jobs are informal sector. There’s nothing like unemployment. There’s certainly underemployment that is intermittent employment, but they’re employed. They are very hard-working people.
Once their existence in the cities is safe, once the sword which is hanging on their head, where they could be bulldozed, they could be evicted, they could be thrown out of the city. Once that is gone, they would invest more, not only in their housing, in their occupations, in their business, in their livelihoods, in the way they earn their income.
The very fact that you’re creating these conditions of their legal state, they will take, that is the most important step in terms of alleviating poverty, because you are empowering them. You are giving them conditions where they could invest more labor, they can invest more capital, they would work harder to earn more, that in the process.
Not only that, once the security of the property right is given, once the city makes investment in infrastructure like clean water, drinking water, few schools, little healthcare, their health will improve. Better water supply would make more working days available to that. That will add to that income. The health would be much lesser. So all these conditions will start from giving property rights, will lead to improving the condition of the poor significantly.More from Kirtee Shah
Ernesto Schargrodsky on Researching the Impact of Land Titling on Children and Families
We found that children in the titled houses are more likely to go into secondary school. In Argentina in these areas, most kids go to primary school, so there are no difference in attendance to primary school, but they are more likely to go into secondary and tertiary education. They have a lower school absenteeism. They have better health, for example, better anthropometrics. They show lower teenage pregnancies. So, the next generation show several advantages in the titled parcels. We have a group of kids now in the titled parcels that, one day, they are going to receive a house, an inheritance from their parents. But in addition to that, they were raised in better houses, they were raised in smaller families, and in these smaller families, they got better education and better health.More from Ernesto Schargrodsky
Ernesto Schargrodsky on Land Titling Improving Human Relationships
We found that the people in the titled parcels, they trust each other more. They understand, I mean, they believe that material progress help to be happy. They believe more in meritocracy and also they are perhaps more individualistic, which might be surprising because they were successful in the land occupation by being a large group; they couldn’t have done that by their own. But now they believe that you can progress in life by your own. And what is very interesting is that we also ask these very same questions to an average Buenos Aires population. So we took random citizens, I mean random households, and we ask the same belief. And even the area still very poor, the people that got titles, they have a set of belief which are very similar to the belief by the Buenos Aires household, than relative to the belief of the untitled populations. So, land title integrated them to the average population and now they share, they seem to share the belief and the values of the more average population, although they are still quite, quite poor.More from Ernesto Schargrodsky
Ernesto Schargrodsky on Land Titling and Poverty Alleviation
Hernando de Soto was very influential with his idea that land titling could be a main tool to reduce poverty. The main idea is that there are millions of people in urban slums in the cities around Latin America, Asia, and Africa, and that these people, they cannot use the land that they possess and occupy as a collateral, because of the lack of titles.
Wealth creation is the true form of poverty alleviation, and this experience of land titling shows that if it allows people to invest more and if it allows the people to educate their children more, that’s a promising way of poverty alleviation.
I think land titling is a very powerful anti-poverty policy, not through the shortcut of access to credit, but through the positive incentives on investment, on children education, on child health, that it’s going to improve the lives of the future generations.More from Ernesto Schargrodsky
Marcos Hilding Ohlsson on Lack of Private Property in La Cava
There is actually no formal private property. Of the people we interviewed, none of them has any documents saying, this is my house or my piece of land. So people will just stay on the land in the house where they were born, or if they want to eventually sell their house, there’s no formal contract. It’s just a pay as you receive, so people would pay as they come into the house, or they can even rent it. But they would only sell or rent to people they knew. And normally, you have to be, they say always be very careful. So actually people in this area will always live on average between fifteen and twenty years in the same house.More from Marcos Hilding Ohlsson
Private Property Rights Defined
Private property rights refer to a cluster of rights that property owners may possess in whole or in part. These include the right to control, rent, benefit from and trade all or part of a property. Typically these rights are circumscribed by one or more regulations, including regulations to protect future generations who may own the property, or to protect the adjoining property of others.
Table of Contents
- Private Property Rights Defined
- Private Property Rights in Developing Countries
- Private Property Rights in the Judeo-Christian Tradition
- A Prudential Case for Private Property
Private Property Rights in Developing Countries
In the developing world, an ongoing challenge has been to ensure robust property rights for the poor, who frequently never get secure title to their land and live in fear of being pushed off their land by powerful interests. The lack of property rights for the poor also prevents them from gaining access to capital or to pursue higher yield, long-term investments in their property (e.g., planting almond trees instead of an annual crop).
Private Property Rights in the Judeo-Christian Tradition
The idea that some individuals should or do possess property rights is as old as human history, and a strong natural law argument can be made in favor of private property rights. The Judeo-Christian tradition supports private property rights even as it has encouraged generosity, charity and a sense of solidarity among humans. The institution of private property is assumed throughout the Old and New Testaments, grounded in the idea that humans are made in the image of God and have been appointed as stewards of creation.
In the Ten Commandments, the law against stealing presupposes private property; the book of Genesis describes approvingly Abraham’s effort to purchase and own a field as a family burial site, and the Levitical code is filled with various rules for protecting people’s property rights.
Private property, however, is not considered an absolute good in the Christian tradition. Property is an instrumental good that exists to serve more essential goods such as human life. Nevertheless, it is usually only in instances of what is called “extreme necessity” (e.g., imminent danger of death) that private property should become “common” again – and even then people are called to make just restitution after the danger has passed. Otherwise, a society runs the danger of using the notion of “common good” in an ever more expansive way until the rights of private property have largely vanished. In such circumstances, neither the individual’s good nor the common good is well served.
At the root of Christianity’s approach to property is the idea, expressed in the book of Genesis, that God has made the world for all people. In the beginning and now, God provides material goods for the use of all. This is the principle of the universal destination of material goods. This simply means that the earth is to be used by and on behalf of all people. It does not mean that human persons jointly own the material world, with each being entitled to an equal share. Rather, it means that nothing in “subhuman” creation ever comes with a label saying: “this good is predestined for this person but not that one, this group but not that.”
A Prudential Case for Private Property
Throughout history, Christianity has taught that the issue of how the earth’s resources are to be used for the benefit of all is left for people to work out rationally, in accordance with principles of justice, and with a view to promoting the common good. Christian teaching, history, and experience tells us that the institution of private property and market exchange are normally the best ways of enabling material things to serve human individuals and communities. First, people tend to take better care of what is theirs than of what is common to everyone, since individuals tend to shirk a responsibility which is nobody’s in particular. Second, if everyone were responsible for everything, the result would be confusion and tension. Third, there is a link between the ownership of property and the willingness to assume personal responsibility for oneself and one’s family.
Empirically, there is a strong association between robust, widespread private property rights and economic prosperity. There are no instances of societal-wide common ownership of goods being associated with sustained economic growth. Nor do societies where private property rights are widely undermined by crime and political corruption tend to thrive economically.
Peruvian economist Hernando De Soto has described the tendency of robust property rights to unleash economic flourishing as “the mystery of capital.” In part, this strong tendency results from the incentives linked to acquiring property. In other words, if a person has some hope of acquiring secure property, the person has a stronger incentive to work, save and acquire property, and to cultivate or otherwise improve the acquired property for long-term returns.
Robust property rights spur economic growth also because they tend to limit state power. In this regard, the institution of private property supports the rule of law inasmuch as it requires a legal apparatus that aids property’s creation, exchange and distribution. This in turn restricts the state’s ability to behave in arbitrary ways that discourage entrepreneurial initiative and investment.
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