The Property Rights Alliance is starting a fellowship honoring Peruvian economist Hernando de Soto, head of the Institute for Liberty and Democracy and author of The Mystery of Capital.

I was introduced to De Soto at a PRA affair yesterday, and he immediately began grilling me on exactly why I support IP rights and how these might tie in with promoting prosperity in the underdevolped world.

Some of the points he made in his brief talk to the group:

+ He has been contacted by 33 heads of state or their representatives ("Hey, read your book! If you're ever in the neighborhood, drop by!") They look at their own nations' state of development and look at the U.S. They don't think we are ethnically superior; they realize that there is something in our institutional structure that enables us to work more effectively, and they are receptive to De Soto's explanation that one of the fundamentals is property rights.

+ However, the heads of state have a problem selling this concept. In Latin America, and in much of the rest of the world, the term "property rights" is synonomous with "protect the rich against the 95% of the people who have no formal property," so, when you begin to talk of property rights, they tune out. Different language is needed to embody the point that property is a way of enabling the poor and releasing the entrepreneurial energies of entire societies. (But he did not specify what this language might be.)

+ In the 1930s and 1940s, Latin American nations had much higher per capita GDP than the Asian nations, a situation that has totally reversed. That something went wrong is obvious.

+ "Property rights" is the forgotten child of economic development, and it is absolutely essential to tapping the entrepreneurial energies of the people. But it is not just property, it is a whole institutional structure. 94% of the entrepreneurs in Mexico do not have access to the corporate structures that are necessary to create effect division of labor. The real constituency for reform is not the westernized elites but the masses whose energies cannot now be given effective expression.

+ Creation of property rights makes people independent of governments. This is not necessarily popular with existing groups that profit from dependency.

He was a very impressive and dedicated man, fully worthy of his towering reputation.

posted by James DeLong @ 10:50 AM | Internet: P2P, Search Engines...

Link to this Entry | Printer-Friendly | Email a Comment | Post a Comment(0)