Hernando de Soto

Thanks to the Michael Medved fan website (which is having a few technical difficulties), I learned about Hernando de Soto and his becoming the second winner of the prestigious Milton Friedman Prize for Advancing Liberty. From the Fox News article (de Soto is Peruvian -- hence the reference to Shining Path): bq. The prize is a rare honor, but then de Soto is an extraordinary individual. It�s not every economist who finds himself the target of terrorist bombings and assassination attempts. Because of his scholarship and activism on behalf of the world�s poor, in the late �80s and early �90s, de Soto was repeatedly targeted by the Marxist terror group, the Shining Path. bq. It�s not hard to understand why Marxist radicals found de Soto�s ideas so dangerous. They threatened the monopoly the political left (Marxist and non-Marxist) held over solutions to the problems of the world�s poor. For years, statist development experts had sought top-down solutions, operating under the implicit assumption that poor people in the Third World were largely incapable of entrepreneurship. De Soto utterly rejected that patronizing viewpoint, and, beginning in his native Peru, focused on the lack of formal property rights as the source of poverty in poor countries. As an author and an activist, and later as adviser to Peruvian President Alberto Fujimori, de Soto worked to bring impoverished Peruvians out of the shadow economy, and unlock their potential for wealth. I love that line: "...threatened the monopoly the political left (Marxist and non-Marxist) held over solutions to the problems of the world�s poor." Here is a guy who is working for change, actually doing great work in helping the poor and a bunch of Marxists who are also "working for the poor" are hacked off enough at him to want to have him killed. Gee - I wonder who has the "ideologically purer" agenda. More: bq. And the more de Soto and his fellow researchers at the Institute for Liberty and Democracy investigated, the more they realized that dealing with the Peruvian state to obtain legal recognition of one�s assets was maddeningly difficult, if not impossible. Thus, the poor �do not so much break the law as the law breaks them�and they opt out of the system.� bq. Lacking formal legal title to their property, the poor are unable to use these assets as collateral. They cannot get bank loans to expand their businesses or improve their properties. Their potential is locked up in what de Soto calls �dead capital.� He and his colleagues calculate that the amount of �dead capital� in untitled assets held by the world�s poor is �at least $9.3 trillion��a sum that dwarfs the amount of foreign aid given to the developing world since 1945. This is fascinating - the poor are not thought of as having assets but they do. The problem is that they cannot leverage these assets as is done in the western cultures because they do not have a title to them. There has been a lot written about micro-loans for small businesses in developing countries and the great majority of these loans have been very successful. $9.3 trillion is a lot of resources to be sitting on a shelf somewhere... We need more people like this... Here is a link to the The Institute for Liberty and Democracy