January 31, 2005

How To Help Squatters

In a recent and rather brilliant Left2Right post, Elizabeth Anderson argued that libertarian-style "natural property rights" were incompatible with quality capitalism. As an example, she cited Hernando de Soto's work on squatters in the Third World, who all own their own land, but have no way of converting their property into capital. Fair enough, and as far as Anderson's argument goes, nothing further need be said about this. But one also wonders how to fix the squatter problem. So here we go. As I understand it, De Soto claims that we simply need to put in place some sort of legal regime that gives those squatters formal property rights—so that people can start mortgaging their homes and whatnot and get on with the business of, um, business. Capitalism for everyone!

Or perhaps not?

Just the other day, John Gravois wrote an interesting Slate piece about how de Soto's ideas haven't actually helped all that much in the Third World:
In various parts of the Third World, newly legalized squatters on the outskirts of cities are discovering that a property title supplies little of the benefit de Soto projects. Government studies out of de Soto's native Peru suggest that titles don't actually increase access to credit much after all. Out of the 200,313 Lima households awarded land titles in 1998 and 1999, only about 24 percent had gotten any kind of financing by 2002—and in that group, financing from private banks was almost nil. In other words, the only capital infusion—which was itself modest—was coming from the state.
-- Brad Plumer 12:46 AM || ||