Last Updated:Friday - 09/24/2010
December 5, 2005
WCR Letters to the Editor
Free the poor from government bureaucracy
In hisNov. 21 WCR exegesis of the Compendium of the Social Doctrine of the Church, Glen Argan writes, "Property is the basis for dignity (however) the majority of people on our planet . . . may have the right to property but it is a right they are blocked from exercising."
In his widely renowned book, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, the Peruvian economist and reformer Hernando de Soto illuminates the ways in which the poor are blocked. While capitalism itself is often blamed for maldistribution of wealth, de Soto finds that bureaucratic, legal/institutional impediments to formal property ownership are the fundamental cause of "capitalist apartheid."
To explore this firsthand, in the 1980s de Soto and his colleagues set up a one-worker garment workshop on the outskirts of Lima. Spending six hours a day at it, it took 289 days to register the business. The cost of legal registration was $1,231 - 31 times the monthly minimum wage.
Obtaining legal authorization to build a house on state-owned land took six years and 11 months, requiring 207 administrative steps in 52 different government offices. To obtain a legal title for that piece of land took an additional 728 steps.
In Haiti - the Western hemisphere's poorest country - it takes 176 bureaucratic steps and more than 12 years to legally settle on government land. This is typical of the institutional/legal structures de Soto found in "developing and ex-communist countries."
The poor in developing countries collectively own trillions of dollars in productive assets, but it is so difficult and expensive to have their property legally recognized that most of them forego the formal economy and operate extralegally.
De Soto explains that over the past 40 years the developing world has been undergoing an industrial revolution of its own, "one huge, worldwide industrial revolution. . . . For better or for worse, people outside the West are fleeing self-sufficient and isolated societies in an effort to raise their standard of living by becoming interdependent in much larger markets."
These people are now doing as our own feudal forebears did two to three centuries ago, though the present revolution is proceeding much, much faster than ours did.
Four decades of massive migration into cities has "overwhelmed their political and legal institutions."
In citing "blind spots" in our understanding of developing world problems de Soto writes, "Few recognize that the problems they face are not new. . . . The lesson of the West is that piecemeal solutions and stopgap measures to alleviate poverty were not enough.
Living standards rose only when governments reformed the law and the property system to facilitate the division of labour."
That is, for people to be able to work legally within the kind of large scale, specialized and cooperative trading economy - with well-defined rights and obligations protected by the rule of law - that Western capitalism enjoys.
Jesus told us we cannot serve both God and mammon (Matthew 6:24; Luke 16:13): service on the path of Spirit and service on the path of acquisitive greed leads us in opposite directions. But as Mr. Argan explains, the Church recognizes the essential necessity of the institution of property and productive work for human dignity.
Describing how life will be in the "new heavens and new earth," the prophet Isaiah writes, "My chosen ones will long enjoy the work of their hands" (Isaiah 65:22). While direct charity is sometimes necessary, our best gift to the poor among us and in developing nations is not handouts that lead to welfare dependency and spiritual despair.
Our best gift is to work to free them from the institutional impediments that block their admission into a legal and open social economy with the kinds of opportunities we ourselves enjoy to apply their own effort, imagination and intelligence towards productive and rewarding work.
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