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The De Soto Delusion: Davos types thought they had a way to help the poor

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KamaAina Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 04:57 PM
Original message
The De Soto Delusion: Davos types thought they had a way to help the poor
Edited on Fri Jan-28-05 05:35 PM by KamaAina
while enriching themselves in the process.

Weeellll, it looks like they got the "enriching themselves" part right, anyway...

http://slate.msn.com/id/2112792 /

De Soto's vision of the Third World is instinctively appealing. He sees industrious, entrepreneurial slum-dwellers, toiling with boundless ingenuity, yet living in homes and owning businesses that are theirs only by de facto possession and jury-rigged local agreements, not by de jure deed and title. De Soto calls all this informally held property "dead capital," because it can't be leveraged to produce growthit can't be mortgaged, because it lacks a proper title to guarantee it as collateral. He says there are gobs and gobs of this dead stuff out there: $9.3 trillion worth, by his estimate, skulking in the ghetto.

Mindful of the fact that "the single most important source of funds for new businesses in the United States is a mortgage on the entrepreneur's house," de Soto's plan is, quite simply, to make homeowners out of the world's poor squatters. Neighborhood by neighborhood, slum by slum, he wants to formalize the vast extralegal world by dotting it with individual property titles. Once that's done, he promises, the poor will have access to credit, loans, and investment, as their dead assets are transformedvoil!into live capital.

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 2002and in that group, financing from private banks was almost nil. In other words, the only capital infusionwhich was itself modestwas coming from the state....

In the nine months or so leading up to the project kickoff, a devastating series of slum fires and forced evictions purged 23,000 squatters from tracts of untitled land in the heart of Phnom Penh. These squatters were then plopped onto dusty relocation sites several miles outside of the city, where there were no jobs and where the price of commuting to and from central Phnom Penh (about $2 per day) surpassed whatever daily wage they had been earning in town before the fires. Meanwhile, the burned-out inner city land passed immediately to some of the wealthiest property developers in the country. (Prominent among them was this guy, Cambodia's richest thug.)


Davos fat cat: (takes deep swig of cognac) "You know, this De Soto guy might actually be on to something. If we give the squalid peasants title to their pathetic little shanties, that'll make it easier for us to steal them!"

The unrepentant lefty twist on this would be to incorporate entire villages and shantytowns as cooperatives, with communal land ownership. "United we stand..." Besides, the notion of individual land ownership is anathema in most indigenous cultures. The American Indians thought they were swindling the English: "Some fool of an Englishman gave me all this stuff, and all I had to do was sign one of their papers that says that they now own the land. Own the land?! Are they insane? No one can own the land..."
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oscar111 Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 05:09 PM
Response to Original message
1. "Englishown the land" ??: unclear
Edited on Fri Jan-28-05 05:19 PM by oscar111
plus, how do titles make grabbing away easier?

all in all tho, a great post. Thanks for educating me. Many good points. Just some quibbles at the beginning of my re.

DeSoto explained.. who is Davos?

Davos quoted, but not say who he is or where or what he does. IS he the fat cat? How he a fat cat?

Were the cambodian fires intentional? Not a lapse in your post, just a wondering question from me. An afterthought.

I have seen intentional parallels.. housing projects torn down so genteel hi rent condos can be built. {one town even tried to condemn and trash middle class homes for a store that wanted the land. Failed} Back to the Project now.... No transfers for the project residents that i heard of. I assume they are homeless.

We had a rash of crime after the teardown.. i assume due to exresidents scrambling to grab money for rent in ordinary ll apartments. ll is landlord.
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KamaAina Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 05:38 PM
Response to Reply #1
4. Oooh, pesky italics
should read more coherently now.

If you don't have title to it, you can't resell it to the highest bidder. Perhaps a more precise way to put it is that titles make theft more profitable, not necessarily easier.

Davos is a ski resort in Switzerland that is host to the exclusive invitation-only World Economic Forum, going on now. A "Davos fat cat" is the sort of tycoon who gets invited.
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SoCalDem Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 06:41 PM
Response to Reply #1
5. Davos is a ski resort in Switzerland
There was just a big conference there.. Clinton attended.

All fat-cats sitting around tossing ideas at each other..
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idlisambar Donating Member (916 posts) Send PM | Profile | Ignore Fri Jan-28-05 05:13 PM
Response to Original message
2. Bottom up approaches are limited
Edited on Fri Jan-28-05 05:15 PM by idlisambar
The help the poor to "pull themselves up by their bootstraps approach" has an appeal but it is limited in its impact. The course to development that has been proven successful -- Top-down where central authority directs capital into promising industries -- is strangely neglected. One problem is that it requires an effective and strong government.
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oscar111 Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 05:22 PM
Response to Reply #2
3. you forgot the key,idisam :a gov that cares
Edited on Fri Jan-28-05 05:24 PM by oscar111
to help.

But good points. I know you meant to include "cares", i just wanted to point it out.
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