Rating: 
Summary: like, not enough really complex equations and stuff
Review: The book is redundant and definately simplistic in its approach and solutions, but the research is important and compelling enough to warrant 5 stars. Anyone seriously interested in economic development, especially the macro gurus who think low inflation and balanced budgets is all capitalism needs to take off, should be aware of this research.Unfortunately, the lack of point data and "hard" analysis may keep its importance from being recognized by the usual lot academic snobs that for some odd reason seem to dominate development debates.
Rating: 
Summary: GOLD IN THE STREETS
Review: The third world is poor, in spite of abundant real resources and financial capital , because clear title to new capital - houses, factories etc. cannot be obtained as readily as in the US and similar first-world nations. De Soto advocates improvement in legal systems; he has written previously on this subjecty and leads a research institute in Peru. This book is both useful and inadequate. The trouble is real but the remedy is not a mere wave of the hand. Cadastral systems exist in every society - to determine property rights and facilitate investment. But they collapse when colonial rule is swept away, when serfdom is abolished or when a society is vanquished. New technology crushes old wealth - pollution, transportation and communications ( e.g. Napster), De Soto's perspective is surprisingly limited. (He seems to misunderstand the word "fungible;" "real" property is non-fungible by definition.) There are many important differences between real assets and financial assets. My impression is that de Soto underestimates the diffiulty of establishing an efficient system of property registration and transfer. The rights of occupants, investors, creditors, heirs and neighbors need to be clear and assignable. This is a very complex package, enlessly contentious even in so "orderly" a society as the US. And every society has its special blend of rules that are religious and traditional, so for what de Soto visualizes "one size does not fit all." Worse - the chaos he complains of serves some people very well, not least the legal profession. Indeed, it is reasonable to think the disorder is by design. But De Soto is right - the mess should be cleared away to let human beings work in harmony to build the life that is possible, promising and just. Just don't hire lawyers to write the rules.
Rating:
Summary: Trickle-Up Economics
Review: The Mystery of Capital, by Hernando DeSoto, could be among the most important books on economics of any century. DeSoto notes that more than a decade after the fall of Marxism, the expected capitalist revolution has not occurred. Capitalism has been successful only in the developed nations and has made little progress in the third world or in the former communist states. He and his team are convinced that the problem is the lack of well defined property rights. He notes that the poor in under-developed countries have assets, but that their real property is often owned informally, and thus cannot be used to generate capital. As a result, the crucial role of real property is simply absent in under-developed countries. He proposes the obvious solution --- formalization of informal property rights and notes that acquisition of property through informal means (squatting) has a storied history in the United States and other developed nations. DeSoto understands that formalization will be politically difficult, but points out that both rich and poor will benefit economically. One might call it "trickle up economics." Finally, formal property rights are under attack in developed nations, through overly intrusive land use and environmental regulations. It is well to reflect upon the potential for slipping toward a system that allows virtual squatters to seize or nullify property rights through regulation, threatening a principal source of national income. Wendell Cox
Rating:
Summary: Brilliant
Review: De Soto has hit the nail on the head! This is a brilliant piece of work.
Rating:
Summary: Brilliant
Review: I spent 5 years in Cambodia doing development/legal reform work and never could figure out why it was so often frustrating and kept running into dead ends. I only wish I had had this book at the beginning of my time there. It reveals what needs to be done to bring the third world out of poverty. Full of simple but powerful ideas. I only hope the development bureaucracy will adopt it. Sound property laws enable land and other assets currently not marketable, saleable or mortgageable to be used as collateral for enterprises (as in the West), and there is more of such property out there in the world than all the Western aid since the beginning of time to all other countries! The author has done his homework on the ground and has compelling and important ideas. An interesting read even if you are not involved in this area.
Rating:
Summary: One of the single best books on Economics I've read
Review: Many of the other reviewers have given excellent in depth summaries of DeSoto's book, and I will not regurgitate what others have already done a good job of saying. I will just say this: if you want to know why 3rd world countries are 3rd world countries, and what Gov'ts around the world can do to create prosperity for their people, read this book. Nations are poor because of ill-guarded private property rights. It's that simple. They aren't poor because of lack of socialism (quite the opposite), they aren't poor because of lack of resources, it's because "It's the property rights, stupid!" Books like this can give hope to the pessimist, that it is possible to end serious poverty in the world. Relative poverty will always exist, but the civilization-destabilizing poverty that exists in the Arab world, in Latin America, *can* be cured if Gov'ts would just put in place a system that allows capital (ie entreprenuers) to grow from the natural resources within the country. Replace Socialism w/ Rule of Law. I hope every member of the Iraqi CPA has read this book and heeded its lessons...
Rating:
Summary: >80% of Egyptians have no title to the property they occupy!
Review: "The single most important source of funds for new businesses in the United States is a mortgage on the entrepreneur's house." By such process the West injects life into assets & makes them generate capital. It is the inability of most of the developing world to produce capital internally in this manner, the author concludes, that retards them economically. So what is missing? Answer: The rule of law, particularly as it relates to property. "Law is the instrument that fixes and realizes captal"; specifically, it is the formal property system that is capital's 'hydroelectric plant.' "This is the place capital is born." Developing countries don't suffer from a lack of entrepreneurial spirit; nor are they culturally disadvantaged herein. The author states that such countries "are exactly where Europe, Japan, and the United States were a couple of hundred years ago." They just need to catch up, and can only do so if political elites in developing countries make this a conscious goal. "Law," the author states, "is more discovered, than enacted." California after 1849, for instance, had 800 separate property jurisdictions, each with its own records and regulations. The issue at hand is one of integrating such into a uniform whole as well as integrating the resulting norm into the enforceable property system that exists in more elitist circles. Case in point: Hilton Hotels can purchase land in Egypt for a property owing to their deep pockets and ability to surmount red tape, but an Egyptian laborer will find it almost impossible to do so himself. Hence the author presents us with the fact that 92% of Egyptian city dwellers (& 83% of those in the countryside) live in housing that exists outside the Law. Formalize these properties & you open up a welter of amazing possibilities for such dead capital to be enlivened. Simpler said than done, however. The author implies that its just matter of will, but too many developing nations cannot be expected to legalize informal property systems---to trumpet the "law" when many such countries as Egypt don't operate under the law themselves. The author is Peruvian & presents his home country is an increasing success story herein, but how applicable is that to dictatorships that all too characterize the developing world? The last thing Hosni Mubarak wants to do, after all, is empower millions of Egypians so that their informal property becomes an asset protected by law. The hold over such people that exists by their state being able to easily dispossess them of their "wealth"---since one doesn't hold legal title to one's dwelling---must be intimidating, wouldn't you think? This is an interesting book, mind you; I just think it has more limited applicabilty than the author presupposes. Peru, Brazil, Phillipines, Thailand, South Africa, and other democratizing states could certainly benefit from Mr. De Soto's advice, but dictatorial states within the developing world need first to become states where "The Law" means something before they can empower their people to stimulate the ceation of internally generated capital. As other reviewers have stated, this is a short book; and it could have been significantly shorter still, as the author goes on ad nauseam re-iterating the same points throughout this book---without, unfortunately, addressing the issue of Democracy as a integral contributing factor to the possible success of what he proposes. It's an interesting book; it could have been a superior one, but alas...I still welcome Mr. De Soto's efforts. (Do have a look at Richard Pipes' "Property & Freedom" while you're at it, too.) Cheers!
Rating:
Summary: Wow! These are things you never think about
Review: This is beautiful book. And there are so many good things to be said about them, I've had to abbreviate much of my review in the interest of readability.
First, the good points:
1. First hand experience with the subject of which he is speaking. This author went through a lot of pain to actually go through some of the processes that he described the local people in different countries that he was describing so as to associate some numbers with the facts. So, he would count out 728 steps in the a particular registration procedure. Or 289 days from start to finish for another.
2. His coverage of the American experience with squatters was brilliant. Most people don't understand that it took a long time for America to "get it right" in terms of assigning property rights and creating the stable country that we have today-- and this is not unreasonable since the type of information that deSoto was gathering had to be found at a lot of different places. (How often do people write about the hisotry of squatters with respect to legal issues?) The stability of American assets and the strong property rights go a long way in explaining why American assets are coveted in such a way as to create the huge trade deficit that the country experiences.
3. His understanding of which people involved in the game of assigning property rights were apporpriate for which steps. So, for example, people who made a living as intellectuals only dealing with isolated facts on a page were totally inappropriate to the task-- no matter that they develop the most discussion about said people. Those who deal with "nuts and bolts" on a regular basis are best for such things.
4. Discussion of how legal institutions must accommodate extralegal persons-- especially if they form a majority of the country in question.
5. Detailing of the commonality of informal arrangements in places where the government can't be relied on to enforce contracts. It doesn't seem to depend on country or culture or anything of the like. And this author strongly eschews cultural explanations of why people fail to produce wealth-- which is currently en vogue.
6. His discussion of how the symbolic representation of things has changed the value of them to large numbers of people (numbers, paper money, etc) is brilliant and just enough.
7. He's drawn from many sources and his bibliography is extensive and wonderful.
The negative points:
1. DeSoto really bludgeons the reader with the fact that private property has the potential to become venture capital. We understood it the first 5,000 times you made the point.
2. His idea of "surplus value" is not clearly distinguished from that of Marx (to whom he refers several times throughout the text). Marx was so thoroughly wrong about so many things, it would do well for him to make separations between his ideas and those of Marx in the text.
3. Some of his metaphors were stretched too far. If potential energy goes to kinetic energy, that is one thing. I don't know that it's the same thing as some physical object being seen as capital and becoming earning potential as a result.
4. The book was about 220 pages, but could have said the same thing in 150. Big minus, but the book was so strong otherwise it outweighed all of these things.
Rating:
Summary: The BIG solution
Review: Robert Lucas once stated that its hard to think of anything else, once one starts to think about how poor nations can grow rich. de Sotos thinking is the best Ive come across. Most explanations of why so many people all over the world are poor are based upon some moral condemnation. de Sotos is based upon logic and empirics.
He documents that between 50 and 90 per cent of the population in a lot of the developing countries are living in extra legality. A lot of the people on the outside of the legal system are poor, but most of them are not. In reality, they own homes and businesses. However, their ownership cannot be capitalized because it is virtually impossible to register it properly, so creditor would accept their property as collateral. And without credit, development and expansion of business is extremely difficult. The documentation of the dimensions of the extralegal sector is one of the books main qualities.
As some reviewers have pointed out, de Soto is in very little doubt that he has an extremely good case, maybe to little doubt. The book is written almost as a recipe for nations with underdeveloped property registration systems. In the recipe however, de Soto is very nuanced, and pays a lot of attention to most of the important aspects. Especially is he stressing that there is no property vacuum, even without no laws. A transition to a legal system would have to take the extralegal system into great consideration.
To what extent the importance of private property is generally acknowledged in the West, is illuminated by the fact that the Haag convention of war of 1899. "International law (..) treats the property rights of individuals as more sacred than the sovereign rights of states, providing that even if governments lose lands, property owners in those same territories shall not lose theirs (p. 166)".
What I find lacking is a more thorough discussion of the interests in the developing countries that prevent the establishment of rules and property registration. I got a feeling that de Soto thinks the main reason is that the politicians and lawyers just dont know how their nations could grow rich. As an economic explanation, this is clearly to easy, and more related to the classic explanations of how countries are poor (exploitation by the evil West), and not in line with the clear logic carrying most of the book.
Rating:
Summary: The book that could change the world for the better
Review: As I write this, there are already 99 reviews, so I will keep this 100th review brief.
De Soto's argument is that the problem of poverty in the third world is primarily caused by the inability of the people to make use of the capital they already posses, because the government won't allow them legal title to it. So while they occupy the land, build houses and markets, all of their activitity is technically illegal. So while I, in the U.S., can get a loan to start a business, using my house as collateral, no bank will give them such a loan because they don't have legal title to their property and so cannot use it as collateral.
He debunks the arguments that capitalism only works if you have a western ideology. Humans are the same under the skin, regardless of ethnicity or cultural upbringing, and people all over the world have the same goal--to improve their own condition. That desire, and the access to some amount of capital, however small (think of the success of the Grameen Bank's micro-loans), is what leads people out of poverty. Government cannot kill the desire, but it can prevent access to the capital--which is what nearly all 3rd world governments have done remarkabley well.
|
