Wednesday, 1 March 2017

Recognizing Who Owns What Essential to Economic Growth

What's Yours is Yours; What's Mine is Mine

The sanctity of property and property ownership is established and protected by two commandments: the eighth and the tenth--

Thou shalt not steal
Thou shalt not covet.

Since these fundamental commandments are inscribed into the heart of every human being, it is not surprising to find that in most human societies that exist for more than a few generations there is a respect for, and recognition of, the sanctity of private (that is, not-government owned) property.  This respect can take many forms but they all fundamentally boil down to a recognition by a community that "John Doe owns that field there, and Anne Smith owns this dwelling here."

When property ownership becomes formally codified within a country or jurisdiction the potential for economic development and the creation of wealth increases exponentially.
 But in order to codify who owns what requires, not a blank sheet of paper, but a careful investigation and reconstruction of the informal ownership codes that operate in most societies.

When communist regimes in Eastern Europe and Russia ceased to exist, lots of extra-legal systems and conventions establishing and recognizing "who owns what" came into existence--often very rapidly.  Many of these systems had validity because they were recognised by the communities operating with them--even those the systems were pre-formal and not codified.  The law of God, inscribed upon the human heart, was at work.  The same phenomenon can be found in many "Third World" nations.

Hernando De Soto, who had done a great deal of work in developing countries researching different models of recognising title and ownership to property, writes:
In the course of issuing formal title to hundreds of thousands of home and business owners in Peru, my organization never found an extralegal group that did not comply with well-defined consensual rules.  Whenever we visited an undercapitalized area, whether in Asia, America, or the Middle East, we never stepped into a wilderness.  By observing carefully, we were always able to distinguish patters of rules.  In the worst cases, we found a neglected garden--never a jungle.  [Hernando De Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (New York: Basic Books, 2000), p. 175.]
One huge stride towards developing a sustainable capitalist economy is to codify the informal rules and regulations operating in a society to recognize and protect the existing owners of property.  It is a long term project that requires a great deal of patient research.  But it is the only way to proceed.  The alternative--to impose from the top down an abstract code of property ownership--is doomed to failure from the moment it is launched.  Either it will result in absolutist tyranny, or it will be disregarded by the genuine owners of property from the outset.   That is why it is impossible to flick a switch, pass a few decrees, and create a burgeoning free market economy overnight.

If one does not respect and research the informal community rules and codes defining and protecting what belongs to one's neighbour, little economic progress will be possible.  As De Soto warns:
Remember, it is not your own mind that gives you certain exclusive rights over a specific assets,  but other minds thinking about your rights in the same way you do.  These mindsvitally need each other to protect and control their assets. [Ibid., p. 176. Emphasis, ours.]
It is our belief that without the foundation of the Judeo-Christian commitment to the Ten Commandments, property rights will decline over time.  This devolution may take a dozen or so generations, but even in the West it will happen.  The time may well be coming when capitalism, far from triumphing in the West, will wither on the vine.

Whilst there are many advantages to having informal societal ownership codified into the "law of the land", so that who owns what is easily established, there is also a great danger.  Once codified, property, can be seized at will in Western countries--as humanistic law systems gradually replace biblical canons.

The modern practice of civil forfeiture is but one glaring example.

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