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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: paul_philp who wrote (59570)	12/2/2002 3:43:26 PM
From: JohnM	Respond to of 281500

Thanks for the link, Paul. And a hello to you. I'll take a look.

To: paul_philp who wrote (59570)	12/2/2002 8:32:31 PM
From: JohnM	Read Replies (2) \| Respond to of 281500

Paul, As I read this essay by Hernando de Soto it seems to me to be off the track of the debate sketched in the WSJ article. The structure of the argument seems to be to sketch certain characteristics of the property system in places like the US, contrast it with the property system in Africa, Latin America, etc. and note that the absence is what makes it impossible for those countries to grow. Does that sound correct? If so, then it is tilling a different field from the argument in the WSJ article. There, as I understand it, is what are the steps to get from one to the other, whether the shock therapy of the 90s is helpful or not. I start off being more sympathetic, as you might expect, with Stiglitz's argument that shock therapy sacrifices the very populations it is meant to help. A little like the Vietnam era bit that we're going to save this country even if we have to destroy it to do so. I started to read Stiglitz' book but backed off. I'm not sufficiently interested in the argument to bring my economics literacy up to speed. I'm still back with Heilbroner's bit about the "dismal science." Doesn't say good things about me; just a personal confession. So I really don't know enough in depth about economics to evaluate these argument. I simply have the places from which I start thinking about the issues. One such place is that it's much too easy, when thinking about macro issues, to get caught by abstractions that don't carry the human experience. My discipline does that just as economics does it. So I'm not picking on the ecos. But a locked in devotion to "free markets" is capable of producing a terrible toll on populations as witness the Russian experience in the 90s. Similarly, a locked in devotion to state dominated societies can produce equally devastating results. Somewhere in there, hopefully, there is a mix in which the aim is to improve human welfare without getting captured by abstractions. Whoops, got carried away. My apologies.

To: paul_philp who wrote (59570)	12/3/2002 7:36:59 AM
From: Ilaine	Read Replies (2) \| Respond to of 281500

DeSoto's arguments puzzle me, probably because he's an economist and not a lawyer. He seems to have struggled very hard, all on his own, to arrive at a set of rules or precepts which have been embodied in his own Peruvian civil code for decades, if not hundreds of years, that can be traced back to Roman law, as codified in the Corpus Juris Civilus of Justinian, circa 530 AD, drawing on classic texts that reach back to the first century AD and maybe earlier. For example, he talks about using property as collateral. In civil law, this is called hypothecation or pledge -- the ancient Greeks did it hundreds of years before Christ. He seems to struggle very hard to explain what ought to be self-evident -- that investors are relucant to loan money unless they have some assurance that they will be repaid. I know nothing about the Peruvian legal system, but I am very familiar with the civil codes of France and Germany, which influenced the Peruvian civil code (1936). Civil codes from country to country share many similarities. I know absolutely nothing about the Peruvian system of land records and the actual Peruvian court system, but de Soto's generalities are of no help in this. However, it seems to me that he is saying that Peruvians need a better land recording system. We take ours for granted, but as de Soto points out, it took a while for the US to adopt the systems we have. I am very familiar with the US system of land records. It does require a high level of precision -- proper surveys, proper recording on the right kind of archival material, proper maintenance of records, proper storage of archives, and lots of lawyers, not to mention title searchers, surveyers, mortgage companies, title companies. Searching titles doesn't stop at land records, either. Ownership of property can be affected by birth, marriage, divorce, death, judgment, unpaid taxes, tax liens, and so forth. The other part of the process is enforceability of contracts at law, and the ability to collect judgments. Too complicated to go into, but I am sure that in theory these are possible in Peru. If Peru doesn't have such systems, then they need them, I agree. But I find this to be a curious argument coming from an economist. The argument which seems most consistent with economic theory, that the Third World would be better off if it could monetize assets, he seems to downplay, and that puzzles me, as well. Adam Smith was the first person I read who argued that capital needs to circulate, which means paper money and electronic money. Alexander Hamilton understood this. So did the hapless John Law. And Alan Greenspan does a fairly good job of it, incredibly good when compared to the Federal Reserve of 1929-33.