How We'll Fail - a very interesting interview of Hernando de Soto on NR. De Soto is the Peruvian economist who has tirelessly promoted the idea that the third world fails to develop because of (lack of) property rights. He's asked, how important is the establishment of property rights in a post-totalitarian country:
It's obviously crucial... the genesis of a market society is property rights because it relates to the issue of what belongs to whom. Once you determine that, you know who starts with what poker chips. And once people see that the law protects rights that they already have, then people begin to believe in the rule of law.

It's not clear [in most poor countries] who owns what in terms of national records. . . . We've worked for example in Egypt. Now in Egypt it is not clear who owns 90 percent of all assets. In Mexico, 78 percent is not clear.
Will the US implement a solid system of property rights in Iraq? It seems doubtful, especially with all the talk about implementing "democracy". The two are antithetical ideas; choose one. They're currently talking up the wrong one.

Some more interesting stuff in the interview. As a practical matter, in order to reform a nation you must coopt a large class of its citizens. This is true for both internal reformers or revolutionaries, or occupiers. How does one build up a client class? One way which works is via property; property reform is a very powerful method of getting support from the populace. (And unlike other methods of pelf, it's libertarian.)
that's what MacArthur did. The first thing he did was set up a property system. It's very poorly documented. I was very interested [in this] when we had an up and coming politician [in Peru] named Fujimori. Why did they come to Peru and why did the de Sotos not go to Japan? What happened was that after 1945, what MacArthur wanted to do [was] to give the peasants and the poor people and the citizens the title [to land] and take it away from the feudal class.

[At the same time,] Chiang Kai-shek was suddenly losing to Mao Tse-tung . . . and the reason, as MacArthur understood, was that Mao Tse-tung had begun to title. It was collective title, but that was still closer to [the peasants] than the feudal title.

So [the Americans] had a massive title and they spread wealth enormously and millions of Japanese had property. And now it's nine times wealthier than Peru. So you've done that before.

When you went to war in Vietnam — Ho Chi Minh was also a titler. And the lessons that you learned in Japan you forgot in Vietnam. So they basically out-titled you.
Libertarian revolution is possible in places with little liberty. But it is unlikely that the state will deliver it; for the very ideas that underly successful reforms that it would have to implement are antithetical to it. Still, generally speaking there is much more freedom of action for bureaucrats in foreign lands, for the simple reason that the people are "others" and can't vote. So we can hope that the USA gets it right this time.

No comments: