Book explains difference between rich and poor countries.

This is a link to the New York Times review of the book "The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else" by Hernando de Soto.

I haven't read the book, but I have read quite a few reviews of it. The basic idea is that real world history shows that poor countries transform themselves into rich countries by adopting the legal institutions of property rights, rule of law, enforcement of contracts, etc. I am posting a few excerpts from the review, but you can click on the link to read the entire review:

http://ecsoc.ru/db/msg/10171/review

The poor in third world countries are rich in assets -- according to de Soto, they own $9.3 trillion worth of real estate. But their countries remain poor in capital. How is this puzzle to be explained?

De Soto's answer is the poor do not really ''own'' the property they work, because they are not registered as owning it, and because of this, they cannot turn it into capital. It is legal title to property, de Soto claims, that transforms labor into capital. Without title, there can be no contracts with strangers. So the market is restricted and the growth of wealth retarded. His solution is simple: give the poor title to the property they own de facto, and their countries will become capital rich.

It was by converting informal property systems into formal ones that the West moved from the third world into the first world in the 19th and early 20th centuries. The challenge facing third world countries is to replicate this history.

why the status quo is the status quo).





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I think the very people who could most benefit from the information that's in the book may be the ones who are the least likely to get access to it.

and it does not fit the real problems with 'developing' nations.
Title to property has little to do with the difference between resource extraction nations and those with industrial economies, even post industrial economies.

The ownership of a plot of land is irrelevant to climates/topographies
that do not support commercial crops or have mineral value. The ownership of land means nothing in countries where sweatshop labor is the only means of 'wealth' generation. Indeed, many of these countries defined wealth in different ways before colonization, and the formation of Patron/Peonage export systems.

These systems are supported by the demands of modern consumer nations, and poverty is enforced by western corporations subverting their local governmental structures and trade based aid organizations shackling them with debt.

Yes, his solution is simple all right. But it is also parochial and stupid.

How do you explain the fact that some countries are very rich while others are very poor?

Why is South Korea so much richer than North Korea?

Why is Botswana so much richer than Ethiopia?

Why is Japan so much richer than India?

I answer that by saying that it's entirely because of differences in their legal/economic institutions.

The rich countries are the ones that have adopted de Soto's policies, and the poor countries are the ones that haven't.

that explains this phenominon.
Certainly, property ownership might be a factor among factors,
but look even at countries who have had property ownership by deed, but
did not practice primogeniteur, for example.

Charlemagne's empire did not last a generation because of this.

I studied with Dr. Robert Gamer, who did a lot of work on just this subject. I don't entirely agree with his asessment either, but his theory of the destablization of indiginous economies by imperialist economies in the 16th-19th centuries in Africa, Polynesia, South America, etc gives a lot more pursuasive model than ownership by deed. He gives a lot of good evidence for this.

The question of wealth is also a question of economy meeting the needs of its citizenry. Which group of average citizens, for example is better off, an intact barter and extended family economy based one, like the Trobriand islands were up until reasonable recently, or say East Timor, who have been moved into a cash based resource extraction economy, where a balanced agriculture has been replaced by western style processed food. Hint, in one of them, western diseases like diabetes were virtually unknown until recently.

You seem to have confused capital development with quality of life. Going back only a blink in human history, you get the enclosure movement in England, where just what you say happened, and the rural Britons were moved off their cottages, and common land was enclosed by the manor. This resulted in everything you see in Hogarth illustrations of London and early Victorian moralists at the end of it decried.

Also, even where land has been held by deed for over 100 years, those who worked that land often were allowed no access to owning it. For example, the presence of sharecroppers in the south into the 1950's when mechanized farming destroyed their more intensive farming and they all moved to places like Chicago. This, without the big cities, is the multi-generational farming peonage of Central and South America. Indeed, if you look at the difference in Nicaragua under Somoza, with its wealthy extraction Patrons, and its impoverished Peons, then compare it with Nicaragua under Ortega, with land reforms, you see that ownership of property can be a double edged sword.

The short answer to your series of supposed examples is that other, sometimes unique factors are at work here, as well.
India-- look at the Koorinor Diamond, sitting atop the crown jewels of England. Ethiopia, look at the effects of desertification. North Korea, look at the effects of the Cold War.

It would be a wonderful world if 40 acres and a mule would be the magic solution to poverty. But as the American post civil war reconstruction alone shows, it does not.
Finally, I live on a section of Kansas City, where the Wyandotte indians (having been moved twice by our government) gave up their tribal status and sorted their land by deed. Soon it was taken from them again, and they were moved to Oklahoma. Deeds are only pieces of paper, worth only what the ruling junta says they are, or my neighbors would all speak Wendat, and I would be speaking Anglo Saxon.

Japan invested in universal education beginning in 1870, and it sent for foreign experts to help set up its industry and science. The most important factor is that unlike India, which was a British colony for nearly 200 years, Japan always maintained full control of its own economy. For example, it let the British build the first railroad, but when they wanted to stay and run it, the Japanese government refused and required them to train Japanese people to run it.

Although its infrastructure was smashed during WWII, the country still had the technical expertise to rebuild rapidly.

In contrast, India was NOT in control of its economic destiny during the same years that Japan was laying the groundwork for its economic growth. It has not yet achieved universal education, over 50 years after independence.

Property ownership helps, but a lot of the difference among nations can be attributed to culture or bad luck with governments.

The most striking case is the Philippines versus South Korea. In 1960, both were desperately poor Third World countries. Both were under dictatorships. The difference is that the Philippines was under the Marcos family, which saw their being in government as a license to loot the national treasury and give goodies to their friends. Park Chunghee, dictator of South Korea, was no better on human rights, but he had a Confucian-inspired sense of obligation to his country, so he lived relatively frugally and emphasized education and infrastructure. The only thing preventing Ferdinand and Imelda from following that course was their status as complete greedheads.

This arguement was used to steal land from native americans.
The reasoning went like this: "hey those damn indians don't have
any papers showing they own the land they live on so we
have the right to take it. After all there is a legal void
and we have the right to fill that void."

I would suggest The Globalization of Poverty by Michel Chossudovsky
as well as The Colonizer's Model of the World by James Blaut.

That line of reasoning put forth by De Soto is being used this
very day as a way to impoverish indigenous people in meso-america
in a plan called Plan Peubla Panama. Look it up

Learn the real story behing money and banking
http://www.seek2know.net/money.html