Capitol Ideas/De Sow in Peru
Bethell, Tom
De Soto in Peru by Tom Bethell Over the years, America has sent any number of sociologists and anthropologists abroad to study foreign societies. Few with any wisdom have come here to study ours....
...This was done in El Salvador with U.S...
...Oh no, there are conflicting claims on 40 percent of property...
...Wherever we titled and registered, the Shining Path left...
...One was Alexis de Tocqueville in the 1840s...
...officials, only to find that they had little idea how their own system worked...
...Local budget committees exempted from scrutiny cook up projects tied to particular suppliers without competitive bids or publication in any Federal Register...
...T he truth is that "democracy" is not really helpful in analyzing the problem of economic develop ment...
...officials that he is number one on Shining Path's hit list...
...To them, the appeal of coca is that it grows easily, without much preparation of the soil...
...People living in the woods, in the Andes, in the Amazon basin, on the city outskirts, have been excluded from the count...
...is in a position to call the shots in Peru, as in so many foreign countries, by threatening to close the foreign-aid spigot...
...Without addresses, there can be no such thing as police...
...Property registers do exist, and property can be made secure by law, but it has to be enacted, house by house...
...The United States condemned as "unconstitutional" this attack on "democracy," and responded with an aid boycott, stopping $167 million en route to Lima and prevailing on Europeandonors to cut off their support as well...
...But is title uncontroversial...
...They would be happy to switch to more lucrative crops, such as coffee or cocoa...
...coca growers furnishing two-thirds of the world's supply of the raw material for cocaine...
...Their key discovery is that most Peruvians do not have secure property rights...
...But the growers have signed agreements with the government expressing their willingness to switch—in return for property that is tided and registered...
...For reasons that are not entirely clear, he quit at the end of January...
...ing their ability to recognize and teach the importance of these institutions and failing to incorporate them into their foreign policies...
...What was it...
...State Department, no doubt flattered by the imitation...
...If it merely legitimizes a system of rotating theft, with fat hogs turned out and lean hogs admitted in their place, it is worse than useless...
...The proof is that every time you are asked how you do it, by the Poles or by the Russians, you don't really know what to tell them...
...Then, in April, Fujimori dissolved the country's legislature and arrested its politicians, saying that "the country cannot continue to be weakened by terrorism, drug trafficking, and corruption...
...Also, foreign aid has always been aid to governments—not people...
...But they cannot obtain credit on such unsecured land, and are always at the mercy of officialdom, against whom they have little recourse at law...
...The same problem exists all over Latin America, and indeed many parts of the Third World, De Soto says...
...This has made possible a vast and endless corruption, with a privileged few able to privatize what is laughably called foreign "investment...
...The problem is that registering and titling property is very expensive...
...It is, however, one of the few ways in which foreign aid moneymight usefully be spent, and far from propping up existing kleptocracies (which foreign aid normally does) it will undermine them...
...Ask for official figures and you'll be told: "Look, 80 percent of homes here are titled...
...How long ago did they invade...
...Whereupon Shining Path (Viet Cong in Vietnam) are welcomed as defenders by those under attack...
...Latinate legislative and judicial branches, political parties, Treasury Departments, and Reserve Banks promise more than they deliver and sound more democratic than they are...
...De Soto told a recent hearing of the U.S...
...Over the decades they have managed to make the process so expensive and time-consuming that most people do not have access to it...
...Peasants have "common law" property, De Soto says, meaning that local groups or villages respect each other's rights...
...One reason is that early foreign aid teams aimed to expropriate property (from "absentee landlords"), and then set about herding peasants into collectives created on the stolen land...
...As long as they were treated as criminals, they were de facto allies of the Shining Path...
...II 16 The American Spectator August 1992...
...De Soto published some of his findings in The Other Path (1989), pointing out that most Peruvians were mired in a legal morass protecting traditional elites and making enterprise impossible...
...That's how all the Vietnams have gotten started," De Soto said...
...As for the coca growers: There are 250,000 of them and they are a part of the great majority with insecure, unregistered property, forced into what we call the underground economy...
...Growers earn little from cocaine—perhaps $500 a year...
...The institutions underlying the success of the American market system and the genuine participation of Americans in their own governance were constructed over 200 years," he later wrote in the New York Times...
...An informal entrepreneur took 289 days to register his business legally, for example...
...We just finished a pilot program," De Soto said...
...The West "never preserved a blueprint of its own evolution," De Soto told me recently...
...I have not heard of any research or investigation comparable to this since foreign aid began in 1949 with President Truman's Point Four program...
...Joint Economic Committee that "some governments are suspected of paying as much as double the true dollar value of the capital, investment projects for which they contract...
...A government that wants to lay down the law then finds itself at war with a whole class of people—an attack upon one is construed as an attack upon all...
...De Soto had left ten minutes earlier...
...Fifty years ago, 120 years ago...
...In the years ahead, the willingness of aid agencies to commit money to this worthwhile cause will put to the test once and for all their professed concern for the poor...
...He has since been told by U.S...
...a government accustomed to act as the private instrument of Peruvian elites, protecting them from competition...
...This reduces most "owners" to the status of squatters: permanently at risk of eviction, seizure, or inundation by a new wave of squatters...
...For sixteen months, De Soto worked as an adviser to the Peruvian president, Alberto Fujimori...
...The underground newspaper of the Shining Path complained in 1990 that De Soto's organization was "distancing young people from participating in the popular war," and in April 1991, the Institute for Liberty and Democracy's building in Lima was bombed...
...And so it goes...
...You also have land reform areas...
...Before and after the coup, De Soto pointed out that most Latin American countries, Peru included, merely create institutional facades labeled along Western lines...
...The U.S...
...Tiding and registration is a privileged preserve of a ruling lawyer-class...
...His institute has carried out pilot programs in Ecuador and El Salvador, and has been invited also to Guatemala, Honduras, and Indonesia...
...The real money is in trafficking...
...But they thrill the U.S...
...drug traffickers working in league with 10,000 or so Shining Path terrorists led by a Communist philosophy professor (a Kantian, I'm told...
...Such attacks are bound to be indiscriminate, since without property there are no addresses, De Soto points out, and without addresses, police operations necessarily become army operations...
...So unnoticed has this process been that Americans have taken it for granted, losTom Bethell is The American Spectator's Washington correspondent and a media fellow at the Hoover Institution...
...a government impoverished by its own partiality...
...He returned from Washington to the Peruvian maelstrom: a world of 23 million people, mostly impoverished...
...There is no place where you can go and find someone with a map who is willing to testify that there are not four other people with the same piece of paper giving them title to the same piece of land...
...Using what he likes to call "class analysis," De Soto persuaded Fujimori that the growers should meanwhile be decriminalized...
...Mechanisms that make public agencies somewhat accountable to the people here—De Soto mentions public participation in rulemaking, openness to media scrutiny—are nowhere to be found in their Latin imitations...
...Having attended a Swiss boarding school in the 1950s, De Soto was puzzled by this question: Why was Western Europe so much richer than South America...
...a world of curfews, power cuts, and corrupt judges...
...We understand that the people who live there have already parcelled it into private property...
...Now he has round-the-clock security...
...Put all these exceptions back in, De Soto said, and you get back to the 92 percent figure...
...Oh no, we don't count them...
...Obviously there was some important but undisclosed difference in the way their respective societies were organized...
...In such a world, long-range enterprise cannot be undertaken and inhabitants tend either to be scorned as "lazy" or (worse in De Soto's view) praised as members of an "indigenous culture" that is nobler and less materialistic than ours...
...doing it for tens of thousands of people in several countries is a huge undertaking—more than one institute can possibly do...
...another was the Peruvian Hernando de Soto in the 1980s, suitably named after the explorer who discovered the Mississippi River...
...De Soto himself uses and defends the term, but he seems to mean by it something rather differThe American Spectator August 1992 1.5 ent—institutions that spontaneously arise at the grass-roots level...
...In the last couple of years, meanwhile, he and his assistants at the Institute for Liberty and Democracy have undertaken some of the most important economic research ever done in the Third World, explaining as never before its persistent impoverishment...
...President Fujimori did embrace De Soto's proposal to incorporate these informal arrangements into the law of the land by setting up a parallel system of registration...
...A large section of the population was prevented from operating legally within the economy, and the same was true all over Latin America...
...If attacked by army units, the growers move on to new terrain...
...Once this is done, De Soto claims, hitherto insecure property doubles in value overnight...
...As far as titles go, most Latin Americans probably have them," De Soto added...
...Now Fujimori has slapped handcuffs on the pols, but it's not clear that the country is any less democratic as a result...
...T hese registration figures were not easy to come by, De Soto told me...
...Impoverished armies like their own people, but they also like getting paid...
...Yes, that's right," they'll say, "but we don't count them because they're still under collective law...
...But as long as there's a "legislative branch" and a "judiciary," don't worry, it's a democracy and therefore aid-worthy...
...Drug Enforcement Agency...
...American aid officials abroad simply would not have been bold enough, or motivated enough, or armed with enoughlocal information, to question official statistics and come up with their own...
...De Soto's people could do it because they are Peruvians working in Peru...
...But it's worthless paper—title that cannot be registered...
...They are invaders...
...They have property of a sort, but it is not registered...
...There's always been a dictator or a political candidate wanting to be elected and willing to shove paper around...
...The idea that property should be made more secure would have been thought very reactionary...
...This is true of 60 percent of the people in the cities, 92 percent in the countryside, De Soto says...
...Are squatter areas included...
...But these need more in the way of investment, and without property rights it isn't worth their while to substitute...
...De Soto gave several talks in Washington at the time, telling audiences how he had interviewed U.S...
...and an unreliable army, uncertain whether it should be on the side of its own people or the U.S...
...assistance as recently as 1984...
...As he had observed at his polyglot school, Europeans were not noticeably more intelligent than Latins...
Vol. 25 • August 1992 • No. 8
