The economist versus the terrorist paints a romantic picture of Hernando do Soto, economist:
To be the target of a terrorist campaign is not the usual fate of an economist. But Hernando de Soto is no ordinary practitioner of the dismal science. It was his pro-capitalist intellectual crusade against Shining Path terrorists in his native Peru that made him one of their top targets; he survived at least three attempts on his life. Those ideas, set out in his 1987 bestseller, The Other Path, may even have helped to turn the poor against the Shining Path, ensuring its defeat. What worked in Peru, he says, can work wherever terrorism now thrives.After the September 11th terrorist attacks, this message gained a new urgency. Mr de Soto was already increasingly influential with international policymakers, thanks to a second book, in 2000, entitled The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. Now, he is everywhere.
The best snippet:
Marx and Engels, Mr de Soto’s pet dogs, were so named because “they are German, hairy and have no respect for property”. It is a carefully chosen joke, for respect for property is at the heart of Mr de Soto’s economic creed[...]
The core of his creed:
Yet Mr de Soto is not one of those economists who thinks that the key to capitalism’s success is to protect existing, legally established property rights, come what may. On the contrary, he argues that capitalism will thrive, and overcome threats such as terrorism, only if legal systems change so that most of the people feel that the law is on their side. Creating this sense of inclusion requires many things, including marketing the idea aggressively to the poor. But one of the best symbols of change is a mass programme of giving full legal protection to the de facto property rights that are observed informally by the (typically poor) people now living beyond the formal law.According to Mr de Soto’s research, based on interaction with extra-legal communities in several countries, such informal property rights cover assets — notably, land and housing — worth many billions of dollars. Informal systems of property rights usually make such assets “dead capital”, meaning that it is hard to use them as collateral for a loan, which might be used to start a business, for example. Bringing these rights into the formal legal system will unleash this capital and spur growth, says Mr de Soto: an efficient, inclusive legal system preceded rapid development in every rich country.