Two-thirds of the world’s population lacks access to a formal system of property rights.
The great economic divide in the world today is between the 2.5 billion people who can register property rights and the five billion who are impoverished, in part because they can’t. Consider what happens without a formal system of property rights: Values are reduced for privately owned assets; wages are devalued for workers using these assets; owners are denied the ability to use their assets as collateral to obtain credit or as a credential to claim public services; and society loses the benefits that accrue when assets are employed for their highest and best purpose.
.. two-thirds of the world’s population lacks access to a formal system of property rights, resulting in undeveloped resources and assets worth an estimated $170 trillion, or 63% of the value of the assets of the U.S.
.. Hernando de Soto—discovered that even in the most primitive societies records exist on who owns what. Based on this discovery, ILD undertook an organized effort in Peru to begin to assimilate and formalize these records to establish a registry of property ownership.
.. We first collaborated in 1990 when Peru sought American assistance to replace the gun with the rule of law by officially recognizing that the indigenous Peruvians’ primitive property records were legal proof of ownership.
.. Blockchain is an especially promising technology because of its record-keeping capacity, its ability to provide access to millions of users, and the fact that it can be constantly updated as property ownership changes hands.
If Blockchain technology can empower public and private efforts to register property rights on a single computer platform, we can share the blessings of private-property registration with the whole world. Instead of destroying private property to promote a Marxist equality in poverty, perhaps we can bring property rights to all mankind. Where property rights are ensured, so are the prosperity, freedom and ownership of wealth that brings real stability and peace.
To succeed, it will have to break with the State Department’s conventional wisdom that underdevelopment is caused by a paucity of taxes and regulation. It will also have to climb down from its view that trade is a zero-sum game.
.. Failure to create jobs and grow, and the heavy concentration of businesses in the consumer sector, reflects the difficulty Guatemalan entrepreneurs have in getting credit. That’s not unusual in an economy in which more than 72% of businesses operate underground and therefore cannot access the formal banking system.
.. Guatemala ranks 88th out of 190 countries world-wide for ease of running an enterprise, but in key categories that make up the index it performs much worse.
.. The survey finds that it takes 256 hours to comply with the tax code. The total tax take is 35.2% of profits. It takes almost 20 days to start a legal enterprise and costs 24% of per capita income. To enforce a contract it takes more than 1,400 days and costs more than 26% of the claim.
.. at home the state is hostile to business and disrespectful of property rights. As a result, most new ventures see the cost of formality as outweighing the benefits... Nor is Trump protectionism going to help Mr. Tillerson turn Central America around. Companies won’t want to manufacture in the region if they don’t have access to the U.S. market.