The Pope and Property Rights
Hernando de Soto
LIMA – On February 17, Pope Francis is scheduled to celebrate Mass in Ciudad Juárez, Mexico, just south of the border with the United States. He will surely take that opportunity to urge support for the poor in Mexico and for those who have migrated north.
After all, that is what he did in September during his moving homily in New York’s Madison Square Garden. Referring to the 11 million undocumented immigrants in the US, he asked his listeners to reach out to “all those people who don’t appear to belong, or are second-class citizens…because they have no right to be there.”
But the absence of rights is a problem that is neither unique to the US nor confined to immigrants who lack legal authorization to remain in the country in which they reside. Far larger and far more damaging is the difficulty that afflicts the five billion people who lack documented property rights. In Mexico alone, there are ten million urban homes, 137 million hectares of land, and six million businesses whose owners’ rights are poorly protected.
If Francis focuses only on undocumented immigration in his Juárez address, his message is likely to become bogged down in a debate about US security concerns and countries’ sovereign right to protect their borders. If, instead, he expands the discussion to include the importance of clearly documented property rights within countries, he will be on much firmer ground.
Property rights are a universal right enshrined in the US Constitution and the United Nations Charter. Indeed, it is in search of just such rights that many of the world’s poor are motivated to cross borders into countries like the US.
For those living in the richest parts of the world, it is easy to take clear property rights for granted. But the reality is that only 2.3 billion people have the documents to protect and leverage their rights – including approximately one billion people living in Japan, Singapore, and the democratic West, and another billion in certain developing countries and former Soviet states.
Documentation is not just a bureaucratic stamp on a piece of paper. It is crucial to economic progress and inclusion. The reason the undocumented have an interest in being properly documented – whether they know it or not – is that clear property rights provide their owners and the things they own with a lot of additional value.
In the US or Europe, for example, a house not only serves as a shelter; it is also an address that can identify people for commercial, judicial, or civic purposes, and a reliable terminal for services, such as energy, water, sewage, or telephone lines. Documentation also allows assets to be used as financial instruments, providing their owners with access to credit and capital. If you want to take out a loan – whether you are a mining company in Colorado or a Greek shoemaker in New York – you must first pledge documented property in one form or another as a guarantee.
As I have shown elsewhere, the poor of the world are in possession of some $18 trillion of undocumented assets in real estate alone. But those assets will never attain their full value if they are not documented. As it stands, they cannot be used to raise capital. Nor can they be joined with other assets to create more complex and valuable holdings.
The lack of property rights also plays an important role in two areas of concern for both the pope and many US leaders: the turmoil in the Middle East and North Africa and the protection of the environment.
The Arab Spring, it should be recalled, began after a Tunisian street vendor set himself on fire as a protest against the arbitrary expropriation of his undocumented assets. And much of the anger that drove people to the streets, led countries to the point of collapse, and drove millions from their homes was motivated by a desire for clear rights, including those protecting property.
Similarly, property rights are critical to environmental protection. Without clear documentation, it is impossible for authorities to determine who is accountable for damaging natural resources or responsible for restoring local ecosystems. Updated records are also needed to adjust conservation strategies to the opportunities and threats that arise as industry expands into virgin territories.
In the headwaters of the Amazon River, for example, most of the 1,496 local communities cannot fix precise boundaries – using universal coordinates and enforceable property law – to the land in their possession. As a result, individual residents struggle to protect their assets, adapt to environmental threats, or respond to the challenges and opportunities of expanding globalization.
The fact that Francis is addressing the issue of documentation is important. It means the Vatican is not only asking why so few have so much, but also why so many have so little. By extending his compassion to those who lack property rights, the pope has an opportunity to do very much for very many.