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Most poor people in Africa don't own their house...
by Nomad (Bjinse) on Mon Apr 6th, 2009 at 09:24:04 AM EST
[ Parent ]
The argument, roughly, is this
Indeed, if one adds up the estimated value of real estate held by "the poor" in these countries, the total value comes to something in the neighborhood of $9.3 billion. The only problem is that most of this wealth is not in the form of legal titles to property; instead, these are "informal" ownerships not recognized or enforced by the political authorities in these parts of the world.


The heart of de Soto's argument is that under this informal system, a vast amount of private wealth exists as "dead capital." Without legal title to real property -- residential homes, retail businesses, factories, apartment buildings -- the informal owners are unable to tap into either the national or global financial markets. Normal loans or lines of credit with real property as the collateral are difficult to acquire.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Carrie (migeru at eurotrib dot com) on Mon Apr 6th, 2009 at 09:28:08 AM EST
[ Parent ]
So we can bitch and moan about the inequalities and pitfalls of the current (debt-based) financial system or try to make it more fair, most poor people don't even have access to neither the system nor to mortgages despite informal wealth.

Hence the argument (brough up in De's comment in the diary you linked to) doesn't hold whatsoever (and I have my doubt that it is De Soto's). Many poor people don't own their homes at all. There are no available property rights to the "informal wealth" that enable people taking mortgages. We don't know if people would like to take mortgages - they generally can't.

by Nomad (Bjinse) on Mon Apr 6th, 2009 at 10:31:22 AM EST
[ Parent ]
While a home held by traditional tenure and not recognized by more recent legal systems might be considered "dead capital" it still provides shelter and the likelihood that it will continue to do so is higher if it remains "dead" than if the owner is granted a legal title AND THEN obtains a mortgage.  Granting everyone titles to a former commons interspersed with cottages has usually been a prelude to the great majority of those titles falling into the hands of a few individuals who then enclose that commons to the detriment of the previous occupants.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 8th, 2009 at 01:23:32 PM EST
[ Parent ]


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