Pope Francis and Economist Hernando de Soto Agree on One Thing: Free the Poor by Protecting Their Property Rights

By John Zmirak Published on February 17, 2016

Pope Francis’ visit to Mexico is yielding headlines around the world, as he rebukes clergy who are tied to wealthy Catholics, and endorses the use of indigenous Indian customs and languages in church devotions. Given this pope’s mode of expressing the timeless concern that popes have shown for the poor, it is no surprise that he has spoken out forcefully on the centuries-old inequities in Mexico.

Mexico is a country where since the Spanish conquest, full-blooded Indians have suffered discrimination at the hands of those with Spanish and partly Spanish blood. Compare Mexican news broadcasts to the general population, and you might be forgiven for thinking that every blue-eyed, light-skinned person in the country is a television journalist. Indian lands, which had been protected for centuries by the Catholic Church, were seized again and again under the pretext of “secularizing” the country’s wealth, almost always to the benefit of Spanish-descended elites. The pope spoke before crowds of Mexico’s disenfranchised indios, who provide many of the immigrants drawn to enter the U.S. illegally.

According to Vatican Radio, Pope Francis told them:

You have much to teach us. Your peoples, as the bishops of Latin America have recognized, know how to interact harmoniously with nature, which they respect as a “source of food, a common home and an altar of human sharing” (Aparecida, 472).

And yet, on many occasions, in a systematic and organized way, your people have been misunderstood and excluded from society. Some have considered your values, culture and traditions to be inferior. Others, intoxicated by power, money and market trends, have stolen your lands or contaminated them. How sad this is! How worthwhile it would be for each of us to examine our conscience and learn to say, “Forgive me!” Today’s world, ravaged as it is by a throwaway culture, needs you!

In a moment that will resonate even with Americans who, like Donald Trump, are critical of the pope for inserting himself in the U.S. immigration debate, Pope Francis urged Mexicans to make their own country more fair and livable, so that fewer people would be driven to leave. As the Tablet reports:

Pope Francis addressed the entrenched issues of corruption and exploitation in Mexico yesterday (14 February) at a Mass in Ecatepec, one of the country’s poorest and most dangerous cities.

After the open air Mass attended by 300,000, the Pope urged the faithful to step up and work together to “make this blessed land of Mexico a land of opportunities.”

It should be a country where, he said, there is “no need to emigrate in order to dream, no need to be exploited in order to work, no need to make the despair and poverty of many the opportunism of a few.” He went on to denigrate drug traffickers, whom he called “the dealers of death” that destroy lives.

One of the most astute scholars of poverty in the world is Peruvian economist Hernando de Soto, whose ground-breaking work, The Mystery of Capital, exposes the mechanisms by which poor people are excluded from property rights and free exchange in the market economy. De Soto responded to Pope Francis’ call for an economy of inclusion by drawing attention to the conclusions of his own decades of research across many developing countries:

The absence of rights is a problem that is neither unique to the U.S. 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.

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.

Along these lines, I wrote, in an upcoming essay for Australia’s Quadrant magazine:

The answer de Soto offers is not one that appeals to revolutionaries. … Citizens of such countries must make a careful, determined effort to fundamentally reform their laws and policies to recognize the property rights of the poor, and allow them full access to the national and global economy. That doesn’t sound sexy, and you won’t see college students sporting t-shirts with icons of Dr. de Soto. But it’s the only approach that will work.

More radical efforts that offer greater ethical “uplift” have been tried many times and failed, from Peron’s Argentina to Castro’s Cuba and Chavez’s Venezuela. Rather than doggedly working to extend the blessings of private property rights to the poorest people in such nations, impatient leftists and romantic Christians with a distorted conception of “social justice” have attacked private property itself, agglomerating more wealth and power in the hands of the few — those backed by the guns and jails of the State. Instead of extending protection to the work and wealth of the many, as de Soto advised, these regimes have wrecked the middle classes and crippled private enterprise, sharing not wealth but misery more even-handedly.

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