Property and Prosperity

Here's this week's offering from Cool Friend Sally Helgesen. We hope to start a lively discussion with Sally's observation, below:

I am a major fan of Hernando De Soto, the Peruvian economist and author of The Mystery of Capital. De Soto's extensive research leads him to believe that poor countries are poor primarily because their laws do not permit ordinary people to have clear title to private property or predictable control over how that property can be used. There's no title insurance, so ownership is always under threat of dispute, and no one can get a mortgage based on a murky title. As a result, working and middle class people can't increase their wealth in the way they have traditionally done in the US—by owning their homes and businesses. Instead, most property is owned provisionally or even illegally, which means that large numbers of people live off the grid, escaping taxes and pilfering their utilities. Meanwhile, government officials and their cronies have an easy time gaining access to properties they believe are desirable (see Zimbabwe!).

I've thought a lot about De Soto in the last week because a few news items make me wonder if we in the US are seeing the traditional source of wealth for ordinary people—clear title to their own property—being chipped away. First, there was the Supreme Court decision that the town of New London, Connecticut, could use its power of eminent domain to condemn 89 owner-occupied houses standing in the way of a private developer's plan (NYT, 6/24). In her dissent, Sandra Day O'Connor warned that this decision meant that no one's property was safe from any government authority that decided the land could be more economically used or exploited by another private owner.

Next came a disturbing piece about Airmont, New York, a rural upstate New York village in which an Orthodox congregation is trying to build a yeshiva, an adult housing complex, and a huge dormitory in the middle of a quiet residential neighborhood that is zoned to remain so (NYT, 6/26). The case does not entail seizing property, but rather brings to light a bizarre law that Congress quietly passed in 2000, which gives any religious organization in the US the right to circumvent local zoning or development statutes on the theory that this is somehow necessary to protect religious liberty. So even if your community is zoned to protect against big box stores, any religious group could build an equivalent structure because the new federal law trumps local ordinances. This law does not put peoples' titles into jeopardy, but certainly undermines their ability to protect their property's value if some religious group has other plans for the neighborhood.

Finally, of course, there is the news that the current administration in Washington is increasing the dispersal of drilling rights to gas 10-fold on private property in the Mountain West (NYT, 6/22). Under the Homesteading Act, the government retained mineral rights to huge swaths of private land. Now, the government is auctioning off the leases at top speed, so both local ranchers and people buying dream ranchettes in pristine Colorado or Wyoming are waking up to gas companies setting up shop on their land, destroying its value and their security—along with their cattle and peace of mind.

All of these cases straddle the conservative/liberal divide. That's one thing that makes them interesting and important. If you follow De Soto, you may be persuaded that clear title to property and the ability to exert controls on how your property is developed and disposed is the root and foundation of the prosperity and security and democracy we have enjoyed in the US. Are we undermining that? Is the whine of the kamikazi being heard in the land?

Seth Godin posted this on June 28, 2005, in News.
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