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Hernando de Soto’s talk at UC Berkeley January 29, 2010

Posted by jasonized in event, ucberkeley.
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The Shining Path had cache because it protected to property rights of poor people in Peru—gave people a sense of security to their tenure

  • In cities then, 65% of people had control of land but no title
  • At the same time, a lot of people didn’t have business rights either—and so, a lot of liability

There were questions whether poor people in Peru even had beliefs in conventional land ownership

  • Turned out that communities had local knowledge and records of who owned what—so it wasn’t that people didn’t believe in formal conventions of land ownership

Formal titling destroyed Shining Path’s business—was an antiterror strategy at its heart

A lot of governments don’t know who is who, how many people there are, what assets they have

In the US in the 19th century, property title standardization occurred in resolving competing claims in California gold rush

  • Was a major push for changing legal title structures
  • At the same time, US law allowed creation of LLCs without acts of Congress—so that people could access business rights standard

How we understand facts—which are constructed by the human mind

  • Semiotics, signs and signaling
  • “Things in relationship to things” –Wittgenstein

Property identifies things in context

  • It’s not about private or communal, it’s about IDENTITY—about clarifying relationships
  • And that provides security

The West has learned to document according to law

  • Authentication according to protocol, standards
  • It is a “fact system”
  • “We don’t want to take away people’s customs or rights, we want them to be included and fit into the standard”

This is about helping governments “know facts”

  • 70% of assets in Peru are unrecorded
  • Land is the only thing that doesn’t move—so that’s where you start, where you can begin to nail down facts

“You need rule of law to make an economy work!”

  • I think he’s talking about identification more than anything else…
  • Ultimately, about the rationalization of life…

The US Financial Crisis is about a lack of identification

  • Derivatives are securities without identity—no one knew who had what, how much of it there was
  • Moreover, opaqueness in mark-to-market…
  • Shadowiness led to shadowiness and voila!—you’re in the shadow economies of the third world again

ú   At the heart of the crisis was a lack of facts

ú   Uncertainty/lack of info threatened the entire system

  • “You can forget how you create wealth”
  • Just as a great musician can not know how to reproduce an excellent performance

Extralegal areas will get destroyed—take the Amazon

  • Indigenous rights have never been recorded—this is WW3

“It’s not that I believe in private property, it’s that behind the law is the DNA of today’s civilization system”

Corruption is only corruption if you know that it is—not if it’s tradition, if it’s how things are done


  • I only know Peru
  • Participation is a key part of any regime
  • Mechanisms for the poor telling us what they want in the titling system
  • This is key, this is bottom-up
  • Recording only works if people decide to record themselves again
  • That’s the feedback on whether or not people want the system
  • Just accepting titles is not enough—that’s not a sign that this is working

Concerns about control/totalitarianism? Doesn’t this conception of law/property/identity require you to depend on the good intentions of the central authority, the power behind the law?

  • That’s where formalization programs will fail—when people don’t want to be recorded, when they don’t trust their goverments
  • In Peru, that’s why we established an ombudsman, a referendum process, administrative simplification to allow newspaper editorializing
  • It’s not about one thing at a time—you got to handle a lot at once to give people confidence in the system

Indigenous people

  • The rule of law is a very hard thing to get across, especially to non-literate societies
  • You approach people and tell them the paper will be the authority, not the memory of others
  • You don’t need to hold these large events to celebrate things so that people remember…
  • And then you tell people that government is what makes law—what makes those pieces of paper
  • And that’s when people get into democracy

In a lot of places, formalization processes take years and years

  • The law is not sensitive to their needs
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