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Monday, November 30, 2015

Free Market Groups Putting Property Principles into Action

The right to property is making a comeback

When I told a friend some years ago that I was going to be working in a think tank, he replied, “Huh. I always wondered who cleaned those out.”

Not a surprising reaction. Think tanks are often perceived as being removed from everyday realities. Yet sometimes think tanks can change people’s lives in significant ways.

At the Atlas Network’s Liberty Forum in New York, three think tanks from developing countries showed just how important their work is — not only developing ideas, but putting them in practice as well. All three organizations are working on the issue of property rights and land titling (which I wrote about in my previous column, “World’s Poor: We Want Capitalism). They are helping tenants become property owners, bringing wealth to some of the world’s poorest people as a result.

In South Africa, the Free Market Foundation (FMF) is helping to right the wrongs of the Apartheid era. When South Africa became a self-governing British Dominion in 1910, one of its first acts was the Native Lands Act of 1913, which sought to restrict native land ownership to reservations covering just 13 percent of the country.

White farmers, helped by government subsidies to buy machinery, evicted African sharecroppers. Lacking enough land to farm in the reservations, the evicted laborers sought work in towns. The Apartheid system forced them to live in townships, renting property from townships allocated along racial lines.

The FMF’s Khaya Lam (“My House”) project is working to end this injustice. The Foundation worked with sponsoring banks, entrepreneurs, and municipal authorities to identify registered tenants and convert their leaseholds into fully-fledged freeholds. The significance of holding a title deed is not lost on the new property owners. As FMF Director Eustace Davie wrote in April:

Matroos Ratole (97) … became a landowner in his own right for the first time in his life. A truly magnificent moment.

Julia Koloti (87) wept for joy as she received her title deed. Even hardened members of the media had tears in their eyes as they observed the presentation…

Ngwathe Mayor Ms Joey Mochela spoke about how the positive partnership with the FMF is bringing benefits to local residents and of the enthusiasm that this initiative is generating in the community. She told the recipients of title deeds that they were not receiving a gift, they were receiving a title deed to a property that was rightfully theirs.

In India, a similar process is happening in the forests, once again righting a colonial-era wrong. The British Raj nationalized the forests, making them property of the Crown. Upon independence, ownership of the forest passed to the new Indian government. Yet tribal peoples continue to work those lands as they had for centuries.

Now India’s Liberty Institute is working with those forest inhabitants to reestablish their long-lost ownership rights, under a law passed in 2006. However, unlike South Africa, the records of who has been using the land are much less comprehensive in India, which has made allocation difficult and a potential source of conflict.

Technology to the rescue! According to the law, you need to establish use of the land as of the end of 2005 to be granted title. The Liberty Institute has worked with villagers to use GPS devices (most villagers have smartphones, according to the Institute’s Barun Mitra) to plot their land ownership claims. Archival Google Earth maps are then used to validate those claims and to resolve disputes.

India had recognized a constitutional right to property in its initial constitution in 1950, but this was deleted by the socialist government in 1978. As Barun Mitra says:

The spread of land related protests, particularly by the poor, over the last two decades, and the growing intensity of such protests in the past decade, seems to indicate that the people may be beginning to realise the economic and political value underlying the idea of property rights.

If this is true, then not only property rights will find wider recognition, but democracy itself will emerge stronger, with citizens asserting their rights more forcefully.

Finally, in Honduras, the think tank Eleutera is tackling related problems. There, the problem is not so much a legacy of racism, or of a lack of records, but a kleptocratic governing class. Property records have been kept, but many have been stolen by government officials. Therefore, Eleutera is working to resolve disputes caused by this registry regime and replace it with a new technological system that solves the problem of lack of trust caused by rampant corruption.

The new system will be based on the blockchain, the distributed public ledger used to validate bitcoin transactions. As Guillermo Pena, Executive Director of Eleutera, notes in the Central American edition of Economic Freedom of the World 2015:

The blockchain platform is renowned for its resistance to manipulation, because it doesn’t depend on any one person or specific entity, and for being publicly accessible to everyone.

By solving the problem of trust, the new system can swiflty eliminate one of the largest sources of corruption in Honduras.

These three think tanks demonstrate that their activities go well beyond producing  quasi-academic white papers. Not only are they helping to unlock wealth, they are introducing reforms that make their countries more honest, more democratic, and yes, more equal.

Now if you’ll excuse me, I have some cleaning to do.

  • Iain Murray is the Competitive Enterprise Institute's vice president of strategy. For the past decade with the Institute, he has concentrated on financial regulation, employment and immigration regulation and free market environmentalism.

    Murray has published several acclaimed books, including Stealing You Blind: How Government Fatcats Are Getting Rich Off of You and The Really Inconvenient Truths: Seven Environmental Catastrophes Liberals Won’t Tell You About – Because They Helped Cause Them. His op-eds have appeared in The National Review, The Providence Journal and Fox News. He has appeared on Fox News, CNN Headline News, the BBC and Al-Jazeera, among other broadcast networks.

    In addition to his work at CEI, Murray is the visiting fellow at the Adam Smith Institute and board members of the Cherish Freedom Trust and American Friends of the Taxpayers Alliance and advisory board members of Global Britain and Young Britons Foundation.

    Prior to coming to CEI in 2003, Murray was the Director of Research for the Statistical Assessment Service and an Executive Officer in HM Department of Transport. He received his MBA from the University of London and his MA from the University of Oxford.