Property Ownership in the Third World -- Breaking the Poverty Vortex
by Brian Risman, Publisher and Founder, The Law Journal UK and Consultant in International Law
The key to improving the situation in the Third World is not the well meaning efforts of Bob Geldof and Bono of U-2 -- or those of aid agencies and NGOs such as CARE, Oxfam or World Vision. Rather, the Third World needs legal reform to create individual wealth and power. That legal reform must start with establishing legal property ownership by individuals in these countries. It is clear from other Third World examples that legal property ownership lifts nations out of poverty.
We need solutions – and new approaches -- to the problem of Third World poverty.
For fifty years, Third World countries – particularly in Africa – have failed to progress, to develop, to improve the lives of their people.
Aid agencies and NGOs do an admirable job of feeding the hungry. Organisations such as CARE, Oxfam and World Vision are to be commended for their work.
Rock stars such as Bob Geldof and Bono of U-2 likewise raise the profile of the problems to the public and world leaders.
Yet nothing changes.
Let us look at the root causes of the poverty.
Third World countries achieved independence from their colonial masters in the post-World War 2 period.
However, these new nations, even if provided with Parliaments similar to the old colonial power, did not emulate the best parts of the colonial power’s society back home.
Instead, they followed the worst practices of the colonial masters administering the colony. The leaders pillaged the resources – and the people -- for their own benefit. The characteristic of Imperial Powers – stripping the resources of the nations they subjugated – simply continued under the new native leaders.
Inevitably, these leaders were overthrown with the promise of improvements. But, the financial attractions proved too much for these new leaders, who simply continued the destruction. Rebel leaders were no better – they did the same in their areas of control.
It made little difference whether these countries allied themselves in the Cold War with the US or the USSR (or China). If they allied themselves with the US, the American multi-national corporations gained. If they allied themselves with the Communist powers, the resulting centralized power structure benefited only the ‘vanguard of the proletariat’, namely the members of the party elite.
Now back to the present. No progress is being made despite all the rock concerts held worldwide. No progress is being made despite the heart-wrenching Christmas appeals by the aid agencies.
How can the problems of the Third World be solved?
The key to solving the problem is to look at third world countries which have succeeded – and moreover, why they are succeeding. Let us look at Japan, China, and India.
Few think of Japan as a Third World country, because it has been successful for such a long time. At the end of World War 2, defeated, destroyed, and possessing an ancient feudal system, Japan hardly looked to be a future success story. Japan looked to rebuild itself in a fresh start. The feudal system was replaced by property ownership, and seeing that they had a stake in the new Japan, the citizenry worked to build a successful nation. By the Tokyo Olympics of 1964 – just 19 years after their defeat – the new Japan showed itself to the world. The Japanese Yen is a major world currency, and despite a decade-long economic recession, Japan remains a world power in the G-8.
China was even more backward than Japan at its worst. At the time of Mao’s death, the nation was hardly a world leader. Yet it was not long until a new leadership emerged to change the nation. Despite its official Communist orientation, private ownership was allowed. The changes had their effect – China started to develop. Incomes improved, as did the standard of living. Yet China is still held back by the Communist system. The rural areas are still incredibly backward, and the lack of environmental protection threatens the economic success. No one, especially since the massacre of Tiananmen Square, is allowed to dissent. Hence you have economic prosperity due to private ownership, but no ability of the emerging commercial class to make changes, to protest, to improve problems such as the environmental abuses. The irony is that the Communist leaders do not secure their leadership by stifling dissent – they in fact weaken their nation and their power by allowing the problems to fester. The New China, the leader of the future, may in fact not occur due to a lack of follow-through on economic reforms such as property ownership, with improvements in the quality of life of their people.
India likewise has engaged in economic reform, and is developing into an economic power. Private ownership exists, and moreover exists in a democracy. People have a say. India, however, did have periods of backwardness, largely due to authoritarian style rule (under a democratic façade) in the past. Once that rule was shaken off, the nation grew and prospered. It is interesting that India, with many ethnic groups and religions – and flare-ups of strife along those lines -- is able to adopt the best of the economic and political reforms, and allow growth.
What is the lesson for the rest of the Third World?
As with the three countries discussed above, the route to improvement is legal and economic reform by means of property ownership. Moreover, that economic reform must be coupled with political reform to allow the people, and particularly the emergent commercial class, to share in the power. By sharing the power, government leaders do not weaken their position – they in fact enhance it, since the seeds of protest for improvements are far less volatile than the seeds of stifled revolution. The Romanov Czars in Russia refused to accept democratic and social reforms – and they were gone.
Though the Third World does not need to follow Western examples (hence the use above of cases from the Third World), it is instructive to examine how – and why – Europe emerged from the dark ages many centuries ago. Legal changes in the economic structure, allowing commercial transactions including property ownership, encouraged the emergence of a commercial class that demanded change – both political and social – resulting in the Renaissance.
The first step in the legal and economic reform is the key. That step is the implementation of property ownership rights. The prosperity of people in Western nations is largely due to their legal ownership of their homes, their personal property. Even if a person is an employee in a company, the fact that they own their own home creates wealth. Wealth, in turn, creates power. Power, in turn, creates change and improvements.
In many Third World countries, on the other hand, there is no legal ownership of homes, creating wealth. Hence people gain no economic value from their homes, and poverty continues.
Land is the oldest basis of wealth, and that has not really changed. Hence if land is given value by registering ownership of homes, people gain economic wealth and strength.
There have been many calls for land reform in the Third World in the past. Large landowners grew wealthy, and the people stayed poor. Yet many landowners have seen that system collapse, because they could not reconcile themselves to the reality that a wealthy populace brings strength, and poverty brings revolution.
Worse, many land reforms are simply seizures by the government or their army without any regard to improving the economic and political system. That brings up the other problem – not just landowners, but authoritarian governments that resemble gangs. These governments refuse to allow proper land reform, since a wealthy population could destroy their rule – or so they think.
What is needed is a change of mindset – namely that power does not come from a gun, but by making your citizenry individually wealthy with a legal system allowing registration of land ownership. As people see their wealth grow, support for the nation and its leaders can grow as well.
Brian Risman, Publisher and Founder, The Law Journal UK and Consultant in International Law
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