The nature of modern imperialism
De Soto himself indicated that rural poverty can be attributed to change after World War II
Our Economic Past "The Origin of American Farm Subsidies" By Burton Folsom , J R . Read this article and learn about the beginnings of modern agricultural subsidies
http://www.fee.org/pdf/the-freeman/0604Folsom.pdf
"The Mystery of Capital: Why Capitalism" by Hernando De Soto
http://www.amazon.com/Mystery-Capital-Capitalism-Triumphs-Everywhere/dp/0465016146
These quotes are from the book the Mystery of Capital:
I remember watching a documentary (this was before the earthquake) about Haiti but I watched it a long time ago I don’t remember what it was called. One thing from that documentary that really stuck with me was that someone in the documentary said he was surprised Haitians are able to stay alive. It was the irony these people seem to be doing so badly but paradoxically they are also very resourceful. For people reading website I want to point out and place great emphasis on the damage that agricultural subsidies from the developed world have done and how this stems back to World War II and I will use De Soto’s book to prove my point. First lets take a quick look at entrepreneurs in Haiti and Senegal and then a look at the assets that Haitians own and the true reason they can’t make full use of their assets.
Page 89:
As Simon Fass wrote in the eloquent conclusion of his book about the economy of Haiti,
"These ordinary people are extraordinary in only one respect. Their incomes are very low, so low that one serious error of judgment or one unfortunate act of providence can often threaten survival of a household as a corporate entity, and sometimes also threaten survival of its members as corporeal entities. What is extraordinary is not so much povery itself, but rather the ability of these people to survive in spite of it… Nothing they do in this process is anything but a productive contribution to survival and growth, and the simple items they obtain have concrete functions as a factor inputs to the production process. "
Now to page 91 a look at Senegal:
In some countries, the extralegal sector is now at the very root of the social system. The people of Touba, Senegal, who can be seen hawking their wares on the sidewalks of New York and other big U.S. cities, are often part of a sophisticated Islamic-African sect that funnels millions of dollars of profits back to their home city. Newsweek describes touba as:
"A state within a state, largely exempt from Senegal’s laws,… [and] the country’s fastest growing city. Entire villages have relocated here, setting up tin shacks among the walled villas of the rich… The duty free city is the hub of Senegal’s transportation and real estate empires, the booming informal sector, and the peanut trade, the nation’s main source of foreign exchange.”
De Soto was trying to tell us that legal property rights will help these people succeed, but I believe much of the evidence that he gives tells another story. In other words the benefit I got from the book was contrary to the actual purpose of the book. The book also talks about the evolution of property rights and property rights in the United States and Great Brittan. The history of both of these nations also convinced me that the ignorance, corruption, and incompetence of leaders and the governments of developing nations cannot be the sole factor to attribute to the underdevelopment of these nations. In fact unimaginable amounts of land in America were improved upon and made productive by people who moved into the area without permission from the government and had no legal right to the land and were often at odds against the government. In both the United States and Great Brittan the government had to concede to the demands of the most productive people in society. If we accept the idea that developing countries today will have a developing process similar to that of the nations of Europe, then people must be productive improve the land and develop industry and then demand their rights from the government. De Sotto did show us that even the poor have accumulated savings, and that in the informal sector their rights are understood by their neighbors, this creates a problem with his overall thesis since the savings occurred in the first place before being formally recognized by the government
Page 5
“In Haiti, the poorest nation in Latin America, the total assets of the poor are more than one hundred fifty times greater than all the foreign investment received since Haiti’s independence from France in 1804. If the United States were to hike its foreign-aid budget to the level recommended by the United Nations - .07 percent of national income – it would take the richest country on earth more than 150 years to transfer to the world’s poor resources equal to those they already possess.“
In many places throughout the book he does say that the possessions of these people are recognized by a community that has their own ideas about property and a system they have for themselves, the people in these poor nations have understanding of property and as shown with the first quote I gave these people are also productive. They seem to have everything they need to demand their rights from the government and many want their enterprises to be formally recognized by the government. I do not have a perfect explanation why these governments have a difficult time legally recognizing these enterprises but here are some of the negatives of being outside the law
Page 196
“Property also provides a legal alternative to drug trafficking. As long as the farmers remain illegal landowners, short-term cash crops, like coca and opium poppies, remain their only alternative. For small farmers in some areas of the developing world, money advanced by drug traffickers is practically the only credit available, and because their property arrangements appear in no official system, law enforcement cannot even find them, never mind work out an enforceable crop-substitution agreement. This lack of legal protection also means that growers of drug crops have to band together to defend their assets or call on traffickers to defend them. Without a formal system that includes such landowners, controlling growers of drug crops, chasing drug traffickers, and identifying polluters of the environment becomes virtually impossible. There is no way for authorities to penetrate the tight extralegal arrangements the people create to protect their interests.”
That last quote might become popular with people who advocate legalizing marijuana but I strongly believe that the height of the drug trade today is because people are denied opportunities for other profitable activities. On page 80 De Sotto talks about mass migrations from rural areas to cities and urban growth in developing and formerly communist countries. He says that there was much incentive for workers to move to cities where they could double or triple their income. De Sotto also points out how governments struggled to cope with such large migrations and many governments in developing countries are trying to bar people from settling in cities as it leads to more problems in unemployment, this in part explains why the government doesn’t give legal recognition to many businesses. On page 80 he also talks about how there is agreement that migrations came about because of uncertain markets for traditional crops, this is why people are struggling to make incomes. This is also the reason for the widespread drug trade
It is true that such migrations happened in developed countries during the industrial revolution, however see the tab on this website about barriers to world trade to learn about how other jobs that can be done in cities are suppressed. Also see Afghanistan and the Taliban to learn about the common people are forced to rely on growing narcotics and giving large parts of their profits to thugs for protection, and how low prices has left Afghanistan’s agriculture vulnerable as farmers had low income, higher income would mean they could have invested more
Page 80
“There is also now fairly widespread agreement that agricultural crises in many countries were also decisive factors. The modernization of agriculture and the uncertain market for some traditional crops following World War II triggered massive layoffs of farm laborers on traditional estates and unleashed vast contingents of people prepared to search for new horizons”
I also want to add this so I'll add it to the end page 35:
By our calculations, the total value of the real estate held but not legally owned by the poor of the Third World and former communist nations is at least $9.3 Trillion (book has a chart on statistics from deferent continents)
This is a number worth pondering: $9.3 trillion is about twice as much as the total circulating U.S. money supply. It is very nearly as much as the total value of all the companies listed on the main stock exchanges of the world’s twenty most developed countries: New York, Tokyo, London, Frankfurt, Toronto, Paris, Milan, the NASDAQ, and a dozen others. It is more than twenty times the total direct foreign investment into all Third World and former communist countries in the ten years after 1989, forty-six times as much as all the World Bank loans of the past three decades, and ninety-three times as much as all the development assistance from all advanced countries to the Third World in the same period.
Page 34
In every country we have examined, the entrepreneurial ingenuity of the poor has created wealth on a vast scale-wealth that also constitutes by far the largest source of potential capital for development. These assets not only far exceed the holdings of the government, the local stock exchanges, and foreign direct investment; they are many times greater than all the aid from advanced nations and all the loans extended by the World Bank
Another interesting quote from the book, this one is about the common people in European history. This shows why it is the people, not the government, that brings progress, and Europe during these days is a lot like developing countries of today.
Page 99
People soon began noticing that the extralegal settlements were producing better goods and services than their legal competitors inside the bell jars. In 1588, a report to Lord Cecil, minister to Queen Elizabeth I, described the citizens of Halifax, one of the new extralegal settlements:
"They excel the rest in policy and industry, for the use of their trade and grounds and, after the rude and arrogant manner of their wild country; they surpass the rest in wisdom and wealth. They despise their old fashions if they can hear of a new, more commodious, rather affecting novelties than allied to old ceremonies…[They have] a natural ardency of new inventions annexed to an unyielding industry."
Extralegals also began building within the cities. In Germany, where it was necessary to pass a test and obtain legal approval in order to build, according to one historian, “whole districts could be found in which plenty of houses were being built, though there was no one in the district legally qualified to build them”
The extralegal’s numbers, persistence, and success began to undermine the very foundations of the mercantilist order. Whatever success they had, it was won in spite of the state, and they were bound to view the authorities as their enemies.
Our Economic Past "The Origin of American Farm Subsidies" By Burton Folsom , J R . Read this article and learn about the beginnings of modern agricultural subsidies
http://www.fee.org/pdf/the-freeman/0604Folsom.pdf
"The Mystery of Capital: Why Capitalism" by Hernando De Soto
http://www.amazon.com/Mystery-Capital-Capitalism-Triumphs-Everywhere/dp/0465016146
These quotes are from the book the Mystery of Capital:
I remember watching a documentary (this was before the earthquake) about Haiti but I watched it a long time ago I don’t remember what it was called. One thing from that documentary that really stuck with me was that someone in the documentary said he was surprised Haitians are able to stay alive. It was the irony these people seem to be doing so badly but paradoxically they are also very resourceful. For people reading website I want to point out and place great emphasis on the damage that agricultural subsidies from the developed world have done and how this stems back to World War II and I will use De Soto’s book to prove my point. First lets take a quick look at entrepreneurs in Haiti and Senegal and then a look at the assets that Haitians own and the true reason they can’t make full use of their assets.
Page 89:
As Simon Fass wrote in the eloquent conclusion of his book about the economy of Haiti,
"These ordinary people are extraordinary in only one respect. Their incomes are very low, so low that one serious error of judgment or one unfortunate act of providence can often threaten survival of a household as a corporate entity, and sometimes also threaten survival of its members as corporeal entities. What is extraordinary is not so much povery itself, but rather the ability of these people to survive in spite of it… Nothing they do in this process is anything but a productive contribution to survival and growth, and the simple items they obtain have concrete functions as a factor inputs to the production process. "
Now to page 91 a look at Senegal:
In some countries, the extralegal sector is now at the very root of the social system. The people of Touba, Senegal, who can be seen hawking their wares on the sidewalks of New York and other big U.S. cities, are often part of a sophisticated Islamic-African sect that funnels millions of dollars of profits back to their home city. Newsweek describes touba as:
"A state within a state, largely exempt from Senegal’s laws,… [and] the country’s fastest growing city. Entire villages have relocated here, setting up tin shacks among the walled villas of the rich… The duty free city is the hub of Senegal’s transportation and real estate empires, the booming informal sector, and the peanut trade, the nation’s main source of foreign exchange.”
De Soto was trying to tell us that legal property rights will help these people succeed, but I believe much of the evidence that he gives tells another story. In other words the benefit I got from the book was contrary to the actual purpose of the book. The book also talks about the evolution of property rights and property rights in the United States and Great Brittan. The history of both of these nations also convinced me that the ignorance, corruption, and incompetence of leaders and the governments of developing nations cannot be the sole factor to attribute to the underdevelopment of these nations. In fact unimaginable amounts of land in America were improved upon and made productive by people who moved into the area without permission from the government and had no legal right to the land and were often at odds against the government. In both the United States and Great Brittan the government had to concede to the demands of the most productive people in society. If we accept the idea that developing countries today will have a developing process similar to that of the nations of Europe, then people must be productive improve the land and develop industry and then demand their rights from the government. De Sotto did show us that even the poor have accumulated savings, and that in the informal sector their rights are understood by their neighbors, this creates a problem with his overall thesis since the savings occurred in the first place before being formally recognized by the government
Page 5
“In Haiti, the poorest nation in Latin America, the total assets of the poor are more than one hundred fifty times greater than all the foreign investment received since Haiti’s independence from France in 1804. If the United States were to hike its foreign-aid budget to the level recommended by the United Nations - .07 percent of national income – it would take the richest country on earth more than 150 years to transfer to the world’s poor resources equal to those they already possess.“
In many places throughout the book he does say that the possessions of these people are recognized by a community that has their own ideas about property and a system they have for themselves, the people in these poor nations have understanding of property and as shown with the first quote I gave these people are also productive. They seem to have everything they need to demand their rights from the government and many want their enterprises to be formally recognized by the government. I do not have a perfect explanation why these governments have a difficult time legally recognizing these enterprises but here are some of the negatives of being outside the law
Page 196
“Property also provides a legal alternative to drug trafficking. As long as the farmers remain illegal landowners, short-term cash crops, like coca and opium poppies, remain their only alternative. For small farmers in some areas of the developing world, money advanced by drug traffickers is practically the only credit available, and because their property arrangements appear in no official system, law enforcement cannot even find them, never mind work out an enforceable crop-substitution agreement. This lack of legal protection also means that growers of drug crops have to band together to defend their assets or call on traffickers to defend them. Without a formal system that includes such landowners, controlling growers of drug crops, chasing drug traffickers, and identifying polluters of the environment becomes virtually impossible. There is no way for authorities to penetrate the tight extralegal arrangements the people create to protect their interests.”
That last quote might become popular with people who advocate legalizing marijuana but I strongly believe that the height of the drug trade today is because people are denied opportunities for other profitable activities. On page 80 De Sotto talks about mass migrations from rural areas to cities and urban growth in developing and formerly communist countries. He says that there was much incentive for workers to move to cities where they could double or triple their income. De Sotto also points out how governments struggled to cope with such large migrations and many governments in developing countries are trying to bar people from settling in cities as it leads to more problems in unemployment, this in part explains why the government doesn’t give legal recognition to many businesses. On page 80 he also talks about how there is agreement that migrations came about because of uncertain markets for traditional crops, this is why people are struggling to make incomes. This is also the reason for the widespread drug trade
It is true that such migrations happened in developed countries during the industrial revolution, however see the tab on this website about barriers to world trade to learn about how other jobs that can be done in cities are suppressed. Also see Afghanistan and the Taliban to learn about the common people are forced to rely on growing narcotics and giving large parts of their profits to thugs for protection, and how low prices has left Afghanistan’s agriculture vulnerable as farmers had low income, higher income would mean they could have invested more
Page 80
“There is also now fairly widespread agreement that agricultural crises in many countries were also decisive factors. The modernization of agriculture and the uncertain market for some traditional crops following World War II triggered massive layoffs of farm laborers on traditional estates and unleashed vast contingents of people prepared to search for new horizons”
I also want to add this so I'll add it to the end page 35:
By our calculations, the total value of the real estate held but not legally owned by the poor of the Third World and former communist nations is at least $9.3 Trillion (book has a chart on statistics from deferent continents)
This is a number worth pondering: $9.3 trillion is about twice as much as the total circulating U.S. money supply. It is very nearly as much as the total value of all the companies listed on the main stock exchanges of the world’s twenty most developed countries: New York, Tokyo, London, Frankfurt, Toronto, Paris, Milan, the NASDAQ, and a dozen others. It is more than twenty times the total direct foreign investment into all Third World and former communist countries in the ten years after 1989, forty-six times as much as all the World Bank loans of the past three decades, and ninety-three times as much as all the development assistance from all advanced countries to the Third World in the same period.
Page 34
In every country we have examined, the entrepreneurial ingenuity of the poor has created wealth on a vast scale-wealth that also constitutes by far the largest source of potential capital for development. These assets not only far exceed the holdings of the government, the local stock exchanges, and foreign direct investment; they are many times greater than all the aid from advanced nations and all the loans extended by the World Bank
Another interesting quote from the book, this one is about the common people in European history. This shows why it is the people, not the government, that brings progress, and Europe during these days is a lot like developing countries of today.
Page 99
People soon began noticing that the extralegal settlements were producing better goods and services than their legal competitors inside the bell jars. In 1588, a report to Lord Cecil, minister to Queen Elizabeth I, described the citizens of Halifax, one of the new extralegal settlements:
"They excel the rest in policy and industry, for the use of their trade and grounds and, after the rude and arrogant manner of their wild country; they surpass the rest in wisdom and wealth. They despise their old fashions if they can hear of a new, more commodious, rather affecting novelties than allied to old ceremonies…[They have] a natural ardency of new inventions annexed to an unyielding industry."
Extralegals also began building within the cities. In Germany, where it was necessary to pass a test and obtain legal approval in order to build, according to one historian, “whole districts could be found in which plenty of houses were being built, though there was no one in the district legally qualified to build them”
The extralegal’s numbers, persistence, and success began to undermine the very foundations of the mercantilist order. Whatever success they had, it was won in spite of the state, and they were bound to view the authorities as their enemies.
