Coffee House

Any questions for Hernando de Soto?

20 March 2013

As we wait for the Budget, I’d like to draw CoffeeHousers’ attention to a talk being given to the RSA tomorrow by one of my heroes, Hernando de Soto. Much rot is spoken about how to help the poor and his books, the Mystery of Capital and The Other Path – make some hugely important and fairly basic points. You need to look at capital: the right to own, and (from that) the ability to borrow. If a country has not enforced property rights, then it will never be properly pulled out of poverty because its people have no means to accumulate capital. Wealth creation depends on this microfinance, not handouts. Grant people these basic, and miracles can happen. But as things stand:-

“The existence of such massive exclusion generates two parallel economies, legal and extra legal. An elite minority enjoys the economic benefits of the law and globalization, while the majority of entrepreneurs are stuck in poverty, where their assets –adding up to more than US$ 10 trillion worldwide– languish as dead capital in the shadows of the law’

More recently, he has spoken about the Arab Spring and how the West is getting it wrong. It was a protest, he says, of traders demanding the basic tools of capitalism.

 Recall the catalyst of what became the Arab Spring: the self-immolation in January 2011 of Mohamed Bouazizi, a Tunisian fruit vendor protesting the expropriation of his merchandise…. It wasn’t unique. We found that at least 63 more men and women—in Tunisia and also in Algeria, Egypt, Morocco, Saudi Arabia, Syria and Yemen—followed Bouazizi’s example within 60 days of his death. That was the critical period during which governments were toppled or dramatically shaken. Does the West get it? The opportunity cost of misinterpreting the causes behind the continuing instability is huge.

I’ll be interviewing him on Friday, and I’d gladly put to him any questions from CoffeeHousers. Or you can come along to his talk at the RSA (it’s free) and ask him directly.

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  • anotherdayoflife

    Well, did you ask?

  • BuBBleBus

    One of the things I recall about HdS was his linking the collapse
    of the banks in the West 2008 with how the West lost sight of the importance of
    property rights, as in the scrupulous recording of what belonged to whom. In
    the market for credit default swaps, investors lost sight of who owned what, it
    was not written down. How does he think the West is coping since, situation
    worsening, or is a recovery on the horizon? Also, regarding the Institute for
    Liberty and Democracy, putting the hype to one side, what are the main obstacles
    to achieving more and faster progress?

  • anotherdayoflife

    How much does this champion of the poor charge to speak at investor conferences and what class of air travel does he demand? Transparency please.

  • Tim


  • Daniel Maris

    Really, that is most amusing…

    A. There isn’t a country in the world that doesn’t try to regulate street trading. If you don’t, you end up with vulnerable children on the streets trading, noxious goods being sold and legitimate tax-paying retail sector being undermined.

    B. The Arab Spring started because the male trader was offended and ashamed that the inspector taking him off the street for his illegal trading was a woman. No doubt there are lots of causes behind that as well, but that was the proximate cause.

    C. I would agree that legally enforced individual property rights are important but equally, the poor are put at risk if those property rights entrench feudal or oligarchic structures – as in Afghanistan, Pakistan and elsewhere. Land reform is often a key factor in lifting people out of poverty.

    • HookesLaw

      Perhaps Nelson is suggesting we should air drop videos of Only Fools and Horses onto the Arabs.

  • Reconstruct

    You’ve got the wrong de Soto. The chap who should be your hero is the Austrian-influenced Jesus Huerta de Soto, because of his book ‘Money, Bank Credit and Economic Cycles.’ I earnestly suggest people read this a) to discover what a bank deposit is and b) to understand the spectacular history of commercial bank disasters.

    I think that it will be readily seen that commercial banks are an unnecessary and extremely dangerous anachronism, and that the sooner they are replaced by universally-distributed money market mutuals, the better for all of us.

  • HookesLaw

    Where in de Soto’s quote does he say the west are getting it wrong? He warns against getting it wrong.
    Where is the evidence that the West do not understand the causes of the ‘Arab Spring’?
    What is there that the West can do when it comes to telling other countries what to do? What do you (thats you Mr Nelson) suggest the West should do?
    How easy is it to truncate hundreds of years of Western history and political social and economic evolution into a few months?

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