Property rights are human rights — Part II

This article is part two of a two-part series.

Teaching property rights here at home

Here in the United States, over 70% of all households are occupied by homeowners. Indeed, as Peruvian economist Hernando de Soto has reminded us, the U.S. built its wealth as a nation on the bedrock of home ownership and the right to start one�s own business. Sadly, for generations we denied these fundamental rights to certain segments of our population, and in so doing created an underclass that only recently has begun to move up the ladder.

Minority home ownership in the U.S. topped the 50% mark for the first time ever just over two years ago. Nationwide, African Americans lag far behind in business ownership, and the people who are here illegally may work for themselves, but cannot operate legal businesses, and thus also have little stake in protecting formal property rights.

We learned from Kelo that five members of the U.S. Supreme Court do not consider home ownership as a sacred, inalienable right for any class of Americans. They ruled that local governments can take away the lifework of ordinary citizens just because someone else has more money or knows how to pull political strings. This decision should serve as a wake up call and a rallying cry to take back our rights and teach them to our children. But we have to be sure that ALL Americans can access their inalienable right to property, or else our own hypocrisy will lead to the further erosion of our freedoms.

In the case of Jennifer Sims (mentioned in Part I of this article), for example, it is unlikely that now as homeowner she can be easily persuaded that the government is doing the right thing by taking away the only home she has ever owned, and selling her property to some land developer who wants to build a strip mall. But what about other Jennifer Sims who live, in say, public housing? Would they necessarily care if the government took YOUR home for the same reason? The answer, of course, is probably not.

Forty years ago, the underclass in America thought they were getting a great deal when the federal government paid off the slum lords who held title to the shacks they lived in and moved them into �public housing� in the name of �urban renewal.� Years after this noble experiment proved disastrous to the poor, those who opposed this badly managed program were reticent to tackle the issue for fear of being branded racists. Nowadays, fortunately, federal programs are increasingly focused on helping people own their own homes, and minority home ownership in particular has been increasing steadily in the U.S. ever since the 1990’s. In the last six years alone, Washington has unveiled a host of beneficial new programs that promote an �ownership society� and these have produced even stronger results for home ownership and minority business startups. The President�s proposed 2008 budget for the Department of Housing and Urban Development further bolsters programs that make it easier � and more secure � for families to become first-time homeowners and to manage their assets so they will not lose those homes.

Others, too, are promoting home ownership. Most people are familiar, for example, with the hugely popular Habitat for Humanity. But another fine example is the Genesis Project, in which the Virginia Housing Development Authority is sponsoring a faith-based and community education initiative to provide free home ownership training and education � including counseling on how to qualify for loans — at Baptist churches in major Virginia cities.

This small-scale program is having great success, as is another program in Albany, New York, in which six educational institutions have provided $300,000 to cover down payments for employed people who want to buy a home in the city�s midtown area where only 25% of houses are owner-occupied. Those who keep their homes for 5 years do not have to repay the down-payment loans. Even better � twice as many new home buyers did not need these loans to qualify for mortgages being financed by a local bank.

But merely enabling people to purchase and maintain homes is not enough � we have to make sure our nation understands that property ownership is not just �good,� but is fundamental to ensuring a robust economy and a free society for future generations.

Teaching property rights around the world

Teaching people the benefits of property rights � and helping people become property owners � should also be an important part of American foreign policy as well. Consider, for example, the 12 to 20 million people � nearly all of whom are non-property owners in their native lands � who have crossed our borders unlawfully in search of a better life.

One reason for the out-migration from Mexico, in particular, may well be international policy that has favored collectivism. In 1995 two World Bank employees, Janis Alcorn and Victor Toledo, presented a paper before the International Association for the Study of the Commons, which touted Mexico�s ejidos and communidads. Alcorn and Toledo were especially pleased that these �tenurial systems� provided barriers to investment or development that might negatively impact �ecological sustainability.� Reading between the lines, Alcorn and Toledo were saying that when individuals own their land they are freer to be polluters, and thus that commonism (sic) provides the best protection for the environment.

Under terms of the 1917 Constitution, the ejido system entitled peasants with �access to� (but not ownership of) resources previously held by the rich, while communidads were preexisting corporate entities allowed to retain their rights if they could demonstrate prior, longstanding community-based use of those resources.

From 1917 on, the Mexican government placed heavy emphasis on creating ejidos rather than on building a system of private ownership that might provide upward economic mobility for those more motivated and willing to work. In 1991, President Salinas began opening up ejido lands for rental and sale to private investors so as to promote greater foreign involvement in the agricultural sector � but still not allowing individual Mexicans to gain legal title to any of these properties. As of 1995, nearly 60% of Mexico�s land � and up to 80% of its forest land � was still held by ejidos or communidads.

Even today, much of Mexico�s land is not protected by any formal legal documentation. There is no legal authority that would enable entrepreneurs to capture investment on their property. Or as Hernando de Soto has said, �There�s no lack of money in Latin America. The problem is it�s worthless� because property titles cannot be converted into an instrument to be used as collateral for credit, as a share or for equity for investment.

Just in the past few years Mexico has taken baby steps toward freedom, but the country scored just a 3.9 on a scale of 10 under �legal structure and security of property rights� in the 2003 survey by the Canadian think tank The Fraser Institute. The World Bank Group ranked Mexico No. 100 out of 155 countries in enforcing contracts and a sorry No. 125 in protecting investors (No. 68 in getting credit and No. 74 in registering property).

The Bank also said it takes an average of 74 days to register property in Mexico � over twice as long in countries who are members of the Organization for Economic Cooperation and Development. And that�s if you own it outright. De Soto in 2002 said it was taking 24 months to create a mortgage in Mexico and 43 months to foreclose on a mortgage (no wonder banks will not lend money to homeowners). But then obtaining legal access for running a business that can have shareholders (such as a limited liability corporation) was taking up to 17 months and 126 contacts with government officials.

Reforms have been slow in coming, though President Fox did liberalize some aspects of mortgage financing requirements; President Calderon has promised even more reforms that are emerging from collaborative efforts with Dr. De Soto. In the meantime, business investment is stagnant and unemployment continues to rise � conditions that make it all the easier for people to violate the law and risk their very lives to flee to a nation where even as illegal immigrants they can enjoy the blessings of liberty and property. And that�s where the rubber meets the road for America�s property rights movement.

Meanwhile, even the Chinese government has taken the first steps toward creating a property rights system despite opposition from socialist intellectuals and old-line Communists. As Philip Levy points out, though, China has for years been developing an informal system of property rights even in the absence of a legal foundation. Much the same was true in early America, as Hernando de Soto documented in his seminal work, The Mystery of Capital.

Levy also acknowledges that how well China�s property rights law will work in practice is dependent upon a court system that functions as an administrative arm of the government and judges who are all members of the Chinese Communist Party. But is this not also true to some extent here at home? That is, if we allow the current trend toward a politicized judiciary to continue in the United States, how long will it be before all of our freedoms go up in smoke?

But what happens if we take up the challenge to preach the message of �property rights as fundamental human rights� which every nation that claims to be a government of the people, by the people, and for the people must both acknowledge and foster? What if we inspire our children � especially those most prone to activism for human rights and other causes � to champion property ownership worldwide (and at home as well)? What if we help build the foundation for a stronger economy built on property ownership in those nations that today are sending us their poor, their landless, their unwanted?

Teaching property responsibility, too!

Finally, any commentary about property RIGHTS would be incomplete without bringing up the subject of property RESPONSIBILITY � that is, making sure we do not exercise our property rights in ways that damage other people, their property, or the flora and fauna around us. Responsibility may also include using our property in ways that benefit others � especially when others around us are in need.

There is no need here to go into any long list of property responsibilities � most folks know what is right and wrong. But when people go unpunished for misusing their property in ways that cause harm to others, they are opening the door for widespread resentment against all property ownership. . .and a disrespect for the principles of freedom that have always carried with them implied or explicit caveats. You don�t let runoff from your land poison your neighbor�s land or water or livestock � you don�t play loud music late at night when your neighbor is trying to sleep. . .and on and on. It is the abuses of rights, often by a very few, that give the enemies of property ownership all kinds of opportunity to restrict freedoms, and so we must treat our freedom with the responsibility it carries with it.

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About the Author: CFACT

CFACT defends the environment and human welfare through facts, news, and analysis.