Epic neo-liberal propaganda fail.

From the BBC:

Could giving property rights to the world’s poor unlock trillions?

They are not talking about ‘property’ in the legal sense, they are using it as shorthand for ‘land’. And no, all that would happen – as the article makes clear – is that banks will tap in to the rental value of land via loans. That’s one of the reasons why the Homeys hate council housing – the banks can’t earn anything from it.

In 1970s China, for example, where the Maoists weren’t the rebels but the government, the very idea that anyone could own anything was seditious, bourgeois thinking. Farmers on collective farms were told by Communist Party officials that they didn’t own a thing. Everything belonged to the collective…

The experience in China shows that even informal property rights can be incredibly powerful. If you know your neighbours respect your boundaries, you can feel confident investing time in weeding your vegetable plot, or building a house.

Bullshit. This has bugger all to do with land ownership, it has to do with ownership of the food produced (true private property, or reward for initiative and work done etc). It is basic human nature. It’s like piecework. If you pay an individual $x for each unit he or she produces, most will try and produce more units. Take a large group of people and tell them they get paid the same, regardless of how many or few the group produces, the ultimate outcome is that little or nothing is produced.

Clearly, with farming, you need some security of tenure (be that long leasehold or freehold) because it is a long term thing, which is why arable farm tenancies tend to be very long. Farmers are happy to rent sheep pastures very short term, because it’s just naturally growing grass. Actually being able to sell the land (i.e. use it as collateral) is irrelevant; or else there would be no tenant farmers.

But in one critical way, it doesn’t help me that my neighbours agree that I own my house. If I want a loan – to improve my house, or build a business – lenders need collateral.

Ah right, so the first thing you do if you want to start a business is buy some land, to be able to borrow against it? This is madness. What about the majority of people who don’t own land? You build up a business to earn enough money to buy land, that’s how it works in real life. And tenants are quite happy to pay for improvements if they know they have a secure/long term tenancy, I’ve seen it plenty of times. In the UK however, no residential tenant in his right mind will pay for improvement because a) he could be kicked out within six months and b) the improvements automatically belong to the building i.e. the landlord, so c) the landlord can increase your rent to make you pay for the improvements you made yourself.

And land or buildings make particularly good collateral because they tend to increase in value, and it’s hard to hide them from creditors. But the lender needs to be confident it could take the house away from me if I don’t repay the loan. So, I need to prove that the house really is mine. That requires an invisible web of information that the legal system and the banking system can use.

For Hernando de Soto, this invisible web is the difference between my house being an asset – something useful that I own – and being capital – an asset recognised by the financial system… But how do assets become capital? How does the invisible web get woven? It needs a government. Enforcing property rights is one of the few things pretty much everyone on the political spectrum agrees a government should do, except perhaps the Maoists.

Here we get to the neo-liberal nub of the matter, dressing up land as ‘capital’.

De Soto couldn’t actually give a shit about third world farmers, he’s a shill for the banks (which is why the Cato Institute give him such a glowing write-up). Loans and interest can only be repaid out of the future income/profit from that land anyway. Farmers can afford to buy most of the stuff they need every year out of their savings from the previous year (by definition) and if they need something bigger, like a tractor, there is such a thing as hire purchase. Borrowing any more than that, purely backed by the value of land is a recipe for disaster for any kind of economy, agricultural or developed capitalist.

He also inadvertently makes the Georgist point that ‘land ownership’ and ‘government’ are more or less synonymous. It is only governments who can really say who owns land (until and unless they are overthrown or the country is invaded).

Utter, utter twats.