“When you look at 19th century America or 18th and 16th century Europe, all of a sudden it’ll become clearer that … the thing that broke the back of poverty and privilege in developed countries in the past was when property rights came around and destroyed feudal title. Now, two-thirds of the world’s population – four billion people – are locked out of the capitalist system. It’s important to let them in.” – Hernando De Solo Polar, author of The Mystery Of Capital
It’s a sign of the times that global perspective has found its way as much into our humor, as it has our social commentary. Through our networks, we hear moment-to-moment updates on world events, from the people who are living through them – instead of waiting for small, dinner-table doses at home.
Awareness can’t make a difference on its own, but it can be a first step down the right path…
The Problem Of Access
In his latest work, The Great Degeneration, Niall Ferguson characterizes the differences of these two worlds in terms of societal access:
Third World – Limited Access
•Economies only capable of slow inter-annual economic growth.
•The state dominates all areas of society, with very few non-state actors.
•Small, centralized government. – “Without the consent of the governed”
•Social relationships exist mostly through personal and dynastic ties.
First World – Open Access
•Economies shift on a daily basis, catalyzing fast economic growth.
•Civil society comprises a wide variety of non-state organizations.
•Larger, decentralized government. (Federal -> State -> County -> Local)
•Social organization through impersonal forces like the rule of law, personal rights, and ideals such as fairness, justice, and equality (though none exist in a perfect state).
De Soto’s The Mystery Of Capital has become one of the most critically acclaimed economic works of the last decade, by identifying property rights as the root cause separating the two.
…And You Thought First-World Bureaucracy Was Bad
First world citizens, including the author, often find frustration with the bureaucracy of their own institutions. Yet, the third world has it far worse…
In his research for the book, Hernando found that the government of Peru’s capital, Lima, required 289 days just to obtain a street vending permit. To purchase land for a business, typically took 7 years and paperwork filed with 52 different government offices. In the developing world, these kinds of policies are typical.
So what can anyone do under these circumstances?
Instead of choosing to starve, most leave their property unregistered and go about their lives as best they can. To stay out of prison, they have to bribe the authorities to “look the other way” while they do business. It’s very risky, because it might only take a single displeased government official to throw you in prison, and confiscate everything you own…
De Soto estimates that over $9.3 Trillion worth of “undocumented property” exists in the developing world – wealth in search of a useful path… (See: The Avenues Of Exodus)
A Catalyst of Revolution
One of the earliest and most powerful catalysts was the story of a young man from Tunisia…
In Sidi Bouzid lived a man named Bouazizi, a street vendor who made his living selling fruit. On the morning of December 17th, 2010, he was harassed by local police, who confiscated $200 worth of produce (purchased on credit), his cart, and an electric scale worth $100 – his only possession of value.
He complained to the governor’s office, who turned him away and refused to help.
Later that morning, he returned to the steps of the building and shouted “How do you expect me to make a living!?” before lighting himself on fire.
He died in a hospital, 18 days later…
Within the city, mass protests began within two hours. Over the coming weeks and months, “Arab Spring” protests would break out in over eighteen other countries, resulting in a slew of political reforms, and multiple regime changes.
Bouazizi himself became a sort-of Saint to the common man in these countries – because they can identify so closely with his story.
The West’s Next Great Export?
These days, even China has adopted the “Killer Apps” of an Open Access system – with tremendous results.
Through the Institute For Liberty And Democracy, De Soto and his colleagues have made targeted progress over the last few decades in several key nations.
Paper property rights have taken extensive efforts of diplomacy, reform and negotiation to put in place. The results have been promising, but new tools can accelerate this game – exponentially.
In Africa, M-Pesa, a service originally designed for sharing cell phone minutes by text message, has become a de facto banking system, now estimated to comprise around 40% of African nations’ GDP – and still growing.
Cryptography As Digital Common Law
Blockchain technology has begun to arrive in the third world, through such services as:
•PayFast – which is essentially South Africa’s version of BitPay.
•BitPesa – which has already undercut M-Pesa’s price point, though not its user base (yet).
•BitPagos – although they’ll certainly find competition in South America…
Not only will these give the likes of M-Pesa a run for their money, but they may bring to these countries, something even more important…
With the ability to document their property rights internationally through a nexus of protocols, users could simply bypass their governments’ claims of financial sovereignty.
Third world citizens will have access to a massive global economy, with a set of rules as adaptable as the network itself. (See: The Rise Of Emergent Networks)
What are the ramifications of a world where freedom becomes a digital commodity – exportable at the speed and cost of moving information?
It may not take long for the answer to arrive…