Property rights are a universal right enshrined in the US Constitution and the United Nations Charter. Indeed, it is in search of just such rights that many of the world’s poor are motivated to cross borders into countries like the US.
For those living in the richest parts of the world, it is easy to take clear property rights for granted. But the reality is that only 2.3 billion people have the documents to protect and leverage their rights – including approximately one billion people living in Japan, Singapore, and the democratic West, and another billion in certain developing countries and former Soviet states.
Documentation is not just a bureaucratic stamp on a piece of paper. It is crucial to economic progress and inclusion. The reason the undocumented have an interest in being properly documented – whether they know it or not – is that clear property rights provide their owners and the things they own with a lot of additional value.
In the US or Europe, for example, a house not only serves as a shelter; it is also an address that can identify people for commercial, judicial, or civic purposes, and a reliable terminal for services, such as energy, water, sewage, or telephone lines. Documentation also allows assets to be used as financial instruments, providing their owners with access to credit and capital. If you want to take out a loan – whether you are a mining company in Colorado or a Greek shoemaker in New York – you must first pledge documented property in one form or another as a guarantee.
As I have shown elsewhere, the poor of the world are in possession of some $18 trillion of undocumented assets in real estate alone. But those assets will never attain their full value if they are not documented. As it stands, they cannot be used to raise capital. Nor can they be joined with other assets to create more complex and valuable holdings.
This is from an essay authored by Hernando de Soto, President of the Institute for Liberty and Democracy, published at the Project Syndicate
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