Some months ago, I was involved in a discussion on Facebook with an Austrian economist (who I respect very much), and some of his followers. The discussion was about squatters on the west coast who were occupying foreclosed and bank owned homes. The economist asked the question about squatter’s rights and actual ownership of real property. The comments went back and forth and referenced the work of Peruvian economist Hernando DeSoto.
DeSoto mainly stated that there is an immense amount of dead capital, some 10 trillion dollars worth, just lying around and not getting put to good use. This dead capital is due to national governments in developing countries not able to record proper information on the actual ownership of properties and all real economic activity. The majority entrepreneurs in these countries end up creating a sort of extra-legal system in order to protect what assets and investments they have made. A sort of shadow law. An underground economy. Those minority entrepreneurs who enjoy the advantages of the legal economic system receive all the investment and globalization benefits. Those majority entrepreneurs have no access to the legal system and thus suffer economically due to the lack of information of ownership, “public memory” about the assets and individuals involved, insurance information and so on. This means no access to the legal documentation that is necessary to engage in economic activity, especially worldwide. It was DeSoto who trumpeted the term, “squatter’s rights”. This is a set of rights for those who are caught up in these economies where information is lacking. His seminal work describes a way for formers Soviet countries to transition from communism to a free market economy by registering those dwellers of property (squatters) and granting them the documentation needed to demonstrate ownership of the property and allowing them to have access to credit. Many countries around the globe have implemented all or parts of DeSoto’s ideas.
So what does this have to do with west coast squatters living in bank owned or foreclosed houses? That is exactly what I asked during the back and forth discussion. I had made a comment about how all free market systems are dependent on the integrity of contracts. Without this, all economic activity comes into question. In the U.S. there isn’t much doubt left to who owns what property. The vast amount of public information at all levels of government are readily available to anyone who is willing to do the little bit of leg work.
I went on to advise the group that sometimes in our quest to be intellectual we forget the fundamentals. Something as basic as a mortgage agreement cannot be overlooked. If one party fails to pay the other on time as agreed, then the offended party has the right to foreclose on the property in question and take ownership away from the former. It’s pretty simple. Thus, the bank or mortgage company now owns the property and not these squatters. It doesn’t matter what the bank does with the property. It could sit idle for years and if it doesn’t break any local ordinances, it’s all well and good. Private property ownership and all it entails is essential to a free society and a free economy. It doesn’t require a PhD in economics to understand this concept.
Oh oh! I shouldn’t have said that. I stepped on some big toes there. A whole lot of studying and money went into that PhD and, by Gosh; some blue collar layman isn’t going to criticize the guy with the advanced degrees. After all, he’s published and this nobody upstart only owns a silly blog. Not to mention the total sum of ego capital in the discussion was pretty high, with each person trying to top the former with some deep intellectual insight. Well, let us just say that my two cents worth wasn’t met with enthusiasm. At first, I was just ignored. Then I was asked where I studied. Finally, the de-friending from his Facebook page. That’ll fix ’em!
At times I question the sincerity with the libertarian free market crowd. Those who get to set the debate. That is, the owners of advanced degrees. Maybe if some layman who only studies on their own and doesn’t own an advanced degree in economics or political science could simply “squat” on some professor’s degree when the person thinks it isn’t being used properly? After all, can’t we question the real ownership of these degrees? Weren’t they acquired through colleges and universities that are tax payer supported in some way? If not outright state run colleges, don’t most private universities receive funding through both private and tax payer supported grants? Can we really know how these degrees were attained? I’m being factitious, of course. Sometimes if we don’t see the forest for the trees, we can certainly pursue an idea into oblivion.
Just a thought.