Reality Check for Redistributionists

Why property rights are environmental rights


Johannesburg—"Forward to Socialism," "W$$D Stop Bushing People," "Don't Owe, Won't Pay," "Israel USA UK—The Toxic Axis of Evil," "Osama Bomb Sandton Kill Bush and MBeki," and "No to Neoliberal policies and Capitalism" were just a few of the slogans that adorned banners and posters in Saturday's march on the World Summit on Sustainable Development. None of the banners or chants in the demonstration of more than 10,000 people mentioned any of the conventional environmental issues like climate change, population control, renewable resources, or biodiversity. One poster, carried by a white guy, did read "No to GM Food." That was about as close as the demonstration got to addressing the issues that animate the major Green lobbying groups from the rich countries.

The march, organized by a collection of hard left groups calling themselves Social Movements Indaba (SMI, or Social Movements United), had at least three times the number of participants and was a lot more diverse than the Green demonstration sponsored on the same day by multinational environmentalist groups like Greenpeace and Friends of the Earth. The set of issues central to the SMI marchers proved the insight that poor people can't afford to and, in fact, don't worry overmuch about the state of the environment until they have enough food, adequate shelter and a job. Unfortunately, the marchers and their leaders don't have a clue about how to achieve those goals and protect the natural world.

The SMI march was a sea of red. Red banners featuring slogans like "End Poverty: Land, Food, Jobs" and red t-shirts and headbands worn by thousands of members of the Landless People's Movement and the Anti-Privatisation Forum. Highlighting the irrelevance of environmental issues to the SMI, another huge contingent were the Pro-Palestine marchers carrying banners that read "Muslims Against Oppression: One Oppression, One Bullet," "1945: Hitler, 2002: Sharon" and praising the Al Asqa Brigade's martyrs.

The SMI demonstration didn't begin propitiously. It seems that the protest leaders had the marchers initially turned in the wrong direction. So the entire line of march had to be reversed. A British journalist quipped, "And these are the people who want to run the country."

The march started from the Far East Bank area of the infamous Alexandra slum on the outskirts of Johannesburg, nine kilometers from the gleaming towers of Sandton. Although the marchers were oblivious to the fact, the route of the march itself was a lesson in the process of how to begin the eradication of poverty. The Far East Bank area is a newly constructed development of very small concrete houses with tile and tin roofs, across the Jukskei River from Alexandra proper. The newest houses were set along paved streets on dusty lots with little vegetation. As we marched through longer established areas, more and more of the houses had walls and fences. The fences protected the green lawns, gardens and the fruit trees planted outside the houses from encroachment by passersby. And many of the houses were painted different colors and had additions. It was clear evidence of the natural human impulse to define and protect what is theirs. And little shops and businesses began appearing. First, there were plastic covered stands where women were selling onions, carrots, and cabbages. More substantial businesses began appearing. Many thirsty marchers, heedless that they were supporting one of the multinational behemoths against which they were supposedly protesting, stopped to buy Coca-Colas from "tuck" shops with names like "Dave's Progressive Generation" and "Joe's Enterprise." We walked by a "car wash" consisting of a hose and a couple of brushes whose proprietor was busy detailing a white BMW sedan. And a sign outside a hairdresser's shop promised "American Flair." The SMI marchers passed by these signs of nascent capitalism without even a glint of understanding that such small businesses are the first steps out of the poverty they were protesting.

We then crossed the river into the old section of Alexandra, which had been established as a black squatter settlement during the apartheid years. Not much has changed in this densely populated square mile of squalor. The marchers were assaulted by the sights, sounds and smells of abject poverty. Many of the "houses" were ramshackle collections of tin, rocks, and cinderblocks. The roofs were often held on by stones and car parts. Not even a weed graced the dingy streets. From time to time we would tramp by stinking open sewers in which children were playing. This is the kind of fierce poverty that needs fighting against. This is poverty that should make people angry. This is poverty that provokes hopeful and impatient people like the SMI marchers to take to the streets to demand relief and redress.

Once the marchers had wended their way through the putrid streets of Alexandra, we turned onto Katherine Street. As Katherine Street crosses under Johannesburg's M1 ring road, we stepped from the Third World to the First World. Behind us lay filth, disease and despair and in front us stretched manicured office parks and shopping malls stuffed with the good things of life. The contrast was jarring; if one subsisted in the squalor Alexandra it would no doubt be infuriating. This avenue of wealth led the SMI march to Sandton Convention Center where they demanded that the world's leaders adopt measures aimed at ending poverty.

The route of the SMI march actually offers the clues to how poverty can be eradicated. Peruvian economist Hernando de Soto, author of the The Other Path and The Mystery of Capital was in town and I caught up with him at the Free Market Foundation of South Africa. De Soto is touring the world trying to persuade political leaders of the crucial role that private property plays in the process of lifting the poor from destitution to affluence. As De Soto showed in The Mystery of Capital, the poor in the developing countries actually own hundreds of billions of dollars in capital assets, especially in land, houses and shops. But because their titles are insecure they have no way of mobilizing their assets such that they could invest in other more productive activities. For example, De Soto's team found out that 88 percent of all Egyptian enterprises operate informally and that 92 percent of real estate is held informally. This means that the assets cannot be used to borrow money and that they are vastly undervalued because of their insecure titles. De Soto estimates that the assets owned by poor Egyptians are worth more than $245 billion at replacement value; that is 30 times bigger than the value of the Cairo Stock Exchange.

The Mystery of Capital has struck a nerve with many political leaders. De Soto and his colleagues are now working with the heads of govenment in Egypt, Haiti, Mexico, Ghana, Nigeria, the Philippines and Russia to devise ways to recognize the property rights of the poor and thus unleash their dead capital. In fact, Egypt's President Hosni Mubarak may well roll out a De Soto-devised plan to register proper titles for the poor in his country this coming spring. How do De Soto's insights apply to the poor in South Africa?

Consider the newly constructed small neat houses in the Far East Bank neighborhood where the march started. It turns out that they are owned by the residents. This fact alone accounts for why the SMI marchers could see so many improvements being made to the houses in the older neighborhoods and why one could see more and more shops springing up in those neighborhoods. Across the river, squalid Alexandra's history as a squatter camp has left property rights confused. The tumble-down shacks of many of Alexandra's poorest residents are located on land for which no one has a proper title. They have little incentive to improve shacks that could be taken away at any moment. The office towers and shopping malls near Sandton stand as the end result of the economic growth that begins with secure property rights and the rewards of small scale entrepreneurship.

The SMI marchers who are demanding land for the landless have the right intuitions, but they don't yet understand that it's not really land that makes the difference; it is secure property rights that are central. After all, no one is agitating for "land reform" in rich developed countries because land is nearly irrelevant to how most people make their livings. Also, merely expropriating land from one set of people and giving it to another without compensation as Robert Mugabe is doing in Zimbabwe calls into question the security of property and ultimately defeats the purpose of the expropriation. If a government can steal property from one person now, it can take it from anyone else later. Property rights are not the complete answer to eradicating poverty, but without them it is almost impossible to make any real progress.