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A great economist you've never heard ofHernando de Soto. He's never heard of you
either*
In the U.S. we have a "not invented here
attitude." Even though we give credit to all the dead great thinkers, we forget
there are people from other nations with first class
minds.
In all the time I've been a libertarian, with everything I had read, and everyone I had talked to, I somehow missed one of the basics. I didn't learn it until after I read The Other Path 
by Hernando de Soto why free markets don't always work. One simple idea, and it
explained exactly why Peru succeeded and Russia failed.
Property rights and the uniform rule of law. That is the whole idea, and without it, no free market can work. The Other Path is the story of how Peru defeated the Shining Path using the rule of law, free markets, and people making their own choices. With property rights and a clear system of recognizing those rights, people can borrow against their assets. Capital flows instead of being locked away. Think about it for just a minute. Someone wants to start a business. They own a house where they live. Without the ability to borrow against that, the only way they can use the value of the house is to sell it. Then they still need a place to live, which diminishes the money they get from selling the house. But if they borrow against the house, they can use that cash to fund a business. And they still have a place to live. de Soto examines this further in another book, The Mystery of Capital .
With the situation in the Middle East, these two books help show what can happen
and what should happen. It's not enough to claim democracy, the rule of law
must recognize the unique property rights of
everyone.de Soto works with The Institute for Liberty and Democracy in Peru. Besides promoting the classic liberal ideas of law and economics, the ILD has the added advantage of no government affiliation. And that helps minimize politics. They are a worthy cause. *You know, I've waited years
to steal that line from Gary Trudeau.
Posted: Sun - June 5, 2005 at 05:04 AM
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 Pagan Vigil
Pagan philosopher, libertarian, and part-time trouble maker, NeoWayland watches for threats to individual freedom or personal responsiblity. There's more to life than just black and white, using only extremes just increases the problems.  My Thinking Blogger Nominees
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