Is this
reverting in a way to this?
The famous Peruvian development economist Hernando de Soto thinks so. He has argued – and shown in practice – that clear and publicly recorded and legally enforced property rights are a key to ending poverty. Now he offers this robust and now mainstream theory to explain the financial crisis of the rich countries (h/t Frank Pasquale):
Over the past 20 years, Americans and Europeans have quietly gone about destroying these [economic] facts. The very systems that could have provided markets and governments with the means to understand the global financial crisis—and to prevent another one—are being eroded. Governments have allowed shadow markets to develop and reach a size beyond comprehension. Mortgages have been granted and recorded with such inattention that homeowners and banks often don’t know and can’t prove who owns their homes. In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.
De Soto is an important and experienced voice, and one that is should be [correction, see comments] difficult for conservatives to ignore.
I think he’s on to something. The fair and traditional price for state enforcement of private contracts is the partial loss of their privacy and idiosyncrasy into a public and structured institutional memory. Absent this, freedom’s just another word for everything to lose.
Law is about resolving conflict, and the law establishes “facts” of the kind De Soto notices, only where the law must resolve conflict between two parties with legally legitimate claims against the other. The “facts” are being destroyed to the extent that unchecked Power is destroying the conflict, by destroying the legitimacy of one set of parties or interests. Peons had no rights landowners had to respect; that’s why they had no institutional capacity to claim property rights. American citizens have no rights a multinational business corporation is bound to respect; and their property and related rights are just a good-bye. It is just a detail in a general pattern, in which the American People no longer exercise any political control over a government, completely unresponsive to their needs and desires, because it is controlled by large banks and business corporations and a handful of the uber-wealthy.
Corporations will continue to use the law to resolve conflict among themselves. So, to apply the question to a picture of Wall Street misses the mark completely. There, the law continues. But, someone, who has a credit card with one of those banks doesn’t have a “contract” with the bank, in the old common law sense of an agreement; the bank dictates the terms unilaterally, and may not even need to give notice! Someone with student loan debt with one of those institutions may not have any rights to discharge the debt under bankruptcy, just as a homeowner with mortgage on her primary residence has no such rights. A stockholder or consumer or employee harmed by those corporations may have no effective right to sue one of those corporations under a broad range of circumstances, but the corporations can certainly sue each other.
Bruce: It’s true that the law offers reasonable parity of arms within Wall Street and corporate America and a stacked deck between them and the working stiff. It always has. There is however more to the story than inequality between rich and poor. The new opacity has made transactions untrustworthy even within the magic circle: as when Goldman Sachs was betting for the default of securities it was selling to another bank. The mechanics of the collapse were initially within this circle. The new reality is that the rigged craps game will continue but the losers will be bailed out by you and me, for ever.
James: “De Soto is an important and experienced voice, and one that’s difficult for conservatives to ignore. ”
Um, have you noticed ‘conservatives’ in the US for the past few decades?
Barry: Pasquale says “de Soto has long been a hero of conservative property rights groups”. Isn’t there a meme that “you don’t need to give foreign aid, just fix the property rights and all will be OK”? Mind you, these are relatively reality-based and grown-up positions, the sort you could expect from Bruce Bartlett, and his wing of the GOP is in hiding. So I call touché.
JW: “It always has.” And, Oceania has always been at war with Eastasia.
James: It’s arguably even worse than you suggest by alluding to Goldman’s fraud. When you “just” have massive fraud, there’s still somewhere an underlying fact pattern that equally-armed legal adversaries can be in a position to uncover. Here, thanks to the utter failure to observe due diligence and forms of legal transactions — compounded by the tax-evasion scam that was MERS — in many cases there effectively is no underlying fact pattern to uncover. The paper has been shredded (if it existed at all), the computerized records demonstrably bear only a coincidental relation to what actually happened, and the paper regenerated from the computer records for purposes of litigation is compromised almost beyond belief. As a result, any attempt to adjudicate this mess will necessarily be rife with error and based on power relations rather than “fact”.
In other words, De Soto is way too accurate.
As a veteran of the german reunification reparations process, I have to say I’m bemused by the sheer scope and quality of this deprecation of property rights. There, for more than 40 years, you had a country torn by war and occupation, under a system of government that had extinction of largeholdings as a policy foundation, and they still kept meticulous records of what had been expropriated from whom, on what date, and with which ostensible legal authority. The “free market” does not look so good by comparison.
James Wimberley says:
“Barry: Pasquale says “de Soto has long been a hero of conservative property rights groups”. Isn’t there a meme that “you don’t need to give foreign aid, just fix the property rights and all will be OK”? Mind you, these are relatively reality-based and grown-up positions, the sort you could expect from Bruce Bartlett, and his wing of the GOP is in hiding. So I call touché.”
There might be such a meme, meaning that somebody in the human race thought of it and told somebody else. So what?
I haven’t seen conservatives in the USA being too respectful of property rights, save in the baseline sense of they don’t want their own stuff taken. And that’s what I was referring to.
Barry,
Consider Justice Thomas’ dissent in Kelo v. New London.
(Barry): “I haven’t seen conservatives in the USA being too respectful of property rights, save in the baseline sense of they don’t want their own stuff taken.”
From the dissent in Kelo:
(Barry): “I haven’t seen conservatives in the USA being too respectful of property rights, save in the baseline sense of they don’t want their own stuff taken. And that’s what I was referring to.”
More on Kelo. From the syllabus:
See also this from Ciry Journal.
[...] Owning the walls of a building separately may seem eccentric and ill-advised, but perhaps it will make a comeback in the light of stories like these? Deutsche Bank “Stuffed Mortgage Reviews In a Closet”. They’re also accused of being a slum-lord and a public menace. More slums, via Felix Salmon. And there’s a slightly unnerving macroscopic take, from Hernando de Soto. I think that’s the first time I’ve seen anyone link the housing bubble and financial crisis itself directly to the mortgage-servicing fuckups. Via. [...]