Friday, May 25, 2012

Brazil Takes a Step to Strengthen Property Rights

brazil's favelas

In analyzing poverty and its root causes, the Keynesians and statists consistently leave out the primary cause of poverty - the lack of secure property rights. But in Brazil, the issue of secure property rights is finally being addressed.

Rio Is Finally Issuing Land Titles In The Notorious Favelas

The above referenced Business Insider article states:
RIO DE JANEIRO (AP) — The home Jose Nazare Braga built in the Rocinha shantytown is his life's work, an investment that grew from a shack to a three-story building over 30 years. A restaurant and a paper-goods store on the ground floor provide income, and his children, grandchildren and great-grandchildren live above.
The red-brick building is Braga's nest egg, his retirement home and an inheritance for his large family. But for decades, the property wasn't formally his, and he lived in fear of losing it all.
Now local officials and human rights groups are working to give legal title to tens of thousands of people like Braga, a process that increases their wealth and gives them greater access to credit, as well as peace of mind.
The importance of secure property rights cannot be overemphasized and the Global Property Guide ( compiles indexes of the security of property rights in nations.  The Property Rights Index is very important because there's a definite correlation between secure property rights and prosperity.  Nations with low property security rights are the most impoverished nations on the planet.  The wealthiest nations have very high property security indexes.

The United States is actually declining in secure property rights with an index of 85.  Canada has a property security index of 90, and so does Iceland, Germany, Ireland, Denmark, Luxembourg, Sweden, Switzerland, Netherlands, Finland, Norway and Austria.  Singapore and Hong Kong also have property security indexes of 90.

Secure property rights extend far beyond deeds to real estate.  They also include the protection of other property, intellectual property, patents, copyrights etc. and such property protections also require a competent and non-corrupt legal system to enforce property rights.

Brazil?  Brazil had a property protection index of 50 which is far below Chile at 85 (same as the US) and Uruguay at 70.  Most South American and Central American nations have low property protections which is why they remain impoverished.

Brazil is definitely taking a step in the right direction and it's a giant step that will work to alleviate crushing poverty.   Most other nations in South America and Central America are not taking steps to strengthen property rights.

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