One of the favorite mantras of the left is the need to protect
people rather than property. But very often the best way to
protect people is protect their property. Those with power and
influence can steal what they want. Only when property rights are
protected do average people have a shot at both liberty and
prosperity.
There are two major indexes of economic liberty — Economic
Freedom in the World (from a group of think tanks, led by
the Fraser Institute) and Index of Economic Freedom
(from the Heritage Foundation) — of which property rights
protection is a part. But for a long time there was no
comprehensive index of property rights around the world. Then the
Property Rights Alliance stepped into the void. It recently
released its latest
report.
The question of property ownership goes far back into human
history. Individual sovereignty over land was alien to
hunter-gatherer societies, but they died out because they were
“unsustainable,” in current parlance. Larger populations required
greater productivity, which required some form of property
rights, even if by a tribe or some other group. The latter could
sustain a certain level of life, but as peoples ancient through
modern have discovered, collectivizing production inevitably
limited available food and other goods. Rulers in a strong empire
might succeed by plundering everyone else, but civilizations were
unlikely to develop without a system of ownership which rewarded
those who invested in developing and improving property.
The right to private property evolved out of a basic moral
notion. While one could argue endlessly about how to initially
distribute unowned property — Locke’s picture of mixing one’s
labor with land was particularly influential in Britain and the
American colonies — land acquired through purchase and improved
through work or expenditure embodied value based upon one’s own
efforts. Property owners also use knowledge, insight, and vision
to enhance the worth of their assets.
Property ownership assumes the right to exclude others and to
employ one’s resources as one sees fit. Writes Anne C. Dedigama,
who conducted the Alliance’s 2009 study: “A person is deemed to
be the owner of the property has this right of freedom of
enjoyment of his property. Thus, private property rights are the
hallmark of liberty.”
Although land and chattel long were the most important forms of
property, today intellectual property has assumed much greater
significance. The productive value of human creativity has
expanded from hands to minds. The software programs on a
computer, not the physical components of a computer, are that
instrument’s most productive property. Which means that real
protection of property rights requires the proper definition as
well as effective defense of property.
Getting property “right,” so to speak, is not just a convenient
option. It is vital to promote free and prosperous societies.
“Property rights in land are critically important for the
functioning of societies. Stability and certainty of property
rights form the foundation of financial and political security,”
writes David Stanfield of the Terra Institute, a contributor to
the latest Index. The most obvious imperative is to “improve
security by which land is held,” he writes, but that is not
enough. Given the prevalence of environmental degradation
throughout the developing world, another objective should be to
“protect land and water resources.” Finally, the left is right to
point to pervasive injustice in the Third World. But such
injustice normally results from the lack of property rights.
Thus, the goal should be, writes Stanfield, to “provide access to
land by the disadvantaged.”
Property as an intellectual concept is interesting, but has
practical value within a particular social context. To achieve
Stanfield’s three goals requires striking a complex balance
within the political and legal regimes. Different countries might
strike the balance differently. The International Property
Rights Index, explains Stanfield, is intended to help
promote the “continual strengthening of the capacity for this
successful balancing,” which not only promotes prosperity but “is
fundamental to a vibrant, just and sustainable global economic
and political system.”
Any cross-national comparison will have limitations, of course,
and the Index is able to include only 115 countries, but they
account for roughly 96 percent of global GDP. The Index
focuses on ten major variables which affect both the definition
and protection of property rights.
Under legal and political environment the Alliance assesses
judicial independence, confidence in the rule of law, political
stability, and corruption. Under physical property rights the
Index covers legal clarity and judicial protection of property
rights, ease of property registration, and loan access. Under
intellectual property rights, the Index measures confidence in IP
protection, strength of patent protection, and copyright piracy.
Although some of the specific ratings may surprise, the general
results are predictable. For the third year in a row Finland came
in at number one. Denmark and the Netherlands tied for second.
Australia, Singapore, and New Zealand join six more European
countries in rounding out the top ten (which actually numbers 12
because of ties).
The U.S. falls in the next ten, along with Hong Kong and several
European states. The next bloc of ten mixes European nations with
South Africa, Chile, and a couple of Middle Eastern countries.
The next highest-ranking African country is Botswana at number
43. The next Latin American country is Costa Rica, falling in a
three-way tie at 46 with Kuwait and India.
The last of 115 — the worst disasters, such as North Korea, are
not rated — is Bangladesh. Angola is 114. Tied at 109 are Chad,
Venezuela, Guyana, Burundi, and Zimbabwe. Also in the bottom 20
are five European (Bosnia, Albania, Moldova, Serbia, and
Macedonia), three Latin American (Paraguay, Bolivia, and
Nicaragua), and three African (Nigeria, Ethiopia, Cameroon)
countries, along with Azerbaijan and Armenia.
The rest fall in between in no particular order. Poland and
Turkey fall in (along with two others) at 53. Mexico is at 62.
China and Brazil rate 68. Vietnam comes in at 77. Russia hits 87.
Pakistan is a 90. Unrated countries include Afghanistan and Iraq.
America’s relatively weak showing reflects a particularly anemic
rating for its legal and political environment. In contrast, the
U.S. ties for second worldwide in intellectual property
protection.
The broad correlations are clear. Western industrialized states
and newly industrializing Asian countries do the best. Developing
nations and former communist states do the worst. Obviously,
property rights protection is not a perfect indicator for
economic growth, but most countries that have poor property
rights records have had difficulty achieving self-sustained
economic growth. The Index finds a strong correlation
between IPRI scores and per capita GDP. The average per capita
GDP per IPRI quintile goes from $39,991 at the top to $4,341 at
the bottom.
Yet, while the practical benefits of a strong property rights
regime are obvious, many countries have been retrogressing. Most
of the top thirty, including America, improved their rating this
past year, though a few of them, such as Germany, remain below
their 2007 levels. But beyond the best performers retreats
outnumber advances. Most of the bottom twenty got worse.
Lowest-ranking Bangladesh improved in 2008 but has since fallen
back below its level of 2007. And the news there keeps getting
worse: a mutiny by units of the border guards has created renewed
political instability.
Of course, as Bangladesh tragically demonstrates, the lack of
property rights protections makes other liberties less secure.
Many of the countries which fare badly on the IPRI also rank
poorly when it comes to political and civil liberties. There’s
Zimbabwe, a nation in almost total collapse. Venezuela, with Hugo
Chavez attempting to create a legal dictatorship. Bosnia is a
fake country that exists only in the eyes of European social
engineers. Azerbaijan is one of the authoritarian remnants of the
old Soviet Union. Nigeria is Africa’s oil-fueled kleptocracy. And
so on.
Secretary of State Hillary Clinton entered office promising even
more foreign aid on top of the trillions of dollars wasted over
the last half century. The International Property Rights
Index demonstrates that we all would be better off if
Americans concentrated on helping poor countries create the right
legal and policy frameworks for economic growth. That includes
protecting property rights, among the most fundamental of human
rights. Taking more of Americans’ good money to toss after bad is
no answer, especially in the midst of an economic crisis and
massive deficits as far as the eye can see.
