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Why Do the Poor Stay Poor?
Townhall.com ^ | December 8, 2010 | John Stossel

Posted on 12/08/2010 4:19:34 AM PST by Kaslin

Of the 6 billion people on Earth, 2 billion try to survive on a few dollars a day. They don't build businesses, or if they do, they don't expand them. Unlike people in the United States, Europe and Asian countries like Japan, South Korea, Hong Kong, etc., they don't lift themselves out of poverty. Why not? What's the difference between them and us? Hernando de Soto taught me that the biggest difference may be property rights.

I first met de Soto maybe 15 years ago. It was at one of those lunches where people sit around wondering how to end poverty. I go to these things because it bugs me that much of the world hasn't yet figured out what gave us Americans the power to prosper.

I go, but I'm skeptical. There sits de Soto, president of the Institute for Liberty and Democracy in Peru, and he starts pulling pictures out showing slum dwellings built on top of each other. I wondered what they meant.

As de Soto explained: "These pictures show that roughly 4 billion people in the world actually build their homes and own their businesses outside the legal system. ... Because of the lack of rule of law (and) the definition of who owns what, and because they don't have addresses, they can't get credit (for investment loans)."

They don't have addresses?

"To get an address, somebody's got to recognize that that's where you live. That means ... you've a got mailing address. ... When you make a deal with someone, you can be identified. But until property is defined by law, people can't ... specialize and create wealth. The day they get title (is) the day that the businesses in their homes, the sewing machines, the cotton gins, the car repair shop finally gets recognized. They can start expanding."

That's the road to prosperity. But first they need to be recognized by someone in local authority who says, "This is yours." They need the rule of law. But many places in the developing world barely have law. So enterprising people take a risk. They work a deal with the guy on the first floor, and they build their house on the second floor.

"Probably the guy on the first floor, who had the guts to squat and make a deal with somebody from government who decided to look the other way, has got an invisible property right. It's not very different from when you Americans started going west, (but) Americans at that time were absolutely conscious of what the rule of law was about," de Soto said.

Americans marked off property, courts recognized that property, and the people got deeds that meant everyone knew their property was theirs. They could then buy and sell and borrow against it as they saw fit.

This idea of a deed protecting property seems simple, but it's powerful. Commerce between total strangers wouldn't happen otherwise. It applies to more than just skyscrapers and factories. It applies to stock markets, which only work because of deed-like paperwork that we trust because we have the rule of law.

Is de Soto saying that if the developing world had the rule of law they could become as rich as we are?

"Oh, yes. Of course. But let me tell you, bringing in the rule of law is no easy thing."

De Soto started his work in Peru, as an economic adviser to the president, trying to establish property rights there. He was successful enough that leaders of 23 countries, including Russia, Libya, Egypt, Honduras and the Philippines, now pay him to teach them about property rights. Those leaders at least get that they're doing something wrong.

"They get it easier than a North American," he said, "because the people who brought the rule of law and property rights to the United States (lived) in the 18th and 19th centuries. They were your great-great-great-great-granddaddies."

De Soto says we've forgotten what made us prosperous. "But (leaders in the developing world) see that they're pot-poor relative to your wealth." They are beginning to grasp the importance of private property.

Let's hope we haven't forgotten what they are beginning to learn.


TOPICS: Business/Economy; Culture/Society; Editorial
KEYWORDS: johnstossel; poverty; privateproperty; propertyrights; ruleoflaw; stossel
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1 posted on 12/08/2010 4:19:35 AM PST by Kaslin
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To: Kaslin

Excellent post


2 posted on 12/08/2010 4:22:50 AM PST by Kenny Bunk (America can survive fools in office. It cannot long survive the fools who vote for them.)
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To: Kaslin
Poverty is an attitude.

An old man once told me, "You can't take people out of poverty until you take poverty out of the people."

3 posted on 12/08/2010 4:23:00 AM PST by MeneMeneTekelUpharsin (Freedom is the freedom to discipline yourself so others don't have to do it for you.)
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To: Kaslin

Sorta like, The fruit of my labor belongs to me. The fruit of my creations belong to me. What a novel idea. I like it.


4 posted on 12/08/2010 4:23:34 AM PST by Gadsden1st
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To: Kaslin

Thanks for posting this. So simple, but so easily taken for granted - the importance of property rights. We do, indeed, need to be reminded of what our “grandpappy” knew.


5 posted on 12/08/2010 4:25:27 AM PST by chickadee
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To: Gadsden1st
Why Do the Poor Stay Poor?

Because we pay them for that!!!

6 posted on 12/08/2010 4:26:18 AM PST by catman67
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To: Kaslin

First post I’ve read this morning and it has the potential to be the best of the day.


7 posted on 12/08/2010 4:26:20 AM PST by Graybeard58
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To: Kaslin

bttt


8 posted on 12/08/2010 4:26:35 AM PST by petercooper (Purge the RINO's.)
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To: Kaslin

John 12:8 “The poor you will have with you always...”


9 posted on 12/08/2010 4:26:35 AM PST by Paisan
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To: Kaslin
"Why Do the Poor Stay Poor?"

In the USA poor means you can't afford both Direct TV AND Highspeed internet for the 3 TVs in you 2500 square ft. plus McMansion you are buying and late on the payments because you have two late model SUVs you are also trying to make payments on while paying for your unlimited texting plan on all the famiiy member's cell phones...

However the answer to your question is easy and my Grandpappy answered it many years ago when I asked him the same question:

"Poor people have poor ways..." ---Paul Henry Gettles

10 posted on 12/08/2010 4:30:59 AM PST by Mad Dawgg (If you're going to deny my 1st Amendment rights then I must proceed to the 2nd one...)
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To: chickadee
Possibly because they were largely usurped when the Sixteenth Amendment was passed.

If Uncle Sticky Fingers can take all he wants, how can we have property rights?

11 posted on 12/08/2010 4:32:15 AM PST by Aevery_Freeman (Fear God and Government - especially when one tries to become the other!)
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To: Mad Dawgg; Kaslin

I’ve said it before on this forum, and I’ll say it again now. In America, you stay poor by being lazy and by doing the same stupid things over and over again. Show up for work drunk and punch my boss? No problem.


12 posted on 12/08/2010 4:32:56 AM PST by Hardastarboard (Bringing children to America without immigration documents is child abuse. Let's end it.)
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To: Kaslin

bfl


13 posted on 12/08/2010 4:34:13 AM PST by ziravan
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To: Kaslin

De Soto’s is a simple premise. When living in a “culture of corruption” folks don’t see the point in expending effort towards obtaining resources that will simply be taken away from them.


14 posted on 12/08/2010 4:34:18 AM PST by wastoute (Government cannot redistribute wealth. Government can only redistribute poverty.)
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To: wastoute
"De Soto’s is a simple premise. When living in a “culture of corruption” folks don’t see the point in expending effort towards obtaining resources that will simply be taken away from them."

His book should be on the must read shelf of every American. "The Mystery of Capital" is one of the economics books I read faithfully, once a year.

15 posted on 12/08/2010 4:37:45 AM PST by Mad Dawgg (If you're going to deny my 1st Amendment rights then I must proceed to the 2nd one...)
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To: Kaslin

This guy doesn’t seen to understand something about history.

Yes, back when our country was founded and settled people actually owned their private property.

Today, no individual in the United States owns their own property.

Don’t think so? Just fail to pay your property taxes and you will find out who REALLY owns your property!

In this age we simply lease our property from the local government, the state and the federal government depending upon the local tax structure.

Many people forget that if you have “owned” your house for more than 30 years, the monthly bill for property taxes today far exceed the monthly payments you made for those 30 years. So......for 30 years you paid both the bank and state and now that it’s paid off to the bank, you will NEVER finish paying the state.


16 posted on 12/08/2010 4:38:01 AM PST by DH (Once the tainted finger of government touches anything, it begins to rot.)
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To: Kaslin
This sentence struck me, but I may be applying it incorrectly:

It applies to more than just skyscrapers and factories. It applies to stock markets, which only work because of deed-like paperwork that we trust because we have the rule of law.

What came to mind was when Obama took over GM and left the share holders high and dry, and handed the company to the union. He seized property and destroyed the rule of law in one fell swoop.

17 posted on 12/08/2010 4:38:57 AM PST by stayathomemom (Beware of cat attacks while typing!)
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To: wastoute

Good, thought-inspiring article. The very first duty of government is to recognize and protect every individual’s rights.

TC


18 posted on 12/08/2010 4:40:09 AM PST by Pentagon Leatherneck
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To: Kaslin
Americans marked off property, courts recognized that property, and the people got deeds that meant everyone knew their property was theirs. They could then buy and sell and borrow against it as they saw fit.

Tell that to the GM investors...

19 posted on 12/08/2010 4:40:36 AM PST by Senator_Blutarski
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To: DH

I wonder if you even read the article. John Stossel is talking mainly about the poor in third world countries not about the poor here, who are not really poor


20 posted on 12/08/2010 4:40:45 AM PST by Kaslin (Acronym for OBAMA: One Big Ass Mistake America)
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To: Kaslin

One of the better posts I ever read.
Clear, concise and hits the nail on the head.


21 posted on 12/08/2010 4:42:15 AM PST by BuffaloJack (The Recession is officially over. We are now into Obama's Depression.)
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To: chickadee

You are welcome. The poster in post#16 doesn’t seem to get it


22 posted on 12/08/2010 4:42:49 AM PST by Kaslin (Acronym for OBAMA: One Big Ass Mistake America)
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To: riri

bkmk


23 posted on 12/08/2010 4:43:07 AM PST by riri
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To: Senator_Blutarski

I think you and I are on the same wavelength. (See my post #17)


24 posted on 12/08/2010 4:45:05 AM PST by stayathomemom (Beware of cat attacks while typing!)
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To: Kaslin

Jesus said the poor will always be with us!!


25 posted on 12/08/2010 4:46:13 AM PST by timetostand (Ya say ya wanna revolution -- OK!)
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To: stayathomemom
"This sentence struck me, but I may be applying it incorrectly:

"It applies to more than just skyscrapers and factories. It applies to stock markets, which only work because of deed-like paperwork that we trust because we have the rule of law."

What came to mind was when Obama took over GM and left the share holders high and dry, and handed the company to the union. He seized property and destroyed the rule of law in one fell swoop."

Nope you are applying it exactly as it is meant. Obama and the Democrats engineered one of the greatest scams in the history of our nation and right out in the open with both Democrats and Republicans shouting amens and hosannas and cheering him on.

This act alone is grounds for impeachment but we will never be able to go back now. And it will be so much easier the next time for the looters to do their dastardly deeds!

26 posted on 12/08/2010 4:47:20 AM PST by Mad Dawgg (If you're going to deny my 1st Amendment rights then I must proceed to the 2nd one...)
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To: catman67

Yep, that is a good career path. Also, no mandatory retirement date, good job security (hard to outsource those jobs) and the occupation has favorable tax attributes, and every fringe benefit you could imagine.


27 posted on 12/08/2010 4:49:13 AM PST by tdscpa
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To: BuffaloJack

It does indeed


28 posted on 12/08/2010 4:51:27 AM PST by Kaslin (Acronym for OBAMA: One Big Ass Mistake America)
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To: Kaslin
John Stossel:
Hernando de Soto taught me that the biggest difference may be property rights. ....I first met de Soto maybe 15 years ago.

Huh? Stossel met Hernando de Soto? Wow, he must be really really REALLY old.

29 posted on 12/08/2010 4:52:57 AM PST by Condor51 (SAT CONG!)
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To: Kaslin

Add in the debate between Ferdinand Lassalle and David Ricardo over the Iron Law of Wages in the modern economic context, immigration trends that begin as a follower to perceived economic progress in a region and then smother that potential in an unrealistic human tsunami, and short-term political expediency by ruling classes that benefit from maintaining an economically stagnant underclass to the subject of the article, and you begin to see just the shadow of the huge, malicious elephant in the room...


30 posted on 12/08/2010 4:53:40 AM PST by doyle
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31 posted on 12/08/2010 4:55:51 AM PST by WakeUpAndVote
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To: Kaslin

The problem is that we are slowly letting the rule of law slip in this country. Trends contributing to this include: judicial activism, tolerating illegals, subjectively enforcing laws, or creating laws that are either incomprehensible or unforceable (to name a few). Within another 20 years, I predict we will be a country of men and not laws. The law will be whatever a Judge or Bureaucrat says it is—at that moment.


32 posted on 12/08/2010 4:56:17 AM PST by rbg81 (When you see Obama, shout: "DO YOUR JOB!!")
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To: Kaslin
Rule of Law can only exist within a population that is morally well-grounded, honest, and that has the good will to make it work. A citizen must **know** that he can trust his neighbor, the courts, and the police to be honest in their dealings.

For a civilization to thrive it must have 4 things ( minimum):

1) Secure borders.
2) Honest courts and police to enforce contracts and to put criminals in prison.
3) Secure and dependable property rights.
4) A morally well-grounded and honest people with the good will to make it work.

By the way,...No one in the U.S. owns property any longer. We are instead renters to the government. If we fail to pay our property taxes, the government will evict us.

And....

A major part of all property taxes is a MASSIVE and bloated collectivist government school system that is dedicated to indoctrinating our nation's youth into worshiping godless government communism.

33 posted on 12/08/2010 4:57:53 AM PST by wintertime (Re: Obama, Rush Limbaugh said, "He was born here." ( So? Where's the proof?))
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To: Kaslin
Rule of Law can only exist within a population that is morally well-grounded, honest, and that has the good will to make it work. A citizen must **know** that he can trust his neighbor, the courts, and the police to be honest in their dealings.

For a civilization to thrive it must have 4 things ( minimum):

1) Secure borders.
2) Honest courts and police to enforce contracts and to put criminals in prison.
3) Secure and dependable property rights.
4) A morally well-grounded and honest people with the good will to make it work.

By the way,...No one in the U.S. owns property any longer. We are instead renters to the government. If we fail to pay our property taxes, the government will evict us.

And....

A major part of all property taxes is a MASSIVE and bloated collectivist government school system that is dedicated to indoctrinating our nation's youth into worshiping godless government communism.

34 posted on 12/08/2010 4:57:53 AM PST by wintertime (Re: Obama, Rush Limbaugh said, "He was born here." ( So? Where's the proof?))
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To: Kenny Bunk

Hey, I’m a middle-income guy who lived for 25 years in a modest house with a modest wife and modest children. Why do I stay that way?


35 posted on 12/08/2010 4:59:06 AM PST by frposty (I'm a simpleton)
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To: MeneMeneTekelUpharsin

And here’s the liberal’s strategy: you can’t take the people out of wealth until you take the wealth out of people.


36 posted on 12/08/2010 5:00:45 AM PST by frposty (I'm a simpleton)
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To: DH
You “get it”.

Please read post #34.

37 posted on 12/08/2010 5:01:25 AM PST by wintertime (Re: Obama, Rush Limbaugh said, "He was born here." ( So? Where's the proof?))
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To: Kaslin

You know, I do think the poster does get it, but is also pointing out something important - that even in the U. S., property is only yours for as long as you can keep the taxman at bay. I think most people were fine with paying taxes when it got them something they wanted: fire protection, education for their children, highway/road maintenance or construction, police protection. Now that taxes are used as wealth transference from those who work/own property to those who think they are owed a living, resentment is building. It’s ludicrous that property owners could lose their property because they can’t afford to pay the taxes to support the deadbeats of society.


38 posted on 12/08/2010 5:02:55 AM PST by chickadee
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To: frposty
I’m a middle-income guy who lived for 25 years in a modest house with a modest wife and modest children. Why do I stay that way?

You stay that way because it is good. In most of the world you cannot GET that way. In our neighbor to the south, quaint and colorful Mexico, no one actually knows who owns anything 100% legally.

39 posted on 12/08/2010 5:04:18 AM PST by Kenny Bunk (America can survive fools in office. It cannot long survive the fools who vote for them.)
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To: rbg81

Within another 20 years, I predict we will be a country of men and not laws. The law will be whatever a Judge or Bureaucrat says it is—at that moment.

it’s already here.


40 posted on 12/08/2010 5:07:32 AM PST by griswold3 (Employment is off-shored, away from govt. regulations, price pressure groups, and liabilities.)
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To: chickadee

The Mexican farmer has little reason to try to build complex infrastructure because a corrupt politician can take it all away, often using antiquities laws. That keeps productivity low unless they leave the country and head north.


41 posted on 12/08/2010 5:17:35 AM PST by tbw2 (Freeper sci-fi - "Sirat: Through the Fires of Hell" - on amazon.com)
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To: Condor51

“Huh? Stossel met Hernando de Soto? Wow, he must be really really REALLY old.”
////////////////////////////////////////////////////////////

Or there was a REAL fountain of youth, who knew?


42 posted on 12/08/2010 5:23:58 AM PST by RipSawyer
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To: frposty

You stay that way because modesty is a virtue?


43 posted on 12/08/2010 5:27:15 AM PST by RipSawyer
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To: DH

Very true. We are loosing property rights, both from the state and by the banks (title fraud).


44 posted on 12/08/2010 5:36:46 AM PST by redgolum ("God is dead" -- Nietzsche. "Nietzsche is dead" -- God.)
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To: Kaslin
It ain't easy, but with the help of the lottery and welfare they manage to stay in poverty. . . . And of course stay the hell out of school. . . .
45 posted on 12/08/2010 5:41:36 AM PST by DeaconRed (This is subject to change at any time! ! ! !. When Voter thinks up a good one. . .)
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To: DH
IIRC, I read that the Founder's, when writing the Constitution, originally started with: “pursuit of property” but ended with “pursuit of happiness”.

Clearly you are right, the government owns our property forever, through the tax system.

46 posted on 12/08/2010 5:43:46 AM PST by Tahoe3002
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To: Kaslin
Birth rate for impoverished people is about 10 times that of prosperous people.

They have nothing better to do, I guess...

Aid mostly decreases death rate, and increases birth rate but does NOTHING to change the economic infrastructure.

Malthus ALWAYS wins that one.

47 posted on 12/08/2010 5:48:28 AM PST by Huebolt (It's not over until there is not ONE DEMOCRAT HOLDING OFFICE ANYWHERE. Not even a dog catcher!)
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To: Hardastarboard
"In America, you stay poor by being lazy and by doing the same stupid things over and over again."

Not exactly true anymore. The government takes so much, its very hard to move up into another tax bracket.

48 posted on 12/08/2010 5:57:04 AM PST by Celtic Cross (I AM the Impeccable Hat. (AKA The Pope's Hat))
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To: Kaslin
The issue about property rights does not apply in the US, yet we have plenty of "poor" people, or more accurately people who have no interest in doing anything beyond collecting their welfare checks. Attitude, energy, and intelligence play a big part in success.

As far as the Third World poor, there are likely many of them with lots of intelligence and drive, and the system makes it very hard for them to get anywhere. The system will not easily be changed because the Elites of those countries like it that way -- they don't WANT business competition from the non-Elite, so they purposefully make it hard for somebody without "connections" to prosper.

49 posted on 12/08/2010 6:00:19 AM PST by PapaBear3625 ("It is only when we've lost everything, that we are free to do anything" -- Fight Club)
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To: chickadee

But do we really own property when the local government can step in and take it away if we fail to pay taxes on it every year ?

People rant about income taxes, but at least those taxes are only paid once — at the time the income is received. You spend what is left over (after you’ve paid taxes on that income) on property, and then you have to pay taxes on the property every year forever ? Usually with no control over what value some faceless bureaucrat assigns to your property ? To me, that makes property taxes the most evil of all taxes.


50 posted on 12/08/2010 6:02:07 AM PST by Kellis91789 (There's a reason the mascot of the Democratic Party is a jackass.)
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