When a local school takes a field trip to city hall on an episode of the show Parks & Recreation, Ron Swanson, a freedom-loving curmudgeon who works for the local government, meets a 9-year-old girl named Lauren. He is uninterested in engaging with her, until he learns that she’s writing an essay on why government matters.
Wanting to help her, Ron begins with a lesson in property.
“This is your lunch,” Ron says to Lauren as he empties her lunchbox onto the table. “Now, you should be able to do whatever you want to with this, right?” Lauren nods.
“… But here I come, the government,” Ron says, picking up her sandwich and chomping into it. “And I get to take 40% of your lunch,” he says as he shoves a handful of her chips into his mouth and washes it all down with a slurp from her juice box.
“And that, Lauren, is how taxes work,” Ron concludes. “That’s not fair!” Lauren protests.
The hilarious scene ends when Ron gives the girl a landmine as a parting gift to protect her property.
Ron Swanson and Hernando de Soto: Property Optimists
Of course, school children should not handle landmines. The show is a comedy. But it occasionally delves into political philosophy. I suggest that a deeper message behind the landmine joke is a positive emphasis on protecting property.
We cannot effectively bring communities out of poverty without understanding how rich societies work.
Despite his many disgruntled comments about government throughout the series, Ron Swanson, in my interpretation, is not a fundamentally a pessimist. He is a property optimist. He believes that if this inquisitive girl can protect her property rights, she will go on to accomplish great things.
“You are, and this is not a joke,” he tells her as she prepares to leave, “much smarter than most of the people who work in this building.”
Another property optimist, one almost entirely unknown to the American television audience, is the Peruvian economist Hernando de Soto. De Soto writes and speaks about the importance of property rights for a prosperous society, and believes that we cannot effectively bring communities out of poverty without understanding how rich societies work.
It is easy to understand the harm done when food is taken out of someone’s hands. But understanding the far-reaching positive influence of individual property rights requires some imagination.
How Stable Property Rights Create Financial Security
In his book The Mystery of Capital, De Soto describes the invisible forces that work in rich countries but are lacking in less prosperous ones. People who have formal ownership of the land they live on can leverage their legal land deed to make money, give money, and lead a financially secure life. De Soto writes,
In the West… every parcel of land, every building, every piece of equipment, or store of inventories is represented in a property document that is the visible sign of a vast hidden process that connects all these assets to the rest of the economy. Thanks to this representational process, assets can lead an invisible, parallel life alongside their material existence. They can be used as collateral for credit… These assets can also provide a link to the owner’s credit history, an accountable address for the collection of debts and taxes, the basis for the creation of reliable and universal public utilities, and a foundation for the creation of securities… By this process the West injects life into assets and makes them generate capital.
De Soto asks us to imagine the difficulty of generating change in a community where people do not have well-defined legal ownership of the homes in which they live.
Most of the poor already possess the assets they need to make a success of capitalism.…But they hold these resources in defective forms: houses built on land whose ownership rights are not adequately recorded, unincorporated businesses with undefined liability, industries located where financiers and investors cannot see them. Because the rights to these possessions are not adequately documented, these assets cannot readily be turned into capital, cannot be traded outside of narrow local circles where people know and trust each other, cannot be used as collateral for a loan, and cannot be used as a share against an investment.
It is not an easy change to bring about, but De Soto suggests that, if a land registry could be successfully introduced into a community that has poorly enforced informal property rights, then those individuals would become not only more secure but also able to create wealth for their whole economy.
The Significance of Transferring Land Ownership
In the United States, we enjoy relatively secure property rights. How do those rights create wealth?
When individuals benefit, the positive impact on society is greater still.
Take home ownership, for example. I just bought a house. The former owners had a title that they transferred to me. There were some fees and paperwork involved, but now I have a title to my land.
It is, of course, nice for me personally to have a house; however, my house is more than a roof I can sleep under. My house is an asset that I can sell or borrow against if I want cash to start a business or to send my child to college. If I simply occupied the house illegally, I might have shelter, but I would not have a financial asset.
Now imagine the benefit to society when millions of people are able to buy and sell property in this simple way. De Soto argues that while all of these people individually benefit from property rights, the positive impact on society is greater still.
The insight that I got from De Soto is that secure property ownership creates opportunities. No one knows what I will do in the future with my new property right. A property optimist looks forward to finding out.
And the optimist in Ron Swanson believes that 9-year-old Lauren has great potential to improve her own life, the life of her family, and the fortunes of her neighbors… if she is allowed to freely exercise her right to buy, sell, and manage her property without interference.
Reprinted from Learn Liberty.
Joy Buchanan is a sixth year PhD student in the Department of Economics at George Mason University. She received her BA in economics from Chapman University. Additionally, she has presented at the Southern Economic Association annual conference and coauthored a book chapter on fiscal discipline with Dr. Vernon Smith.
This article was originally published at FEE.org on July 31, 2017. Read the original article.