The Nature of Poverty

Property rights help the poor even more than the rich

Ronald Bailey | July 13, 2005

Friends of the Earth International (FOE) has just issued its report Nature: Poor People's Wealth in conjunction with the G8 Summit of rich nations at Gleneagles in Scotland. The FOE report aims to highlight the importance of natural resources in poverty eradication.

"Poverty is the greatest shame and scandal of our era," according to FOE. All too predictably, a good bit of the report consists of a tiresome standard-issue anti-globalization screed against "neoliberal" economic policies and evil "transnational corporations." FOE notes that policy debates over how to alleviate poverty "tend to emphasize the monetary aspect of poverty, whereas many other factors—including access to and control over natural resources and land, employment, health, nutrition, education, access to services, conflict, political power and social inclusion—also play crucial roles."

Of course, the reason that people might focus on the monetary aspect of poverty is that having a bit of ready cash tends to give one access to all those other good things, such as employment, education, and social inclusion. But never mind, let's move on.

After this initial anti-globalization throat clearing, the FOE report becomes unintentionally interesting. Much of the rest of the report offers brief case studies of poverty from around the world, often among indigenous peoples. ("Indigenous" being the preferred word to describe the least modern peoples; note that the Japanese are never described as an "indigenous people.") Why unintentionally interesting? Because FOE is so busy indicting liberal economic policies that the group completely misses the significance of one of chief reasons for why so many of the people in the report's case studies are mired in poverty. Let's go through some of FOE's cases.

In Cameroon, the Bagyeli "pygmies" have been tossed out of their traditional foraging areas, which have been turned into a national park by the government.

In Chile, the Araucaria forests of the Pehuenche people were cut down by logging companies to whom the national government sold the land.

In Malaysia, the government authorized logging, the creation of plantations and dam building on the customary lands of several Sarawak forest communities.

In Togo, local fisheries are being overfished by modern fishing fleets, leaving none for Togolese fishers.

In Russia, over the past 70 years oil and gas projects on Sakhalin Island have degraded the oceanic and freshwater fisheries of the Nivkhi people.

In Laos, the Nam Theun 2 dam project financed by the World Bank and Asian Development Bank will displace 6,000 villagers, who are being resettled on insufficient land.

In Paraguay, ranchers seized and are continuing to encroach upon the ancestral territory of the Ayoreo people.

In India, the government has never recognized nor given title to the traditional lands occupied by the Katkari people, with the result that they are vulnerable to outside land developers.

Do you see a pattern here? In many of the instances cited by FOE where poor people and natural resources are being misused or abused, there are no clear property rights. In some cases, the governments simply assert ownership and ride roughshod over the desires of the local people who were under the impression that the land was theirs. In others, corrupt national governments collude with powerful interests to seize poor peoples' lands and resources.

Amusingly, while the FOE report insists on all kinds of rights for the world's poor, including environmental, human, political, collective, legal, and women's rights, there is in the report not a single mention of the word "property," as in "property rights." While FOE is to be commended for its support for restoring stolen land to poor people around the globe, it just cannot bring itself to permit individual poor people to own land. Consequently, most of the "sustainable development" schemes endorsed by FOE involve collective ownership of land and natural resources. (By collective ownership, FOE most emphatically does not mean corporate ownership.) Collective ownership by a defined group is better than government theft, but it limits the options of the joint owners who are subject to the tyranny of generally conservative majorities who stifle entrepreneurship. Evidently, FOE would prefer that poor people sit around voting all day rather than getting rich. Think church vestries or condo association meetings.

Friends of the Earth would do well to read the work of Peruvian economist Hernando de Soto, who has minutely detailed how the lack of property rights throughout the developing world keeps billions poor. Without clear title to their land, houses, stores, and so forth, the poor cannot sell their assets or borrow against them. Since their "properties" are subject to seizure at the whim of a government bureaucrat, the poor are understandably reluctant to invest in improving them. Thus they remain poor. FOE researchers who put together the group's report are so devoted to an anti-capitalist and anti-globalization ideology that they don't notice how strongly their case studies support De Soto's larger point. The poor benefit from secure private property rights even more than the rich do.