Sunday, March 04, 2007

Land Reform the Silver Bullet for Iraq?

Using markets to defeat terrorism. How novel, and yet, not so much. Austin Bay follows up on his own blog on using land reform and registration of property rights in providing the average citizen the incentive to make the government work:

In the 1990s, Schafer noted, Peru turned the “land reform” tables on the Communists. Property right reform helped defeat Peru’s “Maoist” Shining Path guerrilla movement.

“The Third World is not populated by proletariats, it’s populated by entrepreneurs– successful small business people,” Schafer said. (And that is what I’ve seen in the time I’ve spent in developing nations.) He added: “If you are someone who is surviving and raising a family by taking a bunch of bananas from out the city and bringing it in (to sell) you are an entrepreneur. You understand business —by low sell high And if you come to them and say you want to extend credit to them they understand that.”

In Schafer’s view, property right reform gives Iraqi Prime Minister Nouri al-Maliki’s government a very powerful political weapon, one that has war-winning potential.

Schafer supplied some fascinating evidence. According to Schafer, less than five percent of Iraq’s cultivatable agricultural land is “freehold” (owned with clear title). 95 percent of the cultivatable land in Iraq is therefore “dead” (illiquid) and cannot be used as security for a bank loan. “Iraqi farmers who lack clear title can’t get (bank) loans,” Schaefer said. That limits economic creativity, particularly in a population demonstrably successful at small business operations. Schafer believes that 95 percent of family homes in Iraq also lack clear, secure title.

“Prime Minister Maliki needs to go on television,” Schaefer advised, “and say “Citizens of Iraq, 95 percent of the property in this country is not legally in your name. You don’t have title to your own land or your own houses. We’re going to change that right now.””
I would suggest that you read the whole thing. If only more governments in Africa and the developing world would take that advice.

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