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March 4, 2005
Help the Poor... Become a Target of Terrorists
A World Connected has an interesting piece up on Peruvian economist Hernando De Soto. De Soto is famous for his books The Other Path and The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, which brought his economic research on property rights in third world countries to the public. The article summarizes this point well, explaining that the reason the underground Peruvian economy was so large was that the government had made it nearly impossible for most people to register their property and businesses legally:
In the early 1980s, De Soto discovered that 90 percent of all small industrial enterprises, 85 percent of urban transport, 60 percent of Peru's fishing fleet (one of the largest in the world), and 60 percent of its food stores operated outside of the law.
Contrary to the views of the government and Peruvian elites who thought of the poor as lazy, many of Lima's poor were in fact carrying the economy on their backs.
The more people the ILD researchers talked to in the shantytowns and rural byways of Peru, the more they realized that it was not so much that the poor were breaking the law as that the law was breaking them.
Even those who had tried to get into the system by applying for titles to their houses and other real estate or licenses to legalize their businesses complained that it was impossible to succeed; wending their way through the bureaucratic obstacles simply took too much time and cost too much money.
De Soto went public with his findings in 1984, attracting attention from Peruvians of all political viewpoints.
Unfortunately, the idea of defining property rights was not a compatible solution with the ideology of radical socialists. The Maoist "Shining Path" declared that the De Soto's ideas were vicious. The group's leader, Abimael Guzman, stated: "It is clear that the objective of The Other Path is to deceive and mislead the masses… It directly targets young people, who are the driving force of society… It leads the young away from the popular war."
De Soto and those at his group Instituto Libertad y Democracia were then declared targets for assassination.
Recognizing that the ILD was the primary intellectual influence behind the restructuring and modernization of the Peruvian economy, Guzman called for an all-out offensive to destroy it.
De Soto and the ILD became the prime target not only of The Shining Path's underground press but also its assassination squads. Terrorists bombed the ILD headquarters in Lima and strafed Institute vehicles.
Guzman was captured in September, 1992, and the following year the 17 terrorists who had bombed the ILD's headquarters were also apprehended.
Today, the ILD staff is able to travel throughout all of Peru without danger and is one of the premier policy organizations dedicated to helping the developing world's poor enter the global economy.
Goes to show, it's a bizarre world we live in.
Posted by Peter Mork at March 4, 2005 9:36 AM
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