BLOSSOMING PROPERTY RIGHTS GIVE HOPE.
The days dwindle down to a COVID winter most of us are dreading. Infections are rising. Governments are clamping down. The U. S. president is sick ( now literally). His country is steaming toward an iceberg of an election day. Yankee ingenuity somehow doesn’t seem up to the simple job of counting ballots correctly. In this country, the skies are grey with debt pouring down.
Where we live, the only relief from the gloom is a sudden but spectacular end-of-season explosion of wildflowers in the backyard garden. What can be the evolutionary purpose of plants that grow slowly all summer long and then erupt like fireworks just as frost is due? We purchase our wildflower seeds from the local Boy Scouts, who along with their equivalents of other genders also give hope in these difficult days.
As the gloom descends, conservatives can take heart in the intellectual version of our backyard wildflowers, the findings of a new study, Measuring property rights institutions, from four blue- chip economists ( from the World Bank, the London School of Economics, and, two of them, Harvard). They use data from the World Bank’s Doing Business program to look at a- man’s- home- is- his- castle rights — the rights both to title to one’s property and to transferring it, i.e., selling it, without which it’s questionable whether you actually own it. (Remember those Philosophy 101 debates: “If you own yourself, and all humans do, should you not be able to sell yourself into indenture?”)
The World Bank’s data cover 190 countries, thus offering lots of variation and therefore possible instruction. Not to kill the suspense but the economists’ most surprising and encouraging finding — their version of the wildflower effusion — is that over the 16 years for which they have data, transferring property has become steadily easier around the world.
That’s encouraging for all sorts of reasons. People should be secure in their homes and the best way for that to happen is through clear, enforced ownership rules. It’s surprising because things haven’t been going very well for liberal-minded internationalists lately, what with de- globalization and the rise of authoritarianism. And in fairness the data do only go to 2019. So maybe COVID will reverse them. But until last year, at least, these rights were generally rising.
You can see the kinds of things the researchers measure by Googling “World Bank Doing Business registering property.” On the transfer side, the bank logs how long it takes, how much it costs and how many procedures are involved in registering the sale of a property in a country’s biggest or two biggest business cities. How does Canada ( i. e., Toronto) do? We rank 37th, with a score of 77.8/ 100. You have to go through five procedures taking four business days and costing 3.8 per cent of the property’s value. We actually outrank the U. S. ( an average of New York and L. A.). They’re 39th, with a score of 76.9/100. They require only four procedures but on average take 15 days. ( Maybe they use the U. S. Postal Service and there’s a delay because of all the fraudulent postal ballots jamming the machines.) In the U. S., the cost is 2.4 per cent of the property’s value.
Top of the pops is Qatar, with a score of 96.2/100. There’s only one procedure, it takes only one day and costs only 0.3 per cent of the property’s value. Afghanistan is last on the list: nine procedures, 250 days, cost equal to five per cent of the property’s value.
You might be skeptical of a list Qatar heads. But in fact the rankings line up well with GDP by country. The countries with the stronger property rights are more economically advanced, as one A. Smith predicted almost 250 years ago they would be.
There are other interesting effects. If you don’t have clear title to your home, you may not have a strong incentive to improve it, which means slums are more likely. ( The UN actually has data on slums as a share of total housing stock.) If selling your home is more costly or difficult, you may end up living farther away from where you work, which means more commuting and traffic congestion. So making property rights more secure and easier to exercise seems likely to encourage people to both maintain their homes and live where it makes sense for them to live.
Why have property rights been improving on average? The study’s authors point to two reasons. One, computers make it much easier to track who owns what. And, two, there’s a line of thinking in economics, dating from a famous 1967 paper by Harold Demsetz, then at the University of Chicago, that efficiency eventually wins out. If many good things will follow from property rights being well defined and secured, governments will come to understand that and define and secure them.
Given some of the governments we’ve all had to deal with lately, that may seem hopelessly optimistic. A little like wildflowers challenging the frost, perhaps.