De Soto’s Excellent Path
An adaptation from the Feb. 24, 2014, issue of NR


It was in 2000 that de Soto came out with his second book, another blockbuster, The Mystery of Capital. It has been translated into some 30 languages and has sold more than 2 million copies. The ILD has been very busy, fulfilling its mission, which is “to assist emerging nations in integrating their poor majorities into the economic mainstream under a single rule of law.” De Soto and ILD have been “called in,” as de Soto puts it, by about 30 heads of state, not all of them nice democrats, but dictators, too. It seems to me that de Soto has a wide streak of realism, to go with his idealism: He will work with nearly anyone, as long as it means improvements for the poor. His rule is, ILD will work in any country that is accepted by the “world community” — wherever a U.S. embassy and a U.N. representative are found.

De Soto has made three documentaries with the Free to Choose Network, based in Erie, Pa. The latest of them is Unlikely Heroes of the Arab Spring, now airing on PBS. This “spring” began in January 2011, after a Tunisian fruit vendor named Mohamed Bouazizi committed suicide in a public self-immolation. De Soto sent an ILD team into the region. He says, “I’m a researcher, really. It’s kind of like Joe Friday in Dragnet: ‘Just the facts, ma’am.’” He wanted to know why the Middle East in general was ablaze, from the lips of the very people doing the blazing.

The team discovered that, in the two months after Bouazizi self-immolated, 63 more men and women had done the same. They did it in country after country. Like Bouazizi, they were entrepreneurs, or would-be entrepreneurs. ILD talked to their families, and they also talked to survivors: Thirty-seven of the 63 failed in their suicide attempts. In the documentary, one of these 37 shows the scars all over his body. “I tried every possible way to get my rights in society, to find work,” he says. “I tried a thousand things,” with no success. He felt trapped, finished.

De Soto testified to the U.S. Congress about the Middle East last year. In an understatement (as I see it), he said, “Mass suicide in defense of property rights is hard for the modern Western mind to understand.” Why would someone like Bouazizi kill himself over the confiscation of some fruit and the scale with which to weigh it? But Bouazizi’s act was motivated by a lot more than that, de Soto has explained — to Congress, in his film, and to me: Bouazizi was under the whim of local authorities, who could choke off his every avenue. There was nowhere to go, no other authority to appeal to, no veritable rule of law. His last words, before he lit the match, were, “How do you expect me to make a living?” ILD asked Bouazizi’s family what they thought he had died for. They answered, “For the right to buy and sell.”

To Congress, de Soto said, “The average Arab entrepreneur needs to present 57 documents and faces two years or more of red tape to obtain a legal property right over land or a business.” In Egypt, the legal opening of a business “requires dealing with 29 different government agencies and navigating 215 sets of laws.” Arabs, like the majority of the world’s population, lack basic property rights and related rights. They feel left out of the good life, unable even to strive for it. In his film, de Soto says that the Arab Spring amounts to “a huge shout for inclusion.”

He is also entitled to say something about terrorism, I think. The Middle East is plagued by it, as are other regions. He told Congress, “Not so long ago, we at the ILD saw with our own eyes . . . how the entrepreneurial frustrations of ordinary Peruvians could easily be whipped up into terrorism.”

(To read this testimony, go here. To see the film, Unlikely Heroes of the Arab Spring, go here.)

I want to ask de Soto about the word “capitalism.” Where I come from, it is a dirty word, usually said with a scoff or a sneer. De Soto is quite practical about the matter: “If the word is in bad odor, avoid it. Words are what people want them to mean, and if ‘capitalism’ is a bad word, I can think of a lot better uses of our time and talents than to defend it.” When he first arrived back in Peru, capitalism (or whatever we wish to call it) was known as “la economía de la selva” — “the economics of the jungle.” Well, what word does he himself use? It depends on where he is, he says. It depends on the local vocabulary. “Private property,” to some, means “what the rich have” — not the materials a humble fruit vendor has. In the Middle East, the term “property rights” may not mean anything (de Soto and ILD found). But people know the word “expropriation” — they have been victims of expropriation. In any event, says de Soto, “Never go die for a word, if what is important is the idea behind the word.”

He is not one who believes that the free market or “Western values” are for some and not others. He is more a universalist. He recalls a crisis in the Peruvian Amazon, where people were rebelling violently. He spoke with them, and they said, “Sir, your ideas are absolutely alien to our ethnicity. There are things that are Western that are not made for the rest of us.” “Oh?” said de Soto. “Like penicillin?” And “how about soccer”? He then went through the list of demands that the rebels were making of the government in Lima, pointing out all of the items that were “Western” — including computers. De Soto says, “There is no such thing as a Western thing or an Eastern thing: If it works, everybody wants it.”