Thursday, January 10, 2008

Minto vs history (updated)

In a recent Herald opinion piece former NZ Prime Minister Mike Moore made a statement obvious enough to any student of history not blinded by flawed ideology: "Without secure property rights poverty will endure."

John Minto is blinded by flawed ideology.  Point number one of Marx's Communist Manifesto calls for the abolition of private property.  Leon Trotsky pointed out with some glee that where there is no private ownership, individuals can be easily bent to the will of the state under threat of starvation or worse.  John Minto still lives in the shadows cast by these two gentlemen, leading him to place before Herald readers this morning the outrageous lie that "property rights often mean little, if anything, to people in poverty."

It's hard to know here to start with this claim.  He begins by lying about poverty in the US, carries on to ignore the history of property rights and the wholesale destruction of poverty whenever property rights were protected, and concludes with his outrageous lie intended to gull careless readers into accepting his own malodorous world view.

The fact is that property rights protect our lives and the fruits of our labours -- they allow us to pan long range.  As Hernando de Soto points out (de Soto being one of the folk singled out of Minto's barbs), when property rights are insecure, residents of poor shanty towns build their furniture before their walls or roofs.  That's rational behaviour when time horizons are short. As property rights become more secure and their time horizons become longer, however, people can build their walls, their roofs, and then plant crops and trade and make plans that take months or even years to come to fruition.  This is what it means to create wealth - wealth being the opposite of poverty, as some of you might recall.

If Mr Minto is blind to those basic facts, there's no need for you to be.

The fact is, the material values we each produce keep us alive, and allow us to flourish.  Only ghosts can survive without this property; human beings cannot.  Secure property rights allow us to project our values into longer and longer time horizons; the more secure, the further our horizons.  They allow us to bring to bear the unmatchable power of our minds to the pursuit and creation of wealth and human flourishing.

Unlike other animals, human beings cannot survive as we come into the world; in order to stay alive and to flourish we each need to produce and to keep the fruits of our production.

Tom Bethell’s landmark book The Noblest Triumph: Property and Prosperity Through the Ages traces successes and disasters of history consequent upon the respective recognition or denial of property through the ages: Ireland’s potato famine, the desertification of the Sahara and the near-disasters of U.S. colonies at Jamestown and Plymouth can all be traced to lack of respect for property.  The glorious triumph of the Industrial Revolution is the greatest vindication.

In Bethell's book (every home should have a copy), he identifies four crucial blessings of property that, he says,

cannot easily be recognised in a society that lacks the secure, decentralised, private ownership of goods. These are: liberty, justice, peace, and prosperity. The argument of [his] book [and of history] is that private property is a necessary (but not sufficient) condition for these highly desirable social outcomes.

Property rights give us a Turangawaewae, a firm place to stand deserving of legal protection.  Their identification and recognition was an enormous advance in intellectual history, and the practical result of their application across both history and geography has been the destruction of poverty.

It is only the poverty of stale Marxism that could blind a man to something so obvious.

FROM THE ARCHIVES: More posts on Property Rights.

UPDATE 1: Liberty Scott points out "there is a country that echoes Minto’s vision of virtually no property rights, and the sort of true democracy I was talking about – its capital is Pyongyang. Global Peace and Justice is the euphemism for Global Revolution and Socialism."

UPDATE 2: Owen McShane and Paul Walker weigh in against Minto with superbly swinging blows.

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12 Comments:

Blogger Julian said...

Wonderfully written and researched Peter. Julian

1/10/2008 03:13:00 pm  
Anonymous JC said...

Aren't Bookmarks the neatest thing? Here's one I saved from a report from the US Treasury

http://tinyurl.com/3yfp67

This shows that between 1995 and 2005 that the poorest US citizens increased their income 90.5%, and the top 1% suffered a decrease in income of 25%.

And guess who pays most of the taxes?

JC

1/10/2008 03:33:00 pm  
Anonymous JC said...

Here's the US taxes.

http://tinyurl.com/2k4hkq

The top 1% pay 37% of the taxes.

JC

1/10/2008 03:39:00 pm  
Blogger Matt B said...

Great post Peter.

1/10/2008 03:57:00 pm  
Blogger Crampton said...

Why do you have to post things like Minto's column that make me so angry? I want more stories about fluffy bunnies and nice architecture. It's too late in the day for me to be pounding head on desk.

You mentioned ghosts: ever read "Hungry Ghosts"? It's a chronicle of starvation under a no property rights system: Mao's China. Bryan Caplan reviews it here.

1/10/2008 05:18:00 pm  
Blogger Phil (Pacific Empire) said...

Minto: The free-market polices Labour forced on the country in an undemocratic policy blitzkrieg in the 1980s have been well documented as has the ensuing descent into poverty of hundreds of thousands of New Zealanders. It's worth remembering that democratic rights, to the extent we have them, were never granted freely to anyone. People have only gained civil and political rights after bitter, violent struggles.

Is that a threat? Or a statement of intent?

1/10/2008 05:28:00 pm  
Blogger Owen McShane said...

I have just dashed this off and sent it to the Herald.
At least Garth George got something right today.

John Minto’s strange understanding of Property.

The poor people of the world should be thankful that Mike Moore sits on the UN’s Commission on the Legal Empowerment of the Poor rather than John Minto.
John Minto’s understanding of what enables nations to create and distribute wealth is abysmal. Maybe one does not need any understanding of such matters to be a spokesman on Peace and Justice, but when dealing with economic growth and development it surely helps.
John Minto claims that, given the makeup of the commissioners (which includes the Peruvian Economist Hernando De Soto), the commission can only increase poverty rather than reduce it, evidently because at least some of the other commissioners are Americans – a grievous sin.
Mr Minto tells us that such Americans can only create poverty because “The US has the highest levels of poverty in the Western World (more than 30 million)” and asks “Why would this be?”
The answer is simple.
The US Official Poverty Rate (the OPR) is based on calculations that are available from the year 1959 onward, and for the total population of the U.S., the OPR declined by nearly half over this period, from 22.4 percent in 1959 to 12.7 percent in 2004.
It seems Americans do know something about reducing poverty.
Also, millions of Americans can be declared to be in poverty because the UN poverty index is based on the percentage of the population with disposable incomes of less than 50% of the median. Hence, any household whose income is less than half the median income for that nation is deemed to be living in poverty. On this basis those “poverty stricken” American families not only have hot and cold clean running water, flush toilets, electricity, but typically have one or more cars, at least one television, several telephones, and even own their own homes, many of which are air conditioned. The UN test means that when the median American household income reaches one million dollars a year, a family living on 499,000 dollars a year will still be deemed to be living “in poverty”. Using the New Zealand index they could be earning $600,000 a year and still be “in poverty”.
I am not at all sure why Mr Minto assumes that Americans are experts on creating poverty rather than wealth.
Some poverty indices have truly bizarre outcomes – especially those which focus on where families sit relative to average income. John Minto bewails the fact that the very rich in the US have very high incomes. One way to reduce poverty might be to persuade them to up stakes and take their wealth to other less fortunate nations. However, if Bill Gates decided to migrate to a poor country like New Zealand his settlement here could increase the number of New Zealand families officially living in poverty because his massive income would considerably increase the average household income and hence throw hundreds, if not thousands, more families, and even their children, into poverty. We always have to examine the fine print when it comes to measurements of poverty.
Would we turn Bill Gates away because of the wrong choice of “average”?
Mr Minto claims that “Property rights are there to benefit the wealthy and the middle class. They mean much less, if anything, to people who live in poverty.”
By his own measure, many Maori families live in poverty. Perhaps he should explain to them why property rights don’t matter and why their concerns over their property rights to the seabed and foreshore are of no consequence, and presumably totally misguided.
As Hernando de Soto explains, secure property rights are important to people living on the margin. If poor people own a piece of land and hence the buildings on it, when fire strikes they work to save the house. If they are squatters they rush to save the furniture.
It would appear that Mr Minto has a limited appreciation of what rights in property actually cover. Because he is living in a democracy, under the rule of law, he enjoys rights to property in his own life and labour, in his personal effects, his land, his building, his car, his works of art – including his own writings – and even his religious or ideological beliefs. I am sure he appreciates these rights in all his property, even if he seems to think they are of little consequence to others less well off than himself. If some burglar steals his furniture will he not call the police? Does slavery not offend him?
When the ordinary people of England fought to secure their property rights over the years they were all living in poverty by contemporary standards. The incomes of those Americans in the “wild” Western States, who fought to win their private land rights off the Federal Government, were lower than those of many poor Africans today. Does Mr Minto really think they did not know what they were doing?

Mike Moore is not peddling myths about property rights. He is only repeating what more and more African politicians and analysts are saying on behalf of their own people.
Their constant theme is “We want trade – not aid.” And it is remarkably difficult to trade in anything unless you have secure property rights in the things you want to sell.
If Mr Minto were to travel to these countries, of which he claims to know so much, and tried to tell the local people that property rights don’t count, he would be laughed out of the room – unless of course he was talking to someone like President Mugabe who certainly shares his opinions.
940 words.
Owen McShane

1/10/2008 05:32:00 pm  
Anonymous James said...

Well said Owen....I would have been more cutting towards that lying idiot...one devestating fact that Comrade Minto won't like is that the average balck American has a higher standard of living that the average welfare state Swede...

1/10/2008 06:55:00 pm  
Blogger Paul Walker said...

For what its worth my view on Minto is on my blog, Anti-Dismal, here

1/11/2008 11:24:00 am  
Anonymous Anonymous said...

"The United States is one of the richest countries in the world (2nd behind Kuwait), and in 2000, the mean wealth was $144,000 per person.[6] In the United States at the end of 2001, 10% of the population owned 71% of the wealth, and the top 1% controlled 38%. On the other hand, the bottom 40% owned less than 1% of the nation's wealth.

In 2003, the most-earning 1% of the population in the United States, which has a system of progressive taxation, paid over 34% of the nation's federal income tax; the most-earning 10% bore 66% of the total tax load; the top 25% of income earners paid 84% of the income taxes; and the upper half accounted for virtually the entire U.S. income tax revenue (nearly 97%).

However, if the federal taxation rate ("Individual Income Tax Rates and Shares, 2004." (2006) published by IRS) is compared with the wealth distribution rate the net wealth (not only income but also including real estate, cars, house, stocks, etc) distribution of the United States does almost coincide with the share of income tax - the top 1% pay 36.9% of federal tax (wealth 32.7%), the top 5% pay 57.1% (earning 57.2%), top 10% pay 68% (wealth 69.8%), and the bottom 50% pay 3.3% (wealth 2.8%)"
http://en.wikipedia.org/wiki/Distribution_of_wealth#_note-6

1/11/2008 10:00:00 pm  
Anonymous Anonymous said...

"Real estate

In particular, it can be argued that the large increases in property values of recent years has had the effect of redistributing the wealth from those without property to those with property.

The impact is more profound on people at lower income levels who are more likely to rent their home rather than own it outright. The poor are generally less likely to make rational decisions concerning risk, and therefore are more easily targeted by the aggressive marketing of subprime lenders"
Same link

1/11/2008 10:03:00 pm  
Anonymous Falafulu Fisi said...

Owen McShane said...
I have just dashed this off and sent it to the Herald.

Well done Owen, your article made it today to the NZ Herald perspective section. I already read your excellent article here at Not PC.

1/14/2008 02:44:00 pm  

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