Mitt Romney was derided (Gaffe!) by the media last summer for observing that culture in the Mideast has plenty to do with Arab poverty.
He was right. Hernando de Soto notes in the WSJ how property rights are virtually nonexistent in many Arab nations:
….Research in the region conducted by my organization, the Peruvian-based Institute for Liberty and Democracy, has found strong evidence that the Arab Spring revolution was rooted in a desire for what in the West would be called a market-based economy. Arabs and others may not always use that phrase, but their desire for the economic security that comes with property rights and other rights is a force that the foes of individual freedom will not easily overcome. The challenge is to harness that force by offering people of the region the legal protections and security that are the bedrock of all successful economies.
Recall the catalyst of what became the Arab Spring: the self-immolation in January 2011 of Mohamed Bouazizi, a Tunisian fruit vendor protesting the expropriation of his merchandise. According to our estimates, more than 200 million people throughout the Middle East and North Africa depend on income from operating businesses or occupying property in the informal economyâ€”without the protection of the rule of law.
That means the entrepreneurs who want a legal system with property rights like those in the West outnumber al Qaeda membership in the region, often estimated at up to 4,000 core activists, by a ratio of about 50,000 to one.
Some other research highlights:
Mohamed Bouazizi’s desperate protest wasn’t unique. We found that at least 63 more men and womenâ€”in Tunisia and also in Algeria, Egypt, Morocco, Saudi Arabia, Syria and Yemenâ€”followed Bouazizi’s example within 60 days of his death. That was the critical period during which governments were toppled or dramatically shaken. Forty percent of these protesters survived, and some of them are contributing to our research on the difficulty of living in societies without property rights or other freedoms.
All 64 of the self-immolation protesters were engaged in extralegal businesses, and they made their dramatic statements for economic rather than political or other reasons. In filmed footage of real-estate owner Fadoua Laroui in Morocco, for instance, she declares that she is protesting “economic exclusion” just before setting herself on fire in front of a municipal building on Feb. 23, 2011. In an on-camera interview, Mohamed Bouazizi’s brother, Salem, told me that Mohamed set himself alight because he believed that “the poor also have the right to buy and sell.”
The principal reason that self-immolators gave for their acts was “expropriation”â€”governmental seizure of property. A common view of Bouazizi’s death is that he killed himself because a policewoman slapped him and robbed him of his dignity. No slap in the face drives five dozen people to try to burn themselves to death. Every survivor without exception has told us it was about desperation over property.
We calculated the value of Bouazizi’s confiscated assets to be $225. Yet when legal property rights don’t exist, the damage goes far beyond money. Because Bouazizi wasn’t protected by law, his ability to conduct business depended not on an enforceable right but on the goodwill of local authorities. Once these authorities withdrew their protection and seized his goods, Bouazizi was ruined. There was no legal system in place by which he could hope to recover from bankruptcy.
Under contract with the Egyptian government, and with funding from the U.S. Agency for International Development, my institute undertook a five-year study that involved 113 Egyptian professionals working with us to ascertain the size of the gap between recorded propertyâ€”including factories, cars and landâ€”and the actual amount of property in those and other sectors. We found that 82% of businesses and 92% of land holdings were unrecorded and thus unprotected by the rule of law…
This artificially condemns all business to be small business. Poverty can be a self-inflicted wound.