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By Patrick McAuliffe

The World Bank reports that in 2015, 736 million people around the world live on less than $1.90 per day. This is about ten percent of the global population, and the lowest number on record. Still, that’s almost twice the population of the entire United States and a gargantuan number of extremely poor people. How would you go about getting them out of poverty?

The United Nations has its own ideas for a better global tomorrow through its Sustainable Development Goals (SDG). They want the world to achieve these goals by 2030. Most of them are pretty self-explanatory on why they are good things to do (vaccinate your children, avoid wasting water, even help children in your community to read), but we’ll focus on the number one goal: no more poverty.

The first target listed for Goal 1 on the UN website is “substantial coverage of the poor and vulnerable” through “nationally appropriate social protection systems”. By 2030, they hope that this will cut poverty in half. Any fan of national sovereignty is glad that the UN by definition is more of a suggestion and not a commandment, because any sort of mandate to implement this goal would be wildly unpopular with the governments and people forced to do the actual funding. The second target listed for Goal 1 is arguably more beneficial to the poor in the long run and can help them contribute to the global economy. It is more in the spirit of what inspired me to write about this topic.

Target 1.4 (the second one; I know the numbering is weird) hopes for the poor to have “equal access to economic resources”, including “access to basic services, ownership and control over land and other forms of property…”. This is, in my analysis, where the root of the poverty cycle grows from, and why lots of socialists will argue for capitalism’s failure in truly helping the most vulnerable around the world. To see why it actually might be “not true capitalism”, to use the frequently cited conservative cop-out, we need to turn our attentions to Peru and the ILD.

Peru in the late twentieth century was wracked with poverty and turmoil. A communist student group called The Shining Path (because what goes better together than students and communism?) began to commit acts of terror in the country, often using poor, desperate people as their foot soldiers. The Institute for Liberty and Democracy, founded in 1981 by Hernando de Soto, was their main target. (Liberty and democracy were being targeted by communists? Never in a million years!) The ILD was committed to helping poor people realize the source of their frustrations lay not with any oppressive corporation or foreign invader, but with the current economic system they wanted to enter but could not because of their country’s own laws.

De Soto and his team tried to open a small shop on the outskirts of Peru to see just how difficult it was for the poor to operate within the system. To register a business took 289 days and costed more than 32 times the minimum wage; to acquire a title to one’s land took six years. Because of barriers to entry like these, the poor are forced to operate extralegally. Many claim that poor countries are poor because of a culture that doesn’t promote entrepreneurship or because of not enough foreign aid. These claims are empirically incorrect; the poor are incredibly industrious and much of foreign aid puts a relatively small dent in global poverty. The ILD and de Soto argue that the poor cannot improve their condition because they cannot legally register themselves and their property. They have no legal identity and cannot break out of local, pre-modern economies into the modern global one. Their governments are not fully protecting their property rights.

Here is where I trigger the libertarians and communists reading this article: individuals need the state in some capacity. That capacity is to protect their property rights. The fault for poor people remaining poor lies not with the capitalist system itself, but with these governments, more interested in bureaucratic mazes and corruption than helping the poor take control of their lives. The ILD estimates that the global poor actually own billions of dollars of assets, yet they cannot properly capitalize on them because they are not legally recognized.

I encourage you to check out the ILD’s research on this topic. The fact that the poor work quite well within a capitalist system, yet cannot join our broader one because of institutional barriers, is something I had never considered before. It gives me hope that the successes of the capitalist West can be brought to the global poor in full effect, if only their governments would allow it. The top-down recommendations of the UN pale in comparison to how the poor can be helped in the long run. They already help themselves, but they’re locked out of the global market; it’s time for their governments to let them in.

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