The Mystery of Capital

The Mystery of Capital by Hernando de Soto, 2000, Basic Books

I have been hearing about this book for at least 5 years, and it was supposed to be an amazing, viewpoint-changing experience, so I figured that I should probably get around to reading it. I can't say that it radically changed my views of capitalism in respect to other competing economic systems, but the author does do an excellent job of explaining exactly why the 3rd world always seems to miss out on capitalistic expansions. While "the West" keeps getting richer, other people miss out and stay relatively poor. Why is this? Are they stupid? Are they lazy?

No, they aren't stupid and they aren't lazy. The problem is that everyone seems to have forgotten that capitalsim is all about capital (hence the name). And in the 3rd world, most people are not allowed to develop capital because they don't own official property. Why? I liked the flow chart that showed how it would take literally 18 years to follow all the legal channels to buy property legally in Haiti. It is so ridiculous, that nobody outside of the system bothers trying to get on the inside, so they just squat on land and "own" it in this fashion. Because they lack legal title, however, they can't use that land or house as collateral for a loan, a basic thing Americans like me take for granted. I must say that I had never thought about it before, but it totally makes sense.

My only problem with this book is that it felt too long. It's only about 230 pages sans end notes and index, so it isn't physically that long, but it really only takes the author about 150 pages to make his point, and the rest of the book is him hammering the same point over and over and over again. It gets tedious, but this is still an important book for everyone who cares about helping the poor attain the benefits of the global economic system.