Guest Essayist: Andrew Langer

LISTEN ON SOUNDCLOUD:

Early on in the film, Lawrence of Arabia, Colonel Lawrence (played by Peter O’Toole) offers a quote from Themistocles to a British General.  “I cannot fiddle,” Lawrence says, “but I can make a great state from a little city.”

Themistocles’ quote is illustrative of an important point:  sometimes the simplest acts can have tremendous impact in the long term for a society.  Clearing title, the action of ensuring that someone owns a particular parcel of land “free and clear” is one of these actions.  From the standpoint of real estate law, the importance is obvious:  you cannot buy or sell or invest in a parcel of land unless the thread of ownership is crystal clear.

But clearing title goes far beyond that—and is an essential element of a free and prosperous society.

Throughout his works on property, especially the seminal book “The Mystery of Capital,” Peruvian economist and political scientist Hernando DeSoto talks at length about the role that strong property rights play in creating prosperous and stable societies.  In it, he compares and contrasts the various property rights regimes in a host of nation, and lays out the case for how the protection of private property (or lack thereof) plays into that nation’s well-being.

DeSoto is emphatic that ensuring the clarity of title is one of the most-important, if not the most, single element that separates a rich and stable nation from a poor and unstable one.  Without that clear title, people are hesitant to buy or sell a piece of property.  Worse, without that clear title, people cannot use that piece of property to invest in their own future.  They cannot better themselves, and without that prospect they lose hope.  And it is that loss of hope, combined with economic stagnation, that leads to the collapse of a society.[1]

From its founding, the United States has looked at such property rights as a bedrock principle of the Republic.  But beyond the Constitution’s protections in the Bill of Rights, the nation could not have become who we are without recognizing the importance of clear title.

In fact, the very mechanisms by which U.S. Territories became states provide us with example after example of how clearing title was an essential element of the settling of the American West.  If one surveys the “Enabling Acts”—especially the Enabling Acts of states which became a part of the Union after the 1848 Treaty of Guadalupe Hidalgo, one will find a variation on the phrase in each that, the title to all “unappropriated public lands” shall be turned over to the federal government, and that the federal government will become responsible for “disposing” of these lands.[2]

The Territorial Governments (that later became state governments) entered into this agreement because that was this tacit understanding that in order to facilitate smooth settlement (and thus encourage that settlement), ensuring that a parcel of land had a clear title was key.

And it worked.  The federal government was able to effectively encourage mass settlement in western states… and those who were able to secure property (either for free or for a very low amount) could not only build on those lands, secure in the knowledge that they wouldn’t have someone claiming that land somewhere down the road, but they could use that property as collateral for investment as well – an essential aspect of agriculture, for instance, even in modern times.

The lesson also has ramifications in the context of international law.  Many conservatives and conservative organizations (rightly) show skepticism at international legal regimes, like the United Nations Convention on the Law of the Sea.  Understandably, they don’t like the idea of an international body picking and choosing who or how someone gains access to valuable minerals and other resources under the sea bed in international waters.

But what they fail to understand is that unlike much of what the U.N. does, UNCLOS is a pro-property rights regime that builds on how we understand property and finance to ensure the same kind of smoothness that led to the settling of the American West.  It essentially grants that title (in reality, a permitted leasehold interest) to an applicant, who can then turn around and secure the money necessary to extract the resources.

Two companies present themselves before a lending institution attempting to secure financing for an under-the-sea-bed extraction project.  One has the “title” from UNCLOS.  The other is just asserting that the project is in international waters, and is therefore open to anyone.

Who will the bank give the loan to?

The one who has the legal right to engage in the project, of course.  The one who has clear title.

As the World looks to finding ways to promote economic prosperity and political stability—the work of Hernando DeSoto makes it clear.  Look towards property rights, including ensuring clear title to property.  This, as Themistocles would say it, is how you do make a great state from a small city.

Andrew Langer is President of the Institute for Liberty.  This fall he begins teaching at the College of William & Mary in Virginia

 

Click Here to have the NEWEST essay in this study emailed to your inbox every day!

Click Here to view the schedule of topics in our 90 Day Study on Congress.

 

[1] In another DeSoto work, “The Other Path,” he discusses at length the role that titled property rights, including the issue of determining clear title, played in Peru’s struggles with the Marxist terror organization, The Shining Path.

[2] In fact, there is some question as to whether or not this language in these enabling acts serves to contractually obligate the federal government into disposing of these lands, not retaining them in perpetuity.  With the federal government owning and controlling so much land, to the detriment of state and local governance, some believe that the Federal Land Policy and Management Act of 1979 violates the conditions by which these states became states.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *