November 2000 Fraser Forum: An International Perspective on Canada’s Aboriginal Title
Tom Flanagan, Gordon Gibson, I, and others have argued that a lack of property rights has hurt the economic prospects of aboriginal peoples on reserve lands. New research shows our arguments are valid, but incomplete, and that the issue is more important than we previously understood. I refer to a new book by the renowned Peruvian researcher and author, Hernando de Soto, well-known for his previous work, The Other Path. Entitled The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (Basic Books, 2000), it asks the question: why is "the hour of capitalism’s greatest triumph its hour of crisis?" Why does capitalism work so well in creating better lives in the West, and yet appear not to have delivered its promise in so many developing countries? In short, he argues that only the West and a few other countries such as Japan have created stable regimes of property rights in land. Coupled with the rule of law, property laws transform efficiently land assets into the capital needed to fuel further growth. De Soto’s argument will seem familiar to many. How he reached his conclusions will not. Applying his methods to Canada’s aboriginal experience should provide some fresh insights. Here are a couple of examples.
De Soto’s first step was to close his books and open his eyes. He saw that throughout the world the poor owned assets and saved. He writes "By our calculations, the total value of the real estate held but not legally owned by the poor of the Third World and former communist nations is at least $9.3 trillion." The key phrase is "held but not legally owned." Immense numbers of homes are squats on public lands. De Soto chronicles the hundreds of steps needed to transform these "illegal" homes to legal ones. If poor people could tap the dead capital in their homes, they could more readily participate in the capitalist economy, just as people can here. The number one source of capital for North American entrepreneurs is a remortgage on their homes.
In one way, aboriginals on Canadian reserves have even less than the poor in the Third World. The poor in Cairo at least have some security for their homes, even if it is less than legal certainty, because the government is reluctant to force squatters off public lands. Also there is some strength in the argument that the poor in Cairo have built their own homes. On reserves, however, the homes are built by the government, or its local face, the band council. Countless stories circulate of aboriginals ordered out of band housing to make way for someone else. Why is it that an aboriginal person on the reserve has a less certain claim to their own house than a poor family in Haiti?
De Soto was also struck by how little people in the West understand the origins of their good property rights. He talked to land registrars around the world who could not explain why they do what they do. The answer lies in history. In the West, and particularly in the United States, enlightened governments over time recognized squatters’ rights and gave them secure title. Gradually they brought individuals and entrepreneurs operating in the underground economy into the formal economy where their talents could reap greater rewards.
Here in Canada, governments have not moved to give aboriginal people more secure title. True, they have granted them some lands, but with numerous restrictions on its use. First and most significant, the Supreme Court’s Delgamuukw decision places an immense entail on lands bearing aboriginal title. Aboriginal people cannot sell or pledge their lands. All they can do is give them back to the Crown. In contrast, in Indonesia, Haiti, Peru, and other countries, the poor "buy" and "sell" unregistered lands, albeit under conditions of uncertainty. Why is it that aboriginal people in Canada have less control over their aboriginal-title lands than an Indonesian farmer has over his farm on government land?
De Soto’s work raises these questions and many more. Here is just one more example. De Soto examines why countries have failed to legitimize the land rights of the poor. He finds it particularly irritating that lawyers, who would stand the most to gain by way of new business, often prove the biggest impediment. They are more content to work within the accepted practices of a dysfunctional system than to learn new ways. Canada provides an analogy. In case after case, lawyers employ themselves expanding the reach of aboriginal title, while ignoring efforts to make aboriginal title contribute to genuine economic growth.
For anyone interested in understanding better the problems facing Canada’s aboriginal people, I highly recommend reading De Soto’s book about the poor in Jakarta, Mexico City, Sao Paolo, Nairobi, Mumbai, Shanghai, and Manila. De Soto may have simplified matters by stating that land title lies at the heart of dynamic capital, but even his basic points seem lost on Canada’s current political leaders.
Owen Lippert (owenl@fraserinstitute.ca) is a Senior Fellow in Law and Markets at The Fraser Institute. He received his Ph.D. in History from the University of Notre Dame, Indiana.
info@fraserinstitute.ca
4th Floor, 1770 Burrard Street, Vancouver, BC, Canada, V6J 3G7
Tel: (604) 688-0221 Fax: (604) 688-8539 Book Orders: 1-800-665-3558 ext. 580
You can contact us at the above email address for any comments or information requests. Please report any dead links or technical problems.