Pope Leo XIII And Property Rights

Pope Leo XIII And Property Rights

Rakesh Wadhwa
The Himalayan Times , Monday, August 01, 2005


The Kathmandu Post on July 12 highlighted the plight of Krishna Bahadur Karki, a slum dweller of Shankhamul in the country's capital. He has been denied electricity by NEA because he does not possess citizenship papers. He is compelled to use oil lamps instead. If you do not have citizenship papers, you are not only denied electricity, but water and other basic amenities as well. You cannot hold land or property. It is not that Karki has not tried to get the papers, he has been trying for the last 12 years. No success so far. This brings into sharp relief the problems poor face because of officialdom's refusal to give its people simple, but vitally important pieces of paper - whether they certify nationality or grant title to property.

For people it's a catch 22. If you don't have papers, no land, water or electricity for you; and if you try to get those papers, you are asked to show documents of land ownership, or water and electricity supply from NEA. This official indifference to the suffering of people contributes to Nepal's poverty. Red tape ensnares people in the vicious circle of indigence.

Why are property rights so important, and why do excessive documentation like citizenship requirements harm so much? Pope Leo XIII said in 1878: "Men always work harder and more readily when they work on that which belongs to them. It is surely undeniable that, when a man engages in remunerative work, the impelling reason and motive of his work is to obtain property and thereafter to hold it as his very own". Property rights means that the owner gets exclusive use of what belongs to him; he can throw out trespassers, and he gets the right to sell or transfer. Great benefits flow from these rights.

Property rights gives the people a strong incentive to add value and use their property as productively as possible. If you know you have a clear, non refutable title to a home or a building, you will keep it in good shape and carry-on adding value to it. In the old Soviet Union, 99% of the farms were collectivized under state ownership. The one percent small holdings, of less than an acre each, which remained under private control provided 25% of the agricultural output of the country. There is no greater incentive to production than the right to ownership of land and its produce.

Private ownership rewards wise use of what you own. That is why hotel lawns are manicured while the government's open spaces are a cesspool of dirt and filth. Compare the gardens of the Shangri-La hotel with any park maintained by the government, compare also privately owned buildings with what is owned by the government, and you will see why private ownerships matters.

Private owners conserve resources for future. This may not seem obvious, but consider a private owner of a lake where he charges people to fish. He has the incentive to ensure that he earns an income not only this year, but in subsequent years as well. He is not likely to let the stock of fish go down. Contrast this with a government owned lake or the oceans; if I don't catch the fish, then you will, and therefore none of us have any incentive to conserve. This is the reason for worldwide depletion of fishing stocks. There is no depletion of chicken because the ownership rights are well defined, unlike in the case of fish.

The government has a vital role to play. It has to frame policies which protect the property rights of people, makes titles easily and quickly transferable. It must also create a mechanism, through law courts and arbitration procedures, which lead to an expeditious settlement of disputes about property. Nepal fails on all these counts. The process for remedying the situation needs to begin.