Saturday, May 17, 2008

Read: The Mystery of Capital

In all of American history, you probably learned just how land ownership was conferred, approved, and made transferable. In Texas, empresarios recruited colonists to settle in the then-Mexican state. The Texas General Land Office says,

Mexico retained ownership of the land within a colony until the colony's land commissioner issued title to it. The colony's actual boundaries were therefore determined by the extent of settlement within it, rather than by the boundaries specified in the contract. Mexico made more than two dozen empresario contracts, about half of which were even partially carried out. However, empresarios brought about 50,000 settlers to Texas between 1821 and 1836.


The Colonization Law of 1825 also created the office of land commissioner. Because Texas was so large, the governor was authorized to appoint commissioners who would issue land titles, maintain land records and provide the colonists with copies, maps their regions and supervise surveys. In addition, commissioners were to take the oath of allegiance from new settlers, appoint surveyors, select sites and mark the streets for new towns and provide and maintain ferries. Payment for performing these duties would come from title fees collected from colonists.


Texas apparently did not go through the same trouble that colonists went through in other parts of the United States, and what people in many developing countries currently experience.

The problem of land ownership, title, and transfer is a major stumbling block, and that is the thesis of Hernando de Soto's book, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. This book is important, and explains why some countries, like the United States, Canada, Western Europe, Japan, and others are wealthy, and why some seem to stumble or spin their wheels.

De Soto claims that mystery of capital is such because it has received the least amount of attention from activists and the media. Economic reforms have been tried before, and in many countries, they have failed to bring about the long-term economic growth that the US has experience since the 1930s. Even today, leaders like Hugo Chavez propose economic policies that are troublesome at best, and disastrous at worst.

The mystery of capital, of why many countries have trouble building wealth, is actually five separate mysteries: the mystery of missing information, of capital itself, of political awareness, the lessons of US history, and that of legal failure. De Soto devotes a chapter to discussing each of these, and proposing solutions.

The missing information is just that: no one really knows who owns what, outside one's inner circle of friends. Much of this comes from fairly recent, post-1950 economic development. De Soto compare's the post-World War II development of the third world to the post-Revolution developments that occured in Europe and the new United States. The Industrial Revolution was not isolated to the city; its impact was felt in the countryside. Then as is now, people left the agricultural sectors permanently. When they left, they found themselves against a legal system that made entry into legal property ownership, employment, business management so difficult as to be impossible. De Soto cites the example of Lima, Peru:
Our goal was to create a new and perfectly legal business. The team then began filling out the forms, standing in the lines, and making the bus trips into central Lima to get all the certifications required to operate, according to the letter of the law, a small business in Peru. They spent six hours a day at it and finally registered the business-289 days later (18).
With hurdles like these, no one should wonder why so much the economy in developing countries is underground. De Soto has charts in his book that details the mind-numbing process that people in countries like Peru, Phillipines, Egypt, and Haiti must go through to become legit. It takes 168 steps and 13 - 25 years to formalize property in Phillipines. Seventy-seven steps and 6 - 14 years to "gain access to desert land for construction purposes and to register these property rights in Egypt" (22 - 24).

De Soto and his colleagues have done a stunning amount of historical research, going back to Adam Smith and Karl Marx. Economists such as these attempted to define capital, and de Soto says that capital is an abstraction that must be realized, that is, made into something concrete, fungible. Only that which can produce greater value is capital. A car that transports one to work, so that one may earn money, to buy other things (like a replacement car) is capital. A car used for joy-riding is not capital, until put to productive use. De Soto claims that several billion dollars of "dead capital" exists in most of the world, mostly in people's houses, workplaces, and business transactions. Few of these are recorded, made public, and given titles, proof of ownership.

What does exist is an ad-hoc network of informal systems. How to prove that you own what you own? You have a piece of paper, issued by some office, but that office is itself not a legal establishment. The only proof you have is your word, the word of your friends and family, and your neighbors. A stranger has little reason to trust you, and you have little reason to trust them. Among those strangers, is the local, state, provincial, and federal governments.

The word "messy" does not begin to describe the chaotic approach millions of people have taken to securing employment, buy houses, set up utilities, and, well, build capital. It is as if the way that undocumented immigrants have gotten jobs were extrapolated to most of the US population. People like you and me, driving cars, working on computers, renting apartments, blogging, doing all of that without licenses, registration, an accurate electric meter, housing inspections, and a journalist license. Imagine spending years of your life to get an officially sanctioned house. You would probably blow the process off, find a house, arrange payment, move in. You hope that nobody comes knocking on your door, claiming to have a piece of paper demonstrating ownership of the property that was given to them decades ago by the previous government.

At one point, something like that existed even in the US. De Soto writes how in centuries past, the transition from extralegal arrangements to inclusive was made throughout Europe, North America, and Japan. The process then was not easy, and in the US took nearly the entirety of the 19th century. Progress was made in fits and starts, with a lot of emotional rhetoric on the part of lawmakers.

The part where de Soto describes US history is for me the most alive part of the book, no doubt at least in part because I'm an American, and the Wild West is romantic, if only in very fuzzy hindsight. He writes,
The governments and judiciary of the young states, not yet so legally united, were trying to cope with the law and disorder of migrants, squatters, gold diggers, armed gangs, illegal entrepeneurs, and the rest of the colorful characters who made the settling of the American West so wild and, if only in hindsight, so romantic. To a Third Worlder like me [de Soto], this picture of the gringo past is astonishingly familiar. Although my colleagues and I have trouble relating to 11,000 on the Dow Jones, we feel quite at home among the squatters in Thomas Jefferson's Virginia or the log cabin settlements of Daniel Boone's Kentucky (107).

This is an important fact: America was a 3rd World Country, too. Its progress from 3rd to 1st was not due solely to technology or (as some would have it) providence. It was the way that the law reflected the vast majority's outlook on life and its processes. The law reflects society's habits, not commands it. The law is useless if irrelevant and impossible to enforce. Every citizen would do well to be acutely aware of that fact.

If only modifying the law were to be so easy. De Soto says that developing nations have spent more than a century trying to reform property laws, but to little avail. He thinks the problem rests on misconceptions on the part of the reformers. The people who attempt to fix the problem seem to fall in the trap of thinking that people who live and work extralegally do so to avoid taxes, or that proper surveying and recordation is necessary. Maybe the powers-that-be think that the current law is sufficient enough, and that enforcing compliance is the issue. Maybe other leaders think that the current social contracts, however informal, can just be ignored, and that in any case high-level leadership is not necessary.

De Soto deconstructs each of these arguments and demonstrates their fallibilities. Living in the extralegal sector is hardly a tax break, compared to all the "favors" that one must pay to avoid crossing the local gangs. Proper surveying in the United States was not conducted until after property law was reformed.

There is a point in the book that makes me wonder if de Soto contradicted himself. At one point in the book, de Soto writes "Does that mean that lawyers should lead the integration process? No. Implementing major legal change is a political responsibility" (158). Later, he says, "To be sure, the battle [of property law reform] was uphill all the way, mainly because, as Peter Stein has remarked, lawyers' 'contribution to a proper understanding of legal institutions was obscured by their emphasis on antiquarianism and their acceptance of Roman law as a finished product.' Nevertheless, over time, great European jurists overcame excessive rigidity because as Stein points out, they 'made it their profession to become experts in the intricacies of the Roman law, and to ensure that it moved with the time.' Against their colleagues' rampant unresponsiveness, in every European country an elite band of lawyers emerged to help lift the bell jar" (201).

Maybe de Soto thinks that lawyers need to stop venerating the law so much, and assist or lead the political process in adapting the law to be more inclusive. This is a call to profound citizenship.

De Soto concludes that if capitalism is not introduced on a micro-economic scale, then the problems afflicting developing countries threatens their already fragile stability. Earlier I mentioned that non-capitalist movements are seeing a revival, with all their problems. Capitalism for the elite is a bad investment in the long-term.

I conclude by saying that this is one of the most important books of this era. This book should have been published, distributed, and injected into the popular global mindset back in 1991. I posit that many, if not most, economic problems are unnecessary. They are the result of bad management, poor risk evaluation, and now as the case has been demonstrated, an impossible legal framework for the majority of people in developing countries. We the people of Earth deserve better than that.

Tuesday, May 13, 2008

Watch: Battlestar Galactica

Few TV shows stand out, and make a lasting impression upon one's mind. Few shows make you think, days afterward, about life, meaning, religion, its followers, leadership, the things that leaders must do to convince their followers that the path that they are on is indeed the right path. Few shows have dared to be arty, weird, funny, sad, subtle, symbolic, romantic, passionate, and tragic.

Battlestar Galactica (BSG for short), the new one, is one of those shows. It is one of the best TV shows I have ever seen. It is certainly the best American (though it was partnered with British network Sky for its first season) show I have ever seen. The best TV show I've ever seen, though it was actually an OVA, is Legend of the Galactic Heroes (LoGH). The best broadcast network TV show I've seen is Lost. Special mention goes to Doctor Who, for pure inventiveness, but its stories are inherently non-linear as the years go by, so I cannot say that there is a coherent episode-to-episode story like BSG, LoGH, or Lost. There you have the categories.

BSG started out as a miniseries on the Sci-Fi channel, and is now in its fourth season of regular programming. Summarizing this show is difficult, and can take a while. I will focus on just the parts that stick out in my own mind.

Gaius Baltar's vision of the Opera House, and other visions of music and architecture. The music stands out, and what cemented in my own mind that this show was becoming a work of art. The scene is not pretentious, as it is consistent with Baltar's previous visions of Number 6, and the Opera House will figure prominently in later episodes. But, listen to the music! Count the layers of sound! The architecture stands out, because how often do interior layouts, design, and lighting get such high billing and focus? I'm not sure what the Opera House is supposed to mean, other than as a setting for drama, or a cultural bond that humans and cylons share.

The human culture. The humans mostly worship a pantheon of gods. In fact, their culture reminds me of what the Roman Empire might have been like if it had not fallen. Imagine Rome being the center of the world, politically and financially, with computers, space travel, and a (somewhat) democratic process. BSG is not entirely into world-building, which has its pluses and minuses.

On the plus side, Caprica and the other colonies were destroyed, so in the context of the story, they are the past. The show is about the trying to live after the attack, not about life before the attack. Supposedly, a new show, called Caprica, will depict life as it was. That new show would be almost entirely world-building, though if it depicts life decades before the cylons blew everything up, the show could be filmed in present-day Vancouver and no one would justifiably holler "where's the sci-fi city!" Also, world-building often strikes me as poorly-done, since sci-fi tends to have a poor track record in getting future predictions right.

On the down side, enough colonial culture exists in BSG, differing from US culture, that it leaves questions, such as:

Why do most, if not all, documents and photographs have their corners filleted, to form octagon-like shapes?

Why do men and women live in such an explicitly gender-neutral culture (men and women share public bathrooms, and refer to each other as "sir")? How was this achieved?

Given that advanced AI exists, and has existed, and space travel is far advanced, why do human lifespans seem so normal? It's OK that they don't, just...why? I know that advanced space travel and artificial intelligence does not guarantee a greatly reduced incidence of heart disease, but someone should bring it up. At least complain about it.

And, so on. I understand that there has to be some differences, otherwise the show would be Americans in Space on the Run from Monotheistic Robots. But, what differences that do exist, an explanation or reason would be nice.

Another thing (aside from the music/architecture/visions, and their culture), is the high quality of the acting. I don't know if acting is like fashion: it has its cycles and moments, or is something that can be said to evolve, similar to advertising. Advertisers try to convince you to buy something, don't actors try to convince you to believe what they're saying? Maybe the whole subject is, well, subjective. I can't remember a time when the characters acted contrary to previously established behaviors (looking at you, Lost) , but otherwise don't devolve into stereotypes or have over-simplified personalities.

Special attention should go to Katee Sackhoff, who plays Starbuck, and is the first actor I've seen to effectively communicate doubt and dread while barely flinching a facial muscle. She is the most complex person on the show, even more so than Baltar. She loves two men, marries one, is sent out on the most dangerous, strategically ambiguous missions, and maybe even "dies" and returns from the "dead" with photos of Earth and a brand new spaceship. She drinks, smokes, plays cards, had a stash of drugs back on Caprica, is fiercely loyal to Odama, and is currently convinced she must find Earth. All that, and the Cylon Hybrid takes a break from its non-stop babble to grab Starbuck's arm and tell her that she, Starbuck, is the "harbinger of death".


I won't go into an episode-by-episode re-hash of the show. You can visit Ack-Attack's website for that. I just think that any creative endeavor, even video games and TV, can become a work of art, though of two different kinds.

Just as a painting or sculpture tries to evoke an emotion, however abstract, video entertainment can achieve a similar effect. The problem is that these are new forms of media, and don't have centuries of background like other conventional art forms. How long before photography became an art form? Movies? Few paintings have the status of the The Last Supper or Starry Knight, or sculpture like that of Venus de Milo or David. They reflect the idealization, honoring one's cultural background, or that which exists naturally. They stand as wonderful representations of the era in which it was produced.

Can video games transcend technology? Can the romance of 8-bit go beyond nostalgia of the 1980s? Is Myst the first attempt at such transcendence? How about A Mind Forever Voyaging, an attempt at literary video gaming? Can TV be art? 2001: A Space Odyssey manages to be both art and sci-fi. Same for Metropolis. Why not TV? Not an adaptation of previous literary work, but a project conceived explicitly for 22- or 45- minute long viewing segments. Something that will stand as being symbolic of its era.

I saw an episode of The X-Files a few months ago, more than a decade after that particular episode aired, and several years since the show ended. At that moment, I realized how much TV (well, the kind of TV I watch) has progressed, or at least changed. The technology, exhibited on-show as well as used in the production of the show, had changed. Camera positioning and movement styles had changed. The fashion, cars, and particular political outlook (post-Cold War, pre-War on Terror) was so...'90s. All that was missing was music from the Stone Temple Pilots, and a kid playing the first generation Sony Playstation. But those are mostly details, like synthesizer music in the 1980s and afros in the 1970s.

Is Battlestar Galactica the first show to be TV as art?