In two previous blog posts, we examined the seeming irrationality of the urban poor and their tenuous property rights. The posts were in response to the devastation and human tragedy caused by the torrential rains and rampaging floods earlier this week.
This time, I think it is apropos to share with readers excerpts of a paper written in 2009 regarding the property rights of the poor in the country.
A key aspect of poverty would be the weakness or imperfection of the property rights of the poor. A key argument developed in this blog post states that strengthening these same rights through legal recognition (and all other means) is a sine qua non (even if insufficient) to enable poor people to get out of poverty. We are primarily interested in finding out how property rights of the poor in the Philippines could be strengthened as a necessary step towards poverty reduction. To do so, why their property rights are weak or insecure must be understood. We also seek to identify the most important sources and incentives and the necessary institutions and potential alliances for change.
First and foremost, property rights (PRs) are legal categories and the legal nature of PRs must be grasped first. Properties are things over which a person or group of persons (or some juridical entity) has exclusive rights. Someone who has property rights is referred to as a right holder; but more commonly, he is referred to as an owner. Owners of property may be juridical individuals, the state, or a community. Property therefore is the object of property rights. A property right is the exclusive authority of the owner (or right holder) to determine how a piece of property is used. This right is actually a bundle of rights consisting of (a) the right to use the good (usufruct); (b) the right to earn income from the good; and (c) the right to transfer the good to others.
Property rights represent the capacity to call upon a society to stand behind the right-holder’s claim to a benefit stream. They therefore involve a relationship between the right holder and all others, and an institution that supports the claim by requiring others to uphold or respect the right (Bromley 1991). The last requirement is important; to be effective, property rights need recognition and legitimacy and enforcement structures. Ideally, it is the state that ultimately enforces and protects property rights of its citizens. States must be powerful enough to do so. The state’s power is largely a function of its control over means of violence but asset holders must be convinced that such a power will not be used against them.
In reality, however, as Bates, Greif, and Singh (2002) remind us, the state is not the only social agent with assets for violence. Under these circumstances, it is also not the only agency that can protect and enforce property rights and contracts. Therefore, security of life and property are not intrinsic public goods that only a state can provide. They can also be private goods since they can be provided by private agents or non-state actors. Like the state, private actors must have control over some means of violence for them to be able to secure life and property. Absent the state, private agents will have the monopoly over means of violence and security becomes a pure private good. When states and non-state actors have access (even if unequal) to means of violence, then they become rival suppliers of security to private actors without such assets.
How important are property rights to the poor in society? Secure property rights provide not only an income stream today, but also incentives to invest in productive technologies and sustainable management of the resources for the future. The poor are usually those with weakest property rights; and secure rights over land, water, trees, livestock, fish, and genetic resources are fundamental mechanisms for reducing poverty. Insecure property rights compress the poor’s time horizon (emphasis on the present) and consequently lock them in low-yielding livelihood strategies. Poverty is also exacerbated by lack of access to public services like potable water and health facilities. Collective action, or action taken by a group to achieve common interests, can help the poor overcome their limitations and enhance their access to productive assets. This is true even if the poor and women, as with property rights, are often at a disadvantage with respect to collective action. The disadvantage is usually a function of social exclusion, lack of time, lack of education and confidence to speak in meetings, and domination by local elites (Di Gregorio et al. 2005).
Current thinking and practice in law and development is dominated by the so-called ‘rule of law’ (ROL) paradigm especially with respect to property rights. The orthodoxy overlooks a central reality that in many developing countries, laws benefiting the poor exist on paper but not in practice unless the poor or their allies push for the law’s enforcement. The rule of law (ROL) paradigm focuses too much on law, lawyers, and state institutions, and too little on development, the poor and civil society. It takes a ‘top-down,’ state-centered approach and concentrates on law reform and government institutions. It remains to be seen whether the dominant ROL paradigm should be the main means for integrating law and development. An alternative or even complementary approach—legal empowerment or the use of legal services and related development activities to increase disadvantaged populations’ control over their lives—is often preferable (Golub 2003). The recourse to collective action, the presence of non-state rivals, and the weakness of state institutions in the developing world—all make the legal empowerment mode both necessary and viable. However, these two paradigms need not unduly compete with each other. They need to complement each other since rule of law with its requisite institutional arrangements are required for property rights (especially of the poor) to be enforced, protected, and expanded.
Bates, R., Grief, A. and Singh, S. (2002). “Organizing Violence.” Journal of Conflict Resolution 46(5): 599-628.
Bromley, D. W. (1991). Environment and economy: Property rights and public policy. Cambridge, MA.: Blackwell.
Di Gregorio, M., K. Hagedorn, M. Kirk, B. Korf, N. McCarty, and R. Meinzin-Dick. (2005). “A Framework on Institutional Change for Resource Management and Poverty Reduction: The Role of Property Rights and Collective Action.” Paper presented at the 99th seminar of the European Association of Agricultural Economists, Copenhagen, August 24-27, 2005.
Golub, S. (2003). “Beyond the Rule of Law Orthodoxy: The Legal Empowerment Alternative.” Carnegie Endowment for International Peace (CEIP) Working Paper No. 41.
 The transfer of rights over a piece of property to another may be total or partial. For instance, the good may be bequeathed as an inheritance to another by the owner. In this instance, the full panoply of property rights will get transferred to the heir. In another instance, only the usufruct rights may be transferred to another without relinquishing ownership.