International Economist Addresses Thompson Rivers University

Distinguished Peruvian author and economist Hernando de Soto, whose work has been cited by former President Bill Clinton as being a significant contribution to the worldwide reduction in poverty levels, visited Kamloops, BC in October 2013. He visited the First Nations Tax Commission, the Tulo Centre of Indigenous Economics, local First Nation leaders and Thompson Rivers University to speak about the application of his work to First Nations in Canada.  

The focus of Mr. de Soto’s remarks concerned the issue of poverty on reserve. “Why is this so? Why, in a country with such wealth and abundance of natural resources, are so many of Canada’s First Nations living in poverty?” This same question has been asked about indigenous peoples, minority groups and entire nations around the world. Mr. de Soto has completed years of research to seek answers to this question, and has concluded that poor countries have property rights that are inadequately defined, difficult to understand, or often non-existent. Rich countries have well defined and easily understood property rights. Property rights matter because ultimately economies are not built on natural and human resources, but on the exchange of natural and human resources. According to Mr. de Soto, property rights systems enable a relatively easy trade of commodities, products and services. It is this uncomplicated business of trade which supports the creation of wealth for a country and its people. 

In de Soto’s opinion, it is not just a matter of creating private property or secure property rights; it also comes down to how easy it is to use that property in economic exchange. A property right that can be understood at a glance – that does not require extensive legal definition, review and verification – is going to create wealth. 

Mr. de Soto likens property to the invention of the telephone: it enabled conversations but it didn’t create the conversations. Similarly, property rights enable trade but they aren’t trade itself. He feels that First Nations in Canada have been short changed. The existing system of First Nation property rights simply does not support economic exchange on anything approaching what is available in the rest of Canada. It does not provide property rights that are easily understood at a glance. According to de Soto, as long as this disparity continues, economic exchange will not occur on-reserve as fast as it does off-reserve.