* IPRI 2009 originally posted on March 02, 2009; IPRI 2010 originally posted on February 27, 2010.
The ability to own or control, to keep or exchange, to sell or give away, a particular product or service, is one major indicator of how free an individual is.
For instance, a person owns a car but he believes or suspects that his car can also be claimed as a private property by other people, especially the bully and high-ranking government officials. The result is that he will have no peace of mind, always on his toes that his car can be taken or confiscated by other people any day and anytime. So he seldom uses his car, or he may have to hire a private security guard to help him guard his car. Lack of peace of mind means lack of energy to work productively and earn higher, while hiring a private security guard would mean higher monthly expenses and hence, lower disposable income and lower savings for the family.
Thus, societies that have well-defined private property rights and where the rule of law is properly and strictly observed, tend to have more economic stability.
Consumers and producers, workers and entrepreneurs, have peace of mind knowing that whatever contract they will enter with other people within or outside the country will be honored and respected — that whatever commodity or service they will buy or receive as grants from other people, will be protected as their own private property, and no other people can claim ownership or control of those commodities and services.
This philosophy and sentiment is captured by a Report released this week entitled International Property Rights Index (IPRI), 2009 Report. This study is done and commissioned annually by the Property Rights Alliance(PRA) starting in 2007.
The 2009 IPRI Report compared the protections of physical and intellectual property to economic stability in 115 countries representing 96% of the world’s GDP. The Report is a composite ranking of three comprehensive areas of property rights: Legal and Political Environment (LP), Physical Property Rights (PPR), and Intellectual Property Rights (IPR).
Among the general findings of the Report are the following:
a. Countries that protect the physical and intellectual property of their people enjoy nearly nine times higher GDP per capita than countries ranking lowest in property rights protections.
b. Of the 115 countries included, the top quartile averaged $39,991 in GDP per capita while the average in the bottom 20% was only $4,341 per capita. The second, third and fourth quartiles averaged $23,982, $11,748, and $4,891 respectively. The nearly linear data trend shows that countries placing a high priority on property rights see increased economic security.
c. The result of scoring and ranking of each country and city, especially for Asian countries, is shown in this table below:
It is not healthy therefore, for an economy to embrace left-leaning policies that attempt to disrespect individual talents and performance, and forcibly collectivize things.
Property rights is not a result of positive accidents that allowed the rights owner/s to own and control something without hard or meaningful work. Neither is it a privilege that was bestowed by the gods of the earth to their current right owners. Leftism cannot guarantee the respect and expansion of private property rights.
Property rights means freedom. When someone says “I own this computer, this car and this house”, that person means he/she has exclusive right what to do with those properties. Whether to keep using them, or sell them and get a new one, or lend them to friends and relatives, or simply give them away for free to someone else. There is no external group or persons who can dictate and coerce that person what to do with those properties.
Now, remove that property right from that person and he/she will have zero peace of mind. Why? Because other people can also open up and use his car and say, “this car is mine too” and other people can enter his house and say, “this house is ours too, we are homeless and the government gave us some protection from bitter cold outside.”
Same month last year, I wrote an article, Property rights and lefts. It was about the result of the International Property Rights Index (IPRI) 2009 Report covering 115 countries. And the result of the study showed that the Philippines ranked 74th or it belonged to the bottom 40 percent of laggard countries that do not know how to properly protect their citizens’ right to private property. I concluded that article with these words,
“It is not healthy therefore, for an economy to embrace left-leaning policies that attempt to disrespect individual talents and performance, and forcibly collectivize things.”
This week,IPRI 2010 Reportwas released by its main sponsor, theProperty Rights Alliance(PRA) in the US. It is authored by Ms. Victoria Strokova, a young and dynamic intellectual from Russia who studied in the US. This time, there were 125 countries covered and the Report was co-sponsored by 63 think tanks from 40+ countries that are free market-oriented and strong believers of private property rights protection. Our very own Minimal Government Thinkers, Inc. is one of them and the only Philippine-based think tank that partnered with IPRI.
The IPRI Report measures three main categories. One, the legal and political environment (LP), composed of judicial independence, rule of law, political stability and control of corruption. Two, physical property rights (PPR), composed of protection of PPR, registering property and access to loans. Three, Intellectual property rights (IPR), composed of protection of IPR, patent protection and copyright piracy.
LP is important. When there is no rule of law and the government (from the Executive to Legislative and Judiciary) is corrupt, some politicians and bureaucrats can produce or allow the production, of fake land titles and they or their friends can engineer land grabbing of someone else’s property. PPR and IPR are equally important. When someone can say, “the huge cost of your scientific research and invention is your and yours alone, also the losses from your unsuccessful work. But your successful invention is also MY invention,” and government will tolerate it, then innovators will be discouraged from undertaking expensive and highly risky research and innovative work. And society will be stuck with old and outdated technologies and inventions, affecting productivity while human demands and population keep rising.
There is a scoring system employed in producing the composite IPRI, 1 the lowest (meaning almost zero protection of property rights) and 10 the highest.
The more important question now: how did the Philippines and other Asian countries fare compared to other countries around the world?
Again, the Philippines belonged to the bottom 40 percent of the 125 countries covered by the study, 80th out of 125 countries. What pulled down the country’s overall score and ranking, is its low score in the legal and political environment (LP), only 3.5.
For sure, big corruption and plunder scandals in government, plus policy reversals last year like strong attempts to re-regulate the petroleum industry and actual drug price control, contributed to the low belief by entrepreneurs and the citizens of the government’s ability to really promulgate the rule of law.
Populism and leftism, the synonym concepts of socialism, will push any country towards economic underdevelopment. Private property is not public or government property. Private enterprises’ pricing should not be tinkered as government pricing.