Alain Bertaud: recommendation

Transcript context

…Are you afraid that it will lead to more regulation, more taxation, more confiscation and aversion, in essence, of the Chinese social credit system if we make everything part of the formal economy in poor, corrupt countries? I don’t make such difference between the formal economy and the informal economy as most people do. My experience is that if you go in a slum — which most planners will consider informal — you have a market which works exactly like other markets. You have also expropriation. So I don’t think that registering property in itself will create a bureaucracy which will kill the . . . Again, there are different ways of registering property. For instance, the way it was done in the compound in Indonesia where — by the way, another skeleton in my closet — in Indonesia, the World Bank participated in financing the compound upgrading, which was basically slum, I mean former villages which had to be provided with infrastructure. And our theory in the bank was that you can do that only if you provide property rights to the people who are living there, whether they are squatters or not. You just survey their plot, you give them property right. And we insisted with the government — the Indonesian government — at the beginning, we insisted that we will not provide infrastructure unless there was also a program to provide property rights. The Indonesian [government] insisted that this will cost too much. We did the back-of-envelope thing, and it did cost too much to have a proper survey, especially the way lots were extremely small. So we decided to go ahead and finance it because Indonesia was such a big client, and the World Bank is still a bank. You need to lend money at the end of the day. So eventually, what we found is that when people had infrastructure, they had the water meter, they had water, and they had the water bill, and they will pay the bill. And the bill itself was an address. In order to have a bill you have an address. The bill was a proxy for a property title. When some people made a study about that, they found that a property guaranteed by a water bill was discounted maybe about 10 percent compared to a formal thing. So you see, I don’t necessarily make a . . . I think property rights are very important. It’s a guarantee that you will not be removed without compensation. But I don’t make necessarily a very strong boundary between formal and informal. I think there can be a lot of property rights which are just there and as effective. You want property right for transaction, and I think those informal property rights could guarantee very fair transaction the same way as formal one. Do you love graffiti?…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.