Report: Property Rights in America Weakening

United States’ property rights protections ranked 17th in the world


The strength of property rights in the United States has declined over the past four years, a new report on property rights around the world has revealed.

The Property Rights Alliance released its annual International Property Rights Index on Tuesday. The index ranks 131 countries based on how they score in three areas of property rights protection: legal and political environment, physical property rights, and intellectual property rights.

The United States was ranked 17th in the world for property rights protections.

The United States had an overall score of 7.6 out of 10, putting it behind such countries as Finland, the United Kingdom, Hong Kong, and Germany. Its score puts it just ahead of Belgium, Ireland, France, Qatar, and the United Arab Emirates.

The United States’ score has declined almost half a point since its 2009 peak. However, this year’s score is 0.2 points higher than in 2007, the first year of the report.

Intellectual property rights was the highest component of the U.S.’s score, coming in at 8.3 and putting it in a five-way tie for second in the world.

However, the relative weakness of the U.S.’s physical property rights and legal protections dragged down the overall score. The United States ranked 23rd for legal protections with a score of 7.2 and 22nd for physical property rights with the same score.

The United States did see its score slightly improve from last year, "due to a 0.4 point increase in political stability," the report said, presumably in the wake of the presidential elections.

Those countries with stronger property rights protections tend to be wealthier, the report showed. A strong correlation exists between all three areas of property rights and Gross Domestic Product (GDP) per capita.

At the bottom of the rankings were such countries as Yemen, Venezuela, Burundi, Haiti, and Libya. China ranked 58th with a score of 5.5, and Russia ranked 102nd with a score of 4.5.

"Too many in the West, where property rights seem as natural as the air we breathe, have forgotten how important such rights were in helping Europe and the U.S. make the transition from the Old Regime into the Industrial Revolution," wrote Hernando de Soto, president of the Institute for Liberty and Democracy in Peru, in a foreword to the report.

"They tend to view property rights as essentially the protection of ownership … What they miss is that property rights have evolved from those original functions to play other roles in modern society."

De Soto argued that strong property rights protections allow entrepreneurs to work and collaborate, driving the economy. He has been researching property rights issues since the 1980s, and the Property Rights Alliance has created the Hernando de Soto fellowship in his honor. The de Soto fellow writes the report each year.

The report pays special attention to the Middle East and northern Africa with an in-depth analysis of Tunisia, where the Arab Spring symbolically began.

"It’s pretty clear that strong property rights are a key foundation for a strong economy and a strong society," said Rick Geddes, a professor of public policy at Cornell University.

Property rights help encourage investment by guaranteeing the security of investments against arbitrary loss. Property rights also have a big effect on credit markets, as loans depend on clear titles to property to back them, Geddes said.

Additionally, studies have shown that legal protections for women’s wages against arbitrary confiscation encourage families to educate their children, Geddes noted.

"Property rights and low taxes are the key to economic growth. Everything else flows from that," said Grover Norquist, president of Americans for Tax Reform, which helped found the Property Rights Alliance.

The Arab Spring was the result in part of people not having property rights, Norquist contended. The first man to set himself on fire in Tunisia did so because he did not have any property rights, and subsequent self-immolations across the Arab world happened for the same reason, Norquist said.

Property rights—not democracy and financial aid—are the best way to stabilize the region, Norquist argued.

"The way to become like us is to have property rights like we did," he said.

Andrew Evans   Email Andrew | Full Bio | RSS
Andrew Evans is an assistant editor at National Affairs and a former reporter for the Washington Free Beacon, where he covered government accountability and healthcare issues.

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