Hernando de Soto (economist) facts for kids
Quick facts for kids
Hernando de Soto
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De Soto in 2014
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| Born |
Hernando Soto y Polar
June 2, 1941 |
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| Institution | Institute for Liberty and Democracy | ||||||||
| Field | The economics of the informal sector and property rights theory | ||||||||
| Influences |
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| Contributions | Dead capital | ||||||||
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Hernando de Soto Polar (born June 2, 1941) is an economist from Peru. He is well-known for his ideas about the informal economy and the importance of owning property and businesses legally. His work has been praised by many leaders around the world. He wrote famous books like The Mystery of Capital and The Other Path.
De Soto is currently the president of the Institute for Liberty and Democracy (ILD). This organization, located in Lima, Peru, works to help countries grow their economies.
In Peru, de Soto's advice helped shape the country's economic rules. These rules included making it easier for businesses to operate and using policies that aimed to make the economy more open. These changes helped Peru become more stable after a difficult economic period in the 1980s. De Soto also advised Keiko Fujimori during her campaigns for president. He worked with different Peruvian governments, even helping to negotiate a trade agreement between Peru and the United States. In 2021, de Soto ran for president of Peru and finished fourth.
Around the world, de Soto's ideas influenced the Washington Consensus. This was a set of economic policies suggested for countries facing financial problems. He also supported the North American Free Trade Agreement (NAFTA). Many world leaders, including Bill Clinton and George H. W. Bush, have recognized de Soto's work.
Contents
Early Life and Education
Hernando de Soto was born on June 2, 1941, in Arequipa, Peru. His father, José Alberto Soto, was a diplomat and lawyer. In 1948, after a military takeover in Peru, his family moved to Europe.
While in Europe, de Soto went to school in Switzerland. He studied economics at the University of Geneva. In 1967, he earned a master's degree in international law and economics from the Graduate Institute of International Studies in Geneva.
His younger brother, Álvaro de Soto, also became a diplomat. He worked for the Peruvian government and the United Nations.
Economics Career
After finishing his studies, de Soto worked as an economist for the General Agreement on Tariffs and Trade. This organization later became the World Trade Organization. He also held leadership roles in other international companies.
Starting the Institute for Liberty and Democracy
De Soto returned to Peru in 1979. At that time, new economic ideas were becoming popular. He met Friedrich Hayek, an economist who supported free markets. Hayek encouraged de Soto to promote these ideas.
With help from Sir Antony Fisher, a British businessman, de Soto started the Institute for Liberty and Democracy (ILD) in 1981. This was one of the first organizations in Latin America to promote free market ideas. The ILD also received funding from the United States government through groups like the National Endowment for Democracy. The ILD focused on helping people who lived in informal housing in Peru.
Working with the Fujimori Government
Between 1988 and 1995, de Soto and the ILD helped create many new laws and rules in Peru. These changes greatly affected Peru's economy. De Soto became an informal advisor to President Alberto Fujimori.
De Soto suggested a "shock" plan for Peru's economy. He helped Fujimori meet with leaders from the International Monetary Fund and the World Bank. These meetings led to new economic policies, including tax increases and the sale of state-owned businesses. These policies helped stabilize Peru's economy and reduce high inflation.
De Soto's ideas also influenced Fujimori's efforts against a guerrilla group called the Shining Path. By giving legal titles to small farmers, de Soto argued that the group lost support and safe places.
Land Title Program
From 1992 to 1994, the ILD started a program to legally register homes in Peru. This program helped many families get official ownership papers for their homes. By 2004, 1.4 million households were registered, and 920,000 land titles were given out.
The ILD reported that this program helped homeowners work more hours outside their homes. It also reduced the need for children to work to protect their family's property.
Leaving the Fujimori Government
De Soto left his role as an advisor in January 1992. He disagreed with some of Fujimori's actions, especially regarding corruption. Two months later, Fujimori took more power in a self-coup. De Soto spoke out against this action, calling it "unconstitutional."
De Soto later helped pressure Fujimori to hold democratic elections. This was important to prevent another economic crisis in Peru.
International Influence
Washington Consensus
De Soto was a key person who helped create the Washington Consensus. This was a list of ten economic rules suggested by international organizations for countries in economic trouble. His ideas helped explain why some countries struggled economically.
North American Free Trade Agreement (NAFTA)
De Soto supported the creation of the North American Free Trade Agreement (NAFTA). This agreement aimed to increase trade between the United States, Canada, and Mexico. In 1989, President George H. W. Bush praised de Soto's work when announcing NAFTA. Bush said that de Soto's ideas showed how people, when given freedom, organize their lives in similar ways.
Advisory Work
After his time with Fujimori, de Soto and the ILD worked in many other countries. Leaders from over 35 nations asked for the ILD's help to improve their economies. De Soto has advised various political leaders, saying his goal is to help countries develop.
In 2006, de Soto helped negotiate the Peru–United States Trade Promotion Agreement. This was a free trade agreement between Peru and the United States. He also worked with Keiko Fujimori during her presidential campaigns in 2011 and 2016.
Political Career
2021 Presidential Campaign
In September 2020, de Soto announced he would run for president of Peru. He ran under the party "Go on Country." He had thought about running before but worried it might affect his work with the ILD.
De Soto presented his team, which included many experienced people from business and politics. During his campaign, he discussed his ideas for Peru's economy and how to manage the COVID-19 pandemic. He finished fourth in the election.
Main Ideas
De Soto's main idea is that countries need a strong system to record who owns property and businesses. He believes that when people don't have legal ownership of their property, it's hard for them to get loans, sell their businesses, or grow. This hidden economic activity, often called the "informal economy," means that many small business owners are stuck in poverty.
He argues that legal property ownership helps people get credit, start businesses, and protect their assets. It also helps governments collect taxes and provide public services. De Soto believes that without clear property rights, a country's economy cannot truly grow and benefit everyone. He calls assets without legal ownership "dead capital" because they cannot be used to create more wealth.
Work and Research
Since 2008, de Soto has continued to develop his ideas about property rights. He believes that problems with property rights are at the root of many global issues. He has written that economic problems in the U.S. and Europe are due to a "knowledge crisis," not just a financial one. He says that information about property, stored in laws and records, is key to a healthy economy.
De Soto also studied the economic reasons behind the Arab Spring uprisings. He found that many people in these countries worked in the informal economy. They were frustrated because they couldn't legally own property or grow their businesses. He highlighted the story of Mohamed Bouazizi, a street vendor whose protest sparked the revolution in Tunisia.
De Soto has also focused on helping informal miners in Peru. He believes that giving them legal rights and formalizing their work can help solve conflicts with large mining companies.
De Soto's Ideas on Terrorism
In 2014, de Soto wrote an article called "The Capitalist Cure for Terrorism." He argued that giving people more economic opportunities and property rights could help defeat terrorist groups. He suggested that if ordinary people can't participate legally in the economy, they are more likely to be drawn to extremist groups.
De Soto Challenges Thomas Piketty
In 2014, de Soto disagreed with the ideas of French economist Thomas Piketty. Piketty wrote a book about capital and inequality. De Soto argued that Piketty's statistics did not include the many people in developing countries who hold their wealth in the informal sector. De Soto believes that most people want more capital, not less.
De Soto Addresses Pope Francis
In 2016, de Soto wrote articles for Pope Francis's visit to Mexico. He encouraged the Pope to address the lack of property rights among the poor. He suggested this could help solve global refugee problems.
Blockchain Technology
De Soto has also explored how blockchain technology could help formalize property rights. He believes that blockchain, which is a secure way to record information, could be used to create public records of property ownership.
Awards and Recognition
Time magazine named Hernando de Soto one of the top Latin American innovators of the century in 1999. In 2004, they included him among the 100 most influential people in the world. Forbes magazine also listed him as one of the innovators who would "reinvent your future."
He has received many awards for his work, including:
- The Fisher Prize (1990)
- The Freedom Prize (1995)
- The Goldwater Award (2002)
- The Adam Smith Award (2002)
- The Templeton Freedom Prize (2004)
- The Milton Friedman Prize for Advancing Liberty (2004)
- An honorary degree from the University of Buckingham (2005)
- The Bradley Prize (2006)
- The Innovation Award from The Economist magazine (2006)
- The Hayek Medal (2010)
- The Brigham–Kanner Property Rights Prize (2016)
- The Global Award for Entrepreneurship Research (2017)
De Soto is also an honorary co-chair for the World Justice Project.
See also
In Spanish: Hernando de Soto (economista) para niños
- Contributions to liberal theory
- Crony capitalism
- Dependency theory
- Documentality
- Liberalism
- Mercantilism
- Milton Friedman
- The Other Path: The Economic Answer to Terrorism
