The verdict from John Gravois in Slate is that the ideas of Hernando DeSoto, the massively hyped Peruvian economist, have not worked well anywhere they’ve been implemented. In some cases, they’ve even made things worse. I’m not a development economist and I haven’t read DeSoto, but the idea of legally titling squatter land to provide collateral for loans to the poor always seemed too cute to me. It reminds me of Robert Putnam’s social capital concept, which was popularized in Bowling Alone — both are fascinating in their potential and have generated vast academic literatures, but their real world impact has turned out to be limited at best. The problem in DeSoto’s case is that he appears to rely on implausible assumptions about capital markets. As Gravois shows, very few private banks are eager to loan to poor people based on slum property. What a disappointment.

PS Are there any more systematic treatments of DeSoto out there? Links welcome in comments.