My hands are clean!

Now that the sub-prime crisis has triggered the end of free market capitalism, many are understandably claiming they saw it coming. However, how many can claim they saw this in 1989, nearly 20 years ago? Let me explain.

In 1989, I was invited by the World Bank to review a large number of reports, articles, books and papers on land tenure policies in developing countries as a potential contribution to the Bank's forthcoming housing policy paper. I explained to the Bank that I was not an economist, had minimal knowledge of the subject, but was, of course happy to be paid to learn more. I was told it was because I had already reviewed the literature on housing policies in developing countries and could summarise complex issues for a non-technically sophisticated readership (they had students in mind), that I was in fact well qualified. Flattery, and the prospect of being paid to learn, was enough for me to accept.

During correspondence and the exchange of a first draft, it became increasingly clear that the Bank wanted my report to endorse a policy of promoting home ownership in developing countries. Other forms of tenure, such as customary or rental tenure, were apparently not of interest.

The more I read, the more these assumptions seemed politically driven rather than empirically based. I could see no reason why home ownership was being so widely promoted. The reason given - that people could use the collateral of their titled homes to obtain credit, set up a business and thereby lift themselves out of poverty, was seductive, but made a rather basic assumption, namely that collateral is only relevant if you can afford to service the debt in the first place. For the majority of low-income households in developing coutnries, this was clearly not possible. Home ownership, in other words, is not appropriate for everyone.

My draft report advocating caution and promoting tenure diversity was condemned internally as biased, though no substantive criticisms were made and I was told that they would permit me to publish elsewhere. My report findings were excluded from the Bank publication, which was published in 1993 under the revealing title of 'Housing: Enabling Markets to Work'. A cynic might claim that this was a clever highjacking of the enabling concept being advocated by UN-Habitat and many progressive housing professionals working in developing countries, but that's another story.

It was this experience that got me into working on land tenure issues. Several research projects later, the initial concerns have now been fully vindicated. The assumptions made by the Bank - and many other advocates of free markets - have been exposed for what they were - an ideologically driven agenda.

I trust we are all pragmatists now.