U.S. ranks #36 worldwide in protecting physical property rights

Hernando de Soto is a Peruvian economist who founded the Institute for Liberty and Democracy and who gained international notoriety and acclaim for his thesis that economic development and a vibrant market economy depend on the ability of poor people to gain legal recognition of their land rights and be able to use it as collateral for loans. One of the offshoots of his work is an annual International Property Rights Index. The 2012 Index ranks the United States #18 overall among the 130 countries analyzed and #23 for physical property (i.e., land). The study found a strong correlation between higher property rights index scores and GDP per capita. You can read the full copy of the report here.


In arriving at its rankings in the physical property area, the IPR looks at the strength of a country’s property rights systems, judicial protection for those property rights, and how clearly property rights are defined. In the sub-area of protecting physical property rights, the United States ranks #36. I suppose it may surprise some who see the United States as the ultimate bastion of private property rights that its ranking is not higher. Those who believe our system of private property is under constant attack from local, state and federal governments.

An example of these concerns was provided by a just announced Supreme Court decision holding the the compliance orders of the EPA are subject to judicial review. The case involved an Idaho couple and their attempt to construct a house on a small lot (< 1 acre) in a residential subdivision where other houses had been constructed. After they began bringing fill to the site, the EPA issued an order demanding that the lot be restored to its original wetlands condition and threatened fines of up to $75,000 per day for failing to do so. A unanimous court ruled that the landowners were entitled to their day in court to determine whether their lot contains any wetlands.


Sacketts' home near Priest Lake, Idaho


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