Strategy: Capitalization Process

Hernando De Soto, The Mystery of Capital

A. The Discovery Strategy
A.1 Identify, locate and classify extralegal assets (dead capital)
A.1.1 Develop local recruitment specifications to penetrate extralegal sector.
A.1.2 Determine causes fo the accumulation of extralegal assets so as to develop workable topologies
A.1.3 Locate economic sectors and geographic areas where extralegal activities are most prevalent

A.2 Qualify the actual and potential value of extralegal assets (dead capital)
A.2.1 Develop appropriate methodologies to estimate the value of extralegal assets using existing inofrmation and data gathered in the field
A.2.2 Customize criteria to gather and process information and to confirm results
A.2.3 Establish the importance of the value f extralegal assets

A.3 Analyze the interaction of the extralegal sector with the rest of society
A.3.1 Research the relevant links between government and extralegal assets
A.3.2 Research the relevant links between legal businesses and extralegal assets
A.3.3 Identify processes where government has already successfully dealt with extralegal assets

A.4 Identify the extralegal norms that govern extralegal property
A.4.1 Detect and decode the extralegal norms that define the manner in which property rights are held and exersied by the different extralegal communities in the country

A.5 Determine the costs of extralegality to the country
A.5.1 The costs to the extralegal sector
A.5.2 The costs to the legal business sector
A.5.3 The costs to government

B. The Political and Legal Stragegy
B.1 Ensure that the highest political level assumes responsibility for capitalization of the poor

B.2 Put into operation agencies that will permit rapid changes
B.2.1 Identify and connect with the capitalization process the different institutions that presently govern property rights or impinge upon their ability to generate surplus value
B.2.2 Design, obtain approval for, and put into operation agencies that will permit the rapid introduction of changs in the diverse processes required for capitalization. If possible, create a single organization having the solve mandate of caitalizingassets and decentralize offices to provide services throughout the country
B.2.3 Ensure that the capitalization process both the incorporates the political priorities of the government and reflects a consensus within society that makes the process easily enforceable

B.3 Remove administrative and legal bottlenecks
B.3.1 Calculate the costs of capitalizing extralegal assets, including:
B.3.1.1 Requirements for permits at all levels of government
B.3.1.2 Requirements for and the amount of payments for these permits
B.3.1.3 The number of forms and other documents required
B.3.1.4 Requirements that cannot be met in practice
B.3.1.5 All other transaction costs, including time delays

B.3.2 Put into operation agencies that will permit rapid change

B.4 Build consensus between legal and extralegal sectors
B.4.1 Determine the points where extralegal norms coincide with the law so as to be able to draft statutes that recognize acceptable extralegal proofs of ownership with the support of extralegal communities
B.4.2 Ensure that the draft legal norms that incorporate extralegal property do so without compromising the level of security that the existing legal order now provides property that is duly recorded and effectively controlled so as to obtain acquiescence of the legal sector

B.5 Draft statutes and procedures that lower the costs of holding assets legally below those of holding them extralegally
B.5.1 Enact the statutes required for all property in a country to be governed by one consistent body of law and set of procedures
B.5.2 Broaden the definition of proofs of ownership to suit the new process, and consolidate into administratively manageable packages the statues and procedures that will govern the capitalization process
B.5.3 Consolidate dispersed legislation into a single law
B.5.4 Develop institutions and procedures that permit economies of scale for all the activities which constitute the process of capitalization
B.5.5 Create an expedient and low-cost alternative to squatting and other forms of extralegal appropriation. Consolidate process and respect for the law by establishing incentives and disincentives aimed at encouraing legal and discouraging illegal (extralegal) conveyance.
B.5.6 Design andimplement administrative or privae processes to substitute judicial processes, where suitable, so as to encourage settlement of disputes within the law.

B.6 Create mechanism that will reduce risks associated with private investment, including credibility of titles and non-payment for public services

C. The Operational Strategy
C.1 Design and implement field operation strategy, procedures, personnel, equipment, offices, training and manuals that enable government to recognize and process individual property rights in the extralegal sector.
C.1.1 Design mechanisms to obtain the massive participation of the members of extralegal settlements for the purpose of reducing the coss of capitalization.
C.1.2 Carry out training courses for the organization of capitalization brigades that reflect the types of extralegality they will encounter.
C.1.3 Develop manuals that explain to the leaders and the people of extralegal settlements the ways in which they can participate in the selection and collection of proofs of ownership.
C.1.4 Prepare for capitalizing extralegal communities
C.1.4.1 Identify and train local promoters within each community
C.1.4.2 Implement a local promotional campaign within each community
C.1.4.3 Educate each community about the proofs of ownership required
C.1.4.4 Train local leaders to record ownership information on registration form
C.1.4.5 Identify and train private verifiers to certify information collected by the community
C.1.5 Gather and process information on physical assets.
C.1.5.1 Obtain or prepare maps showing the boundaries of individual parcels (where necessary prepare digital base maps to record information)
C.1.5.2 Verify that maps showing individual parcels correspond with what is on the ground
C.1.5.3 Enter the maps into the computer system
C.1.6 Gather and process ownership information
C.1.6.1 Gather ownership information and record on registration forms
C.1.6.2 Verify that ownership rights are valid under the new law
C.1.6.3 Enter the ownership information into the computer system
C.1.6.4 Officially register the ownership rights
C.1.6.5 Hand out certificates to the beneficiaries at a public ceremony.

C.2 Implement communication strategies using appropriate media to encourage participation of the extralegal sector, support in the business community and the government sector, and acquiescence among those with vested interests in the status quo.
C.2.1 Conduct a campaign for each particular type of community in the extralegal sector to encourage their participation in the process.
C.2.2 Devise mechanisms that show beneficiaries of capitalization process that their assets are protected by the same institutional framework that protects the rights of private investors, both domestic and foreign. This will give these owners a reason to respect contracts governed by the formal legal order
C.2.3 Conduct a campaign for each legal community that may feel vulnerable
C.2.4 Design the means of communications to legal sector the benefits of capitalization, emphasizing the reduction in risks and making it clear that capitalization will neither affect existing property rights nor compromise the rights of third parties
C.2.5 Conduct a campaign for professionals with vested interests in property definition, explaining their future role and increased involvement within an expanded legal sector after capitalization.

C.3 Re-engineer the record keeping organization and registration processes so that they can pull together all the economically useful descriptions about a country's extralegal assets and integrate them into one data/knowledge based computer system.
C.3.1 Structure the organization of the registry and its internal work flows, simplify the registration processes, establish specifications for automating information, design and implement a quality control system, select and train personnel, and establish procedures to ensure that the registry can handle a massive national program of capitalization.
C.3.2 Construct GIS based systems to provide spatial analytical capabilities
C.3.3 Establish control mechanisms to guarantee that the cost of enrollment and registration services are sufficiently efficient and cost effective that the users will not be motivated to slip back into extralegality.
C.3.4 Insert descriptions of features of extralegal property holdings into customized, computer-friendly registration forms where they can be differentiated.
C.3.5 Break down the information that is traditionally contained in deeds into simple categories that be entered into computer software and be systematized for easy access, after having effected a legally approved streamlining of existing information gathering procedures.
C.3.6 Facilitate the update of computerized property information by placing data input centers close to the beneficiaries.The purpose is t cut down on the transportation and transaction costs of legally registering property and property-related business and keeping their status legal.

D. The Commercial Strategy
D.1 Implement the information and enforcement mechanism that will enable the provision of:
D.1.1 Banking/Mortgage/Credit
D.1.2 Public Utilities (Energy, water, sewage, telecommunications)
D.1.3 Collection Systems (Credit, rates, taxes)
D.1.4 Databases/Information Service
D.1.5 Insurance products (Property damage, life insurance, credit insurance, liens, title insurance)
D.1.6 National Identification Systems
D.1.7 Housing and infrastructure
D.1.8 National Security

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