In the “how other people live” category: Hernando de Soto ( The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else ) argues that the key obstacle to Third World prosperity is the invisibility of their assets, and the assets are invisible because property rights are in chaos.  Poor people in poor countries have a lot of assets and they’re worth a lot, and poor people in poor countries work hard and creatively.  But their assets don’t function as capital because they are not legally secure.

He sites some stunning statistics: “In Haiti . . . 68 per cent of city-dwellers and 97 per cent of people in the countryside live in housing to which nobody has clear legal title.  In Egypt dead-capital housing is home for 92 per cent of city-dwellers and 83 per cent of people in the countryside.”

Cumulatively, Haiti’s poor have a lot of wealth:

“In Haiti untitled rural and urban real estate holdings are together worth some $5.2 billion.  To put that in context, that sum is four times the total of all the assets of all the legally operating companies in Haiti, nine times the value of all assets owned by the government and 158 times the value of all foreign direct investment in Haiti’s recorded history to 1995.”

Not only housing, but businesses exist in this “extra-legal” state: “In 1993 the Mexican Chamber of Commerce estimated the number of street-vendor stands in the Federal District of Mexico City at 150,000, with an additional 293,000 in 43 other Mexican centres . . . . Thousands upon thousands of people work in the extralegal sector - on the streets, from their homes and in the city’s unregistered shops, offices and factories.”  They produce “clothing and footwear” as well as building or rebuilding “machinery, cars, even buses.”  ”There are even dentists who fill cavities without a license.”

One reason for the explosion of extralegal economic activity and housing is the bureaucratic nightmare that is the legal sector: “In Egypt the person who wants to acquire and legally register a lot on state-own desert land must went his way through at least 77 bureaucratic procedures at 31 public and private agencies . . . . This can taken anywhere from 5 to 14 years.  To build a legal dwelling on former agricultural land would require 6 to 11 years.”  In Haiti things are even worse: “Total time to gain lawful land in Haiti: 19 years.”  And even then the owner cannot be sure “that the property will remain legal.”

From a first world perspective, this is alarming: “The extralegal world is typically viewed as a place where gangsters roam, sinister characters of interest only to the policy, anthropologists and missionaries.”  In fact, “it is legality that is marginal; extralegality has become the norm.”  Poor people “have already taken control of vast quantities of real estate and production.”