Book Review: The Other Path

I finally got around to reading The Other Path by Hernando de Soto.

This is the pathbreaking book from the mid-80s about how poor Peruvians - blocked out of the formal economy by regulations - responded by creating market institutions that were efficient and improved their lot.

I know ... I should've read this 20 years ago ... but it's been excerpted so many places there hardly seemed a point.

Anyway ... I'm glad I read it now rather than never. If the Nobel Peace Prize Committee didn't have its head up its *** they'd be out looking seriously at people like de Soto instead of Jimmy Carter, Kofi Annan, Yasser Arafat, and assorted tree planters, landmine avoiders, and plagiarists.

Ahem. If you're serious, read the whole book. If you're merely interested, start with Part 2.

Part 1 has its moments, but they are few and far between. It's goal is to spend 100 pages or so detailing the history of informal markets in Peru, and the responses of authorities. It is encyclopedic, but far more detailed for anyone other than a scholar. I do recommend skimming it, at the least: you have to remember that before de Soto, no one ever wrote this sort of thing down. We hear a lot of long-winded diatribes about how most westerners are not connected to the experience of the world's poor - well here is someone that just tells you their experiences instead of jumping on a soapbox.

The second part is much better. This is where the thesis that is commonplace today is set forth: that legal institutions are critical for growth and well-being, that in Peru (and other places) they have been hijacked by mercantilist forces straight out of the late Middle Ages, that the political labels of left and right aren't as accurate as mercantilist and libertarian, and that most bureaucrats and politicians fall in the controlling mercantilist camp.

I'll run several days of quotes from the book, so be sure to check back!