Dead capital is a $9 trillion problem. Dead capital is a $9 trillion opportunity. Dead capital is land or homes that haven’t been registered and are technically squatted in. According to Economist Hernando de Soto, there is an estimated $9 trillion worth of unregistered property in the developing world.
Unregistered property or dead capital means that “homeowners” are squatters in their own homes. These dead capital assets which may be 3rd or 4th generation settlements, tenements and even “leased” apartments can’t be sold, borrowed against or transferred for full value. Often times the “owners” pay bribes to maintain their squatting privileges extra legally.
These informal arrangements mean limited taxes or bureaucracy to provide infrastructure such as running water, electricity, sanitation, education, fire protection, police protection and the protection of property rights. The boundaries of a functional participatory society fray at the edges of bureaucratic inclusiveness.
Dead capital registration is a “super” ordinate problem requiring co-ordination and communication to resolve. The end solutions and changes to bureaucratic procedure may be low tech, but some technology may help in facilitating the organization of better property registration procedures.
Urgent Evoke plan: A cloud scaffolding for Dead Capital 1
How? Build a scaffolding in the cloud. 2
To safely change a process one must do the following: 3
Where to start? 3
The plan for the capital city in each country would look like the following major objectives: 3
Who to start with? 5
In each capital city enfranchise key stakeholders to participate in potentially the following ways: 5
The Benchmarks 7
6 Steps For launching the Cloud Scaffolding to reduce Dead Capital 8
The cost and procedures for registering property is too onerous and costly and sometimes exceeds the value of the homes in many countries and regions. Needless or outdated bureaucracy creates corruption, drains tax coffers and leaves millions vulnerable to extra legal and extra judicial forces. The challenge to change dead capital is large, the positive outcomes of changing this situation could be much larger.
Imagine putting even a portion of $9 trillion in wealth back into the hands of the poor or a rising lower middle class. Reducing corruption and increasing revenues to tax strapped city govts. Enfranchised owners are a middle class who can more actively take care of their families neighborhoods and cities.
What? The Paper plumbing
Empires, nation states and organized societies are said to run on the strength of their plumbing. Property registration runs on paper plumbing moving through bureaucratic processes. Paper plumbing is hidden like real plumbing, but shows up when it is either not present or dysfunctional.
Too many twists and turns or to formal a structure blocks the incentive to properly clear registrations, title transfers and other activities. Too little infrastructure means chaos. Sadly, paper plumbing like real plumbing in many emerging countries is only available to the wealthier or more connected individuals in a state.
How? Build a scaffolding in the cloud.
Property registration is a complex process in most countries involving many bureaucracies, doc**ents and procedures. Changing the problem means first understanding the process of property registration and seeing both its nature and the potential impact from improving it.
To build a stone arch, one starts by building a wooden scaffolding in the shape of the desired arche’s void. Stones are then laid on top of the scaffolding, with the Keystone put in last. When the wooden place holding scaffolding is removed a self-supporting arch remains.
Many large projects require first building a placeholder or scaffolding.
To safely change a process one must do the following:
1. Understand the current process, its inputs and outputs to establish a performance benchmark
2. Understand why the process was put in place or evolved to where it is
3. Understand who the process benefits and how changes will impact stakeholders & outcomes
4. Identify where and how feasible change can occur
5. Change the process
6. A****s the impact
The scaffolding that needs to be put into place for the worlds Dead Capital is an open online system for first mapping the current processes and change agents, both graphically and with annotations that explain the actors and motivations behind each stage in the process.
Abraham Lincoln once said, that if given 6 hours to chop down a tree he would spend 4 hours sharpening his ax.
In order to solve a problem, a****sing the context, precedents, participants and potential impacts needs to be done. In social problem such as land, bureaucracy and taxation a broad and open consensus for capturing the objections and needs of various stakeholders must be performed.
Capturing the steps, challenges and obstacles for property registration is not easy as it requires the input from those impacted and those acting outside the current formal procedures. Inclusion is noisy, timely and ultimately necessary to determine the scope of the problem and the first iterations of the solution.
Where to start?
The starting point has a who, where when and why. It is most logical to start in the capital or de facto capital city of each country as it is most likely the capital city has the greatest technical, professional and political resources to establish a national standard for best practices. Often Capital cities represent a 1/5 to 1/6 of the countries populace and are sometimes looked to in a country as a potential source of best practice in governance or the training of bureaucrats and implementation of procedures.
The first goal of benchmarking can be an open source project with many potential parties contributing.
The plan for the capital city in each country would look like the following major objectives:
1. Benchmark the current registrations and create an a****sment of the dead capital. This should help quantify the opportunity presented.
2. Capture the formal process and doc**ent it. This involves creating online doc**ents, diagrams and flow charts that show the current process and how it is supposed to operate. The costs and times associated should be taken into account as a “Best” practice potential using current procedures
3. Capture the actual process, using NGO, lawyers, clients and anonymous customers of the actual process, capture the real process and reflect the differences. The goal is not to capture or implicate rent seeking or corruption but rather to understand how, why and for whom the process has failed. Ideally even those who fall below the potential for even entering the process should be accounted for, ie. Those who are illiterate and don’t or can’t afford to hire expertise or consultants to formalize the process for them.
4. Design process improvements and suggestions in an open online debate forum or wiki, with multiple tools for discussion about impacts.
5. Implement new processes
6. Repeat Step 1 on an ongoing basis to a****s impacts.
Who to start with?
In each capital city enfranchise key stakeholders to participate in potentially the following ways:
StakeHolder Request Motivation Potential Bad Outcome Potential Good Outcome
Country President/prime minister of each country Authority / endorsement to research the opportunity for studying Dead Capital opportunity Political good will from creating value for people and making homes safer, by increasing the enfranchised middle class. Hostile to meddling. Informal sector fears govt. property seizure via registration. Point to improved bureaucracy, more middle class, safer cities, reduction in corruption. Millions in new capital for homeowners
Cabinet member or Federal head of housing and urban development in each country Authority / endorsement to research opportunity and staff support Ability to be seen as proactive. Potential for additional resources for system overhaul and reform Loss of perceived power and patronage. Political risk. Improved bureaucracy, more efficient use of resources, prestige
Mayor of the “Capital” or largest commercial City within a country Authority / endorsement to research the opportunity for studying dead capital Political good will from creating value for people and making homes safer, by increasing the enfranchised middle class. Loss of perceived power and patronage. Political risk. Improved bureaucracy, more efficient use of resources, prestige, improved tax base
Mgr. of land records & registrations at the federal/regional and or city level. Authority / endorsement to access records and a****s system, contribution to review and system capture design Improve process and procedures, more effectively understand outcomes. Shift metrics Loss of perceived power and patronage. Political risk. Improved system, resources to effect change
Top 5 property law firms in the capital city Offer the opportunity to sponsor and or support pro-bono the initiative and data capture Improve perception of good citizenship and domain knowledge, expand client base with (bottom of the pyramid, middle class, sub brand offerings) May reduce patronage and facilitation fees if process becomes more transparent. Costs and potential conflict of interest. Improved understanding of process and the potential to improve the process on behalf of existing and new clients.
Top 5 law universities in the capital city of each country Ask for dean of law school and professors to aid or suggest improvements to project and act as sponsors, data gatherers Prestige project, potential for research and help shape policy, great teaching tool & collaboration experience for students and professors Seen as conflict of interest. Law students learn about research and working with multiple parties to create positive change and form legislation and bureaucratic policy
Top 5 local community activists or leaders in each country Ask for aid in volunteers and access to populations for data and experience capture. Seen as connected and facilitating research and listening May weaken patronage, be seen as collaboration with land grabbing Potential to be seen as agents for positive change and improving local communities.
Top 5 technology and or Design firms Ask for management and technical aid in gathering data, managing process and procedure Sponsorship seen as “major” project involving millions of people and $’s. opportunity to understand and shape new systems Could be seen as opportunity to sell unneeded techno-junk Potential to streamline processes with low – no tech solution and local best practice.
Top 5 appropriate local NGOs Ask for aid, volunteers and support Ability to participate in local projects that may align with own goals May be seen circ**venting primary mission or outside of scope. Potential to have measurable impact on a city and hopefully country
WorldBank Sponsorship Ask for resources to host wiki’s and plan sponsorship. Also to consolidate best practices and comparative studies to act as independent oversight research authority on outcomes Ability to create and “host” large project in experimental distributed format with only limited resources required May run counter to current goals. Risk of being seen as too “open” quality of wiki could be sloppy Potential to be the seed crystal for massive parallel process that improves local governance and bureaucracy using local resources.
The end goal is to have an increasing or increased rate of enfranchised property owners who are paying property taxes, receiving higher standards of govt. services and participating in the formal sector of the economy.
Procedural overhauls can be iterative and consultative, the most important thing is that they are flexible and evolving, no single procedural overhaul will fix a process, but rather an open evolving process that can be benchmarked relative to past or peer performance is required.
Benchmarks for property registration should be used to establish baselines in capitals and provide measured changes over time:
1. Cost of registering a single family dwelling in the capital city as function of median per capita GDP.
2. Cost of transferring title of a single dwelling in the capital city as a function of media per capita GDP.
3. % of residences registered relative to the number of all dwellings in a city. If no estimate for # of dwellings is available an estimate should be made based on residents and a resident/dwelling ratio.
4. Total elapsed Time for the registration of a new property from initial step to title grant, using all proper procedures and no bribes, based on a “blind sample” of actual attempts.
5. Total elapsed Time for the transfer of a property deed from one individual to another, using all proper procedures and no bribes, base on a “blind sample” of actual attempts.
6 Steps For launching the Cloud Scaffolding to reduce Dead Capital
1. Identify & Enroll key WorldBank Officials, who will maintain wiki and monitor country progress and best practice across regions.
2. Launch competition using crowd sourced platform to host 2 “design competitions”
a. Design and update the master plan doc**ent and processes including communication tools and explanations (communication tools is the goal)
b. Design wiki templates and or tools that will be most effective in completing the identification and enrollment phases of the plan
3. Deploy contest winners (wiki with plans) (how to use)
4. Identify potential participants in each country (fill in the blanks) and translate wiki/communication tools to local language(s) as needed. Open source effort.
5. Open source participants identify and contact each country participant (enroll or pass) fill in wiki.
6. Monitor each country wiki for best practice of plan roll-out in various countries. Strive for transparency and tracking of improvements or outcomes at the capital city, regional and potentially national levels.
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