Americans may want to skip this post

Its been a while since I read "The Mystery of Capital" by Hernando De Soto. I won't do justice in 1 page to what takes De Soto over 150 pages, but his thesis is that capitalism as we understand it is underpinned by a host of social norms, policies and procedures that we take for granted. For example, we have a street address and a central property registry which means that a bank can quickly determine whether we actually own a given piece of property and can be reasonably confident that they can send bills to our street address and know we will receive them. From that he builds a case that capitalism and the ability to use assets in a financial sense grows from the most basic civic infrastructure.

That all makes sense to me and I have always assumed that those structures were North American in scope and reasonably consistent across all of North America. De Soto certainly implies that they are. I therefore have been reading with some measure of horror the tales that people down here are telling about selling their RVs, purchasing new RVs and then discovering that the lien on their old RV is still in place or that a previously unknown lien is registered against the unit they thought they had bought. (I'm not sure if you can read that one without being an Escapees member but you can read this one for sure and it is similar - give it time, it takes a while to load.)

I read these tales with a bit of smugness because I don't think that can happen in Canada if the buyer exercises the most basic diligence. We have central property registries that weren't set up to guard against that eventuality but, as De Soto explains, effectively do prevent more than one person from claiming the same asset. The US has carefully guarded the rights of the States but apparently the preservation of State rights may have come at the expense of protection of the individual citizen. It appears to this outsider that there is a lack of consistency in how the individual states handle property registration and that leaves the opportunity for deliberate or inadvertent abuse of the system.

There's a reason why the Canadian banks have weathered the current financial storm much better than their American counterparts. That reason appears to be our different regulatory regime. I hesitate to label our regulators better or wiser although they appear to have better served us in the current financial environment. The question is what happens in the next months or years. If the most basic underpinnings of US capitalism are rotten then the worst may be yet to come down here.