Let’s dispel a common myth. Critics deride capitalism and private property as simply a means for the rich to exploit the poor. Actually, the poor have the most to gain from secure property rights.

In a system without private property rights, the rich have the resources to buy security, either by bribing government officials or by hiring their own guards. Ted Turner doesn’t have to worry much about poaching on his Diamond D ranch; he could afford his own security force. The guy in the trailer park, on the other hand, is subject to the whims of those in power. In a system where property rights are not secure, the poor are especially dependent on the good graces of the government. Property rights serve as a check on power and grant individuals a degree of independence.

In a just society, free individuals own the products of their labor. They have the right to trade their labor as they see fit. With the proceeds they can purchase assets, e.g., a car or a house. Then, as economist Thomas Sowell explains in his book Applied Economics, “what property rights provide, in countries where these rights are readily accessible, is the ability of people to convert physical assets into financial assets, which in turn enables them to create additional wealth.” Physical assets can be used as collateral for a loan to invest in more productive capital, say equipment for a small business.

All of this depends on legally enforced, private ownership of property. This is the basis of economic progress and prosperity. When governments abuse or ignore this right -- e.g. through excessive regulation or outright state control -- progress slows and poverty grows.

Contrast Hong Kong with mainland China. Hong Kong has long had one of the freest economies in the world. It also has one of the best records on protecting property rights. China, on the other hand, has been a communist state since 1949. Although it’s been fitfully liberalizing its economy over the last 20 years, property rights remain weak and subject to government corruption. From 1970 through 2001, Hong Kong’s per capita GDP grew 18 times as much as China’s.

When governments erect barriers to private ownership, they effectively perpetuate poverty. Peruvian economist Hernando de Soto provides some telling examples in The Mystery of Capital. In Egypt, the procedure to gain access to desert land for construction purposes and to register these property rights takes 77 steps through 31 different government entities, which can take 6 to 14 years to complete. In Peru, “to obtain legal authorization to build a house on state-owned land took six years and eleven months, requiring 207 administrative steps in fifty-two government offices.... To obtain legal title for that piece of land took 728 steps.”

Such obstacles waste scarce resources and discourage investment, innovation, and economic progress. Those who wish to start a business must expend a great deal of time and money simply to obtain government permission. Those with the fewest resources will not even try. This is the surest way to keep the poor poor while ensuring only the well-off and well-connected succeed.

When resources are distributed politically, those with the most political power receive the greatest benefits. But in a system of secure private property rights, rule of law, and limited government, those who provide goods and services valued by consumers earn the greatest rewards.

The entrepreneurial instinct is universal. Immigrants have come to the United States from nearly every country in the world in order to improve their lives. They do so through free enterprise. Around the world, poor people work to lift themselves out of poverty when given the opportunity. Ensuring ownership of the fruits of one’s labor through secure property rights is an essential element in creating institutions that help the less fortunate help themselves.

It is the role of government not to ensure everyone crosses the finish line at the same time, but that everyone starts together: equality of opportunity, not outcome. Giving money to the poor won’t eradicate poverty -- nothing will. But we can certainly reduce poverty by removing obstacles that prevent the poor from helping themselves. Ensuring the security of property rights is a large step on the path of development.