Tue Jul 06 2010
Peruvian economist Hernando de Soto in 'Walk The Talk'
Shekhar Gupta: Hello and welcome to Walk the Talk. I am Shekhar Gupta and my guest this week is the capitalist of the poor, the guru of trickle-up, Hernando de Soto. Welcome to Walk the Talk.
Hernando de Soto: It’s a great pleasure to see you.
Shekhar Gupta: Tell us something about trickle-up, because everybody who is halfway non-socialist, talks of trickle-down, not trickle-up.
Hernando de Soto: Most of the wealth of developed countries is trickling up. In other words, countries like the United States were basically made of poor pioneers who migrated from Europe, because they were poor. So they all trickled up. Good growth generally comes from bottom up, for the simple reason that it has to do with the division of labour, and it has to do with poor people creating a solid, independent economy.
Shekhar Gupta: All of us heard the trickle-down mantra from Ronald Reagan: you create growth and wealth will get down. You are saying, create wealth at the bottom of the pyramid, and it will trickle up?
Hernando de Soto: The explanation (of the West) for their tax policies, why they are giving capital gains breaks or why they are helping the big banks is that it will all trickle down. But the way they got to where they are is, first of all, they emancipated their people, gave them rights, gave them the right to form entrepreneurship. And as a matter of fact, all their stories of wealth are not really trickle down. Like Bill Gates, who trickled up. He wasn’t the big guy before he got to where he is. Steve Jobs was also working from a garage. In our countries, or at least in countries like mine, you start working in a garage, you stay in a garage. But these guys keep on moving up.