Have you ever watched the Miss America pageant and wondered just how some blonde Texan wanted to go about ending world poverty? Nobel Peace Prize Nominee Hernando De Soto claims that he has the solution. After reading his book The Mystery of Capital I believe him.

De Soto argues that the U.N. and other large charitable organizations are pouring massive first world resources into a bucket with a big hole in the bottom of it. Rather, than continuing to exhaust even larger portions of developed nations GDP to the third world the solution should be more focused on creating an economic environment where the developing nations’ create their own national prosperity. His argument doesn’t discourage outside help--his conclusions only suggest that a developing country's systems are negating the effects of charitable contributions from the developed world and thus maintaining poverty.

The wonderful element of De Soto’s message is that change can be brought about rapidly and that the overwhelming majority of the third world already has the capital to kick start prosperity. The main factor that is preventing much of the citizenry of the third world from taking advantage of their resources is "dead capital." In other words the majority of assets that could be used to generate wealth are held extra legally. Businesses operate under the government's radar not so much to avoid taxation as to survive. De Soto's research concludes that the large portion of extra legal businesses and personal assets are held extra legally simply because the formal property and legal systems are too difficult and too expensive to use.

De Soto answers the problem by making it a matter of self-interest. If the property and legal systems were more advantageous after all other things were considered than a massive migration of extra legals would rush into the formal systems. His conclusions have thus far earned an additional 1.2 billion dollars in tax revenues from Peruvian businesses that have just recently transitioned to the formal systems. This is only a fraction of the third world's potential.

De Soto estimates 9.3 trillion dollars worth of assets are unsecured because of the ineffective formal property and legal systems that are in place. The consequence is that a government loses out on potential tax revenue and citizens participating in extra legal systems are exposed to losing their unsecured assets. In addition to potential losses the citizens operating extra legally have no access to low interest credit because their property isn’t registered through a legitimate system.

De Soto’s research suggest that most participate extra legally because their government's formal systems bulkiness renders it impossible to make their living profitable. The result is that a large percentage of entrepreneurs within any underdeveloped country's government is operating outside the government’s controls and protections. This is as much a financial growth inhibitor for the Government as it is for the entrepreneur.

As Governments around the world have begun to implement De Soto's suggestions, impressive financial development has taken place. His efforts have created greater opportunities for business owners, investors, and even potential entrepreneurs than ever before. Even a peasant squatting on government land in a shanty hut built with $500 in materials has the potential to secure a loan against his mediocre savings. He can convert his equity into real working capital, once that occurs, the possibilities are limitless. When the Third World helps itself by creating more transparent political activity, more efficient legal and property systems, and as the citizenry of the developing world is educated about the benefits of participating within a revised system, world poverty will diminish. While World Poverty might never be ended, De Soto's brilliant insight and research has resurrected hope at a chance for universal opportunity even in the Third World.