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Forbes.com

 

Good Data Make Good Fences

May 19, 2008

By Peter W. Huber

Who owns what? The next big web thing is a vast network to answer that question. Perhaps to atone for vaporizing intangible forms of property--things like songs that used to be protected from copying--the Web is now going to nail down the most solid and sedentary forms of property. It will publish deeds to land, buildings, airspace, coal, oil, timber and wildlife preserves.

Deciding who owns what in dirt-space has been slow and expensive for as long as people have relied on paper rather than force to decide it. The process still often begins with a search for a musty sheaf of papers buried in some distant archive. Then, from another source, come the paper maps needed to locate the dirt in question.

But these are hardly the final word on ownership. Property interests are also created by traditional use, leases, marriage, death, taxes and the provision of goods or services that have boosted the estate's value. They are limited by zoning laws, environmental decrees and countless other government pronouncements. A few of these secondary claims get officially registered as mortgages and liens--more paper--but most don't. When the property is worth enough to pay their bills, lawyers converge to untangle records and rules that are ambiguous or incomplete. When the records are just too blurry, or the stakes too small, much of the intrinsic value of the property simply evaporates.

Digital technologies are now easily powerful enough to draw precise boundaries around anything, anywhere, and instantly link the delineated space to any written record that affects ownership and use. The boundary lines come from companies like Garmin (nasdaq: GRMN - news - people ) and Trimble, which make the GPS hardware that can report exactly where anything is located in dirt-space. They also come from Navteq (nyse: NVT - news - people ) and Tele Atlas, which compile Google (nasdaq: GOOG - news - people )-scale databases that map where everything in dirt-space is located relative to everything else. Google, Microsoft (nasdaq: MSFT - news - people ) and Oracle (nasdaq: ORCL - news - people ) have what it takes to provide instant, intelligent access to every registry, court record, contract and government pronouncement that affects who claims what interest in this particular acre or building, or the oil under this dirt, or the fish or shipwreck under these waters.

The private sector (with a big boost from government surveyors and military satellites) now has the dirt-space mapping and locating well in hand. Mayors and governors should now be scrambling to digitize every scrap of information already stored in their dirt-space registries, along with every administrative and judicial record that addresses related rights. Federal agencies should do the same for the vast expanses of land and sea that they own, lease and manage, and for the many regulations that affect private dirt-space, too. Rules are needed to standardize the registration of every significant claim of interest. The objective should be a system so wired that courts won't enforce any claim that isn't digitally recorded and linked to every sliver of dirt-space it targets.

The cost of getting official clearance to build, develop, fence off, subdivide, mine, buy, mortgage, sell or inherit will drop sharply. The poor will benefit the most.

As Hernando de Soto of Peru's Institute for Liberty & Democracy has long argued, the first asset acquired by the Third World poor is usually a tiny home on a scrap of land. These people need stable, verifiable property rights a lot more than we do. Ownership creates the incentive to turn a hovel into a home, improve the land around it and use the asset as collateral to fund further improvement or a small business. This process never gets started, however, when documenting ownership costs more than the property is worth. Micro-mortgages can do far more than micro-loans to help the poor take their first step into the aboveground economy. The world has a handful of rich people willing to make unsecured micro-loans. It has billions of people with a tenuous hold on just enough land to provide micro-collateral.

For rich and poor alike, much of the value of property hinges on how well society can answer the who-owns-what question. Quick, cheap, reliable answers provide liquidity--they let markets move wealth easily and often between dirt-space, cash-space and virtual forms of wealth (like stocks and bonds). Private wealth, free markets and global prosperity all hinge on our property-defining skills. The precision, speed and accuracy of the property-defining technologies now at hand are poised to unlock wealth and stimulate growth worldwide.

Original Source: http://www.forbes.com/opinions/free_forbes/2008/0519/104.html

 

 
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