Land is built with law – and leased

Zelaya claimed that he wanted to rewrite the Constitution of Honduras since the existing one got in the way of fighting poverty. However, I claim that to be a lie, intended only to secure him the support of an easy-to-manipulate mob, which could serve as his power base for overrunning the Congress and the Supreme Court. It would do nothing to diminish the real cause of poverty and starvation in the country.

Allow me to suggest a better strategy, based on the Viking time Scandinavian principle “Land skall med lag byggas”, i.e., ‘Land is to be built with law’.

Let us also stop talking about “fighting poverty”. Psychologists know that if we negate something, like poverty in this case, we tend to miss the negation. We thus get our minds set on poverty. What we should do instead is to set our minds on the opposite of poverty, i.e., on building wealth; the wealth of having ones physical needs satisfied: Food, a place to live, access to health care, education, and enough money for the essentials of life.

The key to wealth is to unlock the natural resources of a country, through legislation.

Background

Over half of the population lives on subsistence farming, and even more live under the poverty level. Most good land is owned by a few large land-owners, and that land is often used with a rather low intensity, such as cattle grazing. As a contrast, others have no land at all but cultivate on marginal land, which leads not only to poor productivity but to soil erosion, and to sedimentation in water reservoirs with loss of storage capacity.

The cadaster law in Honduras is of rather recent date (link). I have not been able to find any law on land leasing yet. On the contrary, until recently and perhaps still, the one who has cultivated a piece of land for 10 years was considered the owner, which is why leasing land was not just unregulated, it was impossible. In fact, illegal cultivation of the land of others was the background of the hunger march in 1975, and the murder of 14 persons for which Manuel Zelaya Rosales’ father went to jail.

In comparison, Sweden has had a cadaster for centuries; the making of large scale maps over villages and farms started in 1628. Late in the 19th century there was a debate on the need for a law on land leasing, called “arrende” in Swedish. The new law was passed 1907, and the present arrende “law” is chapters 8 through 11 in Jordabalken, the real estate law.

Purpose of the laws

When you design a car, you want all the pieces to work together so that the overall machine is as fast, comfortable, economical, sustainable, and safe as possible. The same thing applies when creating legislation; the machine is society, and the goal is to make it run as fast, comfortably, economical, sustainably, and safe as possible.

The purpose of the cadaster is to make real estate a tradable asset, so it can be bought, sold, and mortgaged. The right to private ownership is essential for a well-tuned economy, and land is the perhaps most important asset and thus motor for driving the economy. The landowner’s right has to be firmly protected in a country for significant foreign investments to take place, or to prevent that money leaves the country to safer places. Money is of course essential, because the more money there is, the lower the interest rates will be, and the easier it will be for entrepreneurs to start businesses.

The purpose of the land lease law, “arrende law,” is to provide the “grease” that will allow the economical resources to be optimally located in the country. A big landowner may not be able to cultivate his land as efficiently as a bunch of small farmers could. The overall productivity for the nation will be higher if an absentee landowner leases suitably sized portions to agronomists who can set up modern and efficient farms. This will also increase the employment on the countryside, because high-intensity agriculture requires many employees, whereas cattle grazing requires very few.

The Swedish “arrende law”

What is it then that the land lease law does? It has two important roles.

First, it safeguards the landowner’s right to the land. He does not risk loosing it by letting someone else use it, which (I’ve been told) is a major concern for Honduran landowners today, and the main reason why the land of the country is so sub-optimally exploited (which in turn leads to poverty and starvation).

Second, it provides a method for conflict resolution. The Swedish law establishes an “arrende board” in each district. In all matters of potential dispute, the board is involved. The general formula is in each case or dispute the following:

  1. The arrende board decides if the landowner has a duty according to the law to do something (e.g., repair buildings, drainage, irrigation, or build some new structure due to a change in the legal requirements).
  2. They also establish a price for this job, their best estimate.
  3. The landowner gets one month to fix the problem.
  4. If he does not, the lessee (arrendatorn) can fix the problem himself, and charge the cost (according to the price set by the board) from the landowner (normally by deducting it from what he owes for the lease).

The arrende board also settles the issue of lease payment if a lease is prolonged beyond the initial period. The law limits how long an initial lease can be (the time depends on the type of lease: cultivation lease, building lease, etc.). The law also establishes a departure day, the date when a lessee has to leave the farm at the end of a lease (this “fardag” is March 14th, a time of year when the barns are almost empty after the last season, but before the cultivation for the new season starts).

Proposal: A Honduran land lease law

To reach the goal of optimal land use, there must be appropriate laws for land ownership, cadaster, and for land lease. This is true also in other countries, in some of which past attempts to land redistribution reforms have led to violent clashes, civil war, or a coup d’état.

One person may be better at making good use of the value of the land, and another of the fertility of it. To redistribute the ownership for the purpose of cultivation sacrifices one for the other, and rocks the foundations of the economy. It is much safer, and surely even more efficient, to create a land lease law for satisfying the goal of optimal land use.

If I could advice the political leadership in Honduras, I would urge them to proceed as follows:

  1. Make sure the cadaster is working and that the ownership of land is guaranteed, thus providing a domestic source of equity.
  2. Create a land lease law that is designed to facilitate optimal land use from both an economical and an environmental perspective.

It would probably be wisest to appoint an expert or a commission to thouroughly examine the present situation first. They could compare the laws of other countries, like I did above with Sweden, and suggest the objectives and goals of recommended legislative reforms.