The mystery of legal failure

The reason that governments worldwide have failed to open up their property systems to the poor is that they usually operate under five basic misconceptions:
(1) all people who take cover in the extralegal or underground sectors do so to avoid paying taxes
(2) real estate assets are not held legally because they have not been properly surveyed, mapped, and recorded
(3) enacting mandatory law on property is sufficient, and gov.t can ignore the costs of compliance with that law
(4) existing extralegal arrangements or "social contracts" can be ignored
(5) you can change sth. as fundamental as people's convention on how they can hold their assets, both legal and extralegal, without high-level political leadership

Most people do not resort to the extralegal sector because it is a tax haven but because existing law does not address their needs or aspirations. 

Operating in the underground is hardly cost-free. (basic application of demand-supply curves) Being free from the costs and nuisance of the extralegal sector generally compensates for paying taxes.

The widespread undercapitalization, informal squatting, and illegal housing throughout the non-Western world are hardly caused by a lack of advanced information and mapping technology.

Property is not a primary quality of assets but the legal expression of an economically meaningful consensus about assets and law is the instrument that fixes and realizes capital.

Property is not the assets themselves but a consensus between people as to how those assets should be held, used and exchanged.

Assets themselves have no effect on social behavior: they don't produce incentives, they make no person accountable, no contract enforceable. Assets are not intrinsically "fungible"--capable of being divided, combined, or mobilized to suit any transactions. All of these qualities grow out of modern property law. It is law that detaches and fixes the economic potential of assets as a value separate from the material assets themselves and allows humans to discover and realize that potential. It is law that connects assets into financial and investment circuits. And it is the representation of assets fixed in legal property documents that gives them the power to create surplus value.