Travel formalities

Last week Travel Leaders released a poll detailing the ways that political tensions (and outright wars) in 2014 suppressed travel to traditional tourist destinations, including Egypt, Israel and Kenya. 

On the day I read the survey, I was in Peru, a country whose attractions I had longed to see in the 1980s, when it was considered off-limits owing to the Shining Path insurrection.

Peru has come a long way since then, welcoming 3.2 million visitors last year. I was in Lima last week attending the World Travel and Tourism Council Americas Summit and, coincidentally, the opening keynote was presented by Hernando de Soto, the man many people credit with pushing the reforms that ultimately resolved the crisis in Peru more than 20 years ago.

De Soto, now 73, is not a political leader, but an economist. In his speech he neatly connected the root causes of world unrest, the issuance of passports, documentation proving the ownership of cattle and his belief that the travel industry could soar to unprecedented heights if certain economic principles were pursued.

De Soto said that Peru, which embraced his ideas, is the only country in the last quarter-century to defeat an insurgent terrorist group without foreign assistance. And in that same time frame, it went from an inflation rate of 6,700% to an economy that has grown at twice the rate of Latin America in general, and whose middle class has grown four times faster.

In de Soto's world view, people are either "formal" or "informal," in economic terms. Of the approximately 7 billion people in the world, 1 billion ­-- primarily the residents of Western Europe and North America (or, in de Soto's words, "you pink people") -- belong to the "formal" world. "I'll give you Japan and Singapore, too," he offers.

We formal people are well-documented. We can get passports and credit cards. We can prove we graduated school. If we own a house, we have a title. We have social security numbers and pay taxes.

Another billion "formal" people are scattered in other parts of the world, leaving about 5 billion "informals."

Of these, only 1 billion are content to be informal. The other 4 billion want the benefits of formality but are frustrated living in informal societies.

An informal society is not without ownership, but its recording of ownership is idiosyncratic. De Soto has made a study of demonstrating that common understandings of "ownership" exist and are widespread, even when there is no legal documentation, titles or deeds. His Institute for Liberty and Democracy surveyed several countries in Africa and didn't find one domestic animal that didn't belong to someone through an informal means of understanding. But rarely was there paperwork to prove ownership.

The undocumented, informal wealth of the poor is staggering, he says. In Egypt alone, the informal poor own $360 billion in capital, equivalent to eight times the amount of foreign investment since the time of Napoleon. But because it is informal, ownership can't be proven in court and exists largely outside systems used to establish credit.

Religious conflict, he contends, is often born of economic frustration. Representatives of his institute interviewed family members and survivors among the 64 people in North Africa who set themselves on fire (and likewise ignited the Arab Spring) four years ago. Not one was religious, but all were frustrated about an inability to rise economically in their society.

"These were people wearing sneakers, blue jeans, T-shirts and who had short hair," de Soto said. "Everyone assumed it was religious, but it was not."

He said Karl Marx's view of religion -- that it is the opiate of the people -- is misunderstood. Praising Marx as "a great intellectual," he said the father of communism was warning that if you don't provide economic satisfaction, frustrated people will turn to faith.

(It is impossible to classify de Soto as a leftist or rightist, by the way. The communist Shining Path tried to kill him, Ronald Reagan sung his praises and Bill Clinton called him "the world's greatest living economist." Heads of state, the International Monetary Fund and World Bank have hired his institute for consultation.)

But back to travel.

If formality becomes more widespread, the benefits to the industry would be two-fold. He (and the Travel Leaders survey) noted that travelers avoid "zones of conflict." These travel-inhibiting tensions often stem from frustration related to informal economies.

Moreover, travel would be among the primary beneficiaries if people become more economically secure through formality. Currently, the travel industry is beside itself with joy contemplating the 1 billion Chinese and Indians who are expected to rise to the middle class (and become potential international travelers) in the next 10 years.

Now just imagine if that number were 4 billion.

We "pink people" won the economic Cold War without firing a shot, de Soto said, and now it's time to share the economic benefits of formality, from titles and deeds to credit cards and passports and airplane tickets.

Email Arnie Weissmann at aweissmann@travelweekly.com and follow him on Twitter.