Jay Richards’ previous post on Richard Rahn’s article “Not Rocket Science” illustrates Huxley’s famous statement about a fact destroying a theory.
Jay quotes Rahn’s lists of the politicians and development experts who support increased foreign aid.
It’s no longer just politicians and economists. Bono’s One Campaign is designed to get the developed nations to contribute 1 percent of their GDP to foreign aid for the poorest countries. No doubt Bono and many other supporters have good intentions. But good intentions don’t fight poverty. Economic opportunity, entrepreneurship, and free trade do.
Using the Heritage Foundation/WSJ “Index of Economic Freedom” Rahn lists example after example of the success of countries who liberalized their economies, and failures of those that haven’t.
The economically freest societies are the most prosperous, and the most economically repressive societies are the poorest.
Ireland 30 years ago was among the poorest countries in Europe. It then made a major shift toward freeing up its economy — e.g., its maximum corporate tax rate is only 12 1/2 percent (it ranks No. 3 out of 157 countries in the index). As a result, it now has the second-highest per capita income in Europe and is far ahead of the old leaders like Germany (No. 19) and France (No. 44). (Note, when I refer to per capita income, I do so using the Purchasing Power Parity measure which accounts for local price differences.)
In Eastern Europe, Estonia is economically the freest (No. 7), and Romania the least free (No. 92), though the latter is now making progress. Both countries started out at roughly the same level 16 years ago, but now Estonia has almost twice the per capita income of Romania. Much of the credit for Estonia being the most successful transition country goes to its brilliant and able free-market former prime minister, Mart Laar.
On the other hand, the biggest recipients of development aid over the last quarter-century, for the most part, have gone nowhere economically. Egypt (No. 129), the biggest recipient of development aid in the last quarter-century, is a prime example, with a per capita income about 5 percent of Ireland’s.
Despite the evidence you will continue to hear Kofi Annan and the others clamoring for more aid and more generosity. Instead of aid, they should start asking to reduce tariffs and subsidies and encourage and assist developing countries to set up market economies guided by the rule of law.
Hernando de Soto’s book The Mystery of Capital illustrates that what is needed is not more aid, but the ability to turn assets into capital and less government regulation and interference in the economy.
The One Campaign is right to care about the poor in Africa and elswhere. Perhaps if we could get Bono’s good intentions and passion behind sound economics we might see some real change.
The abstract arguments for economic freedom are great for those of us who, well, like abstract arguments. But sometimes, there’s no substitute for some good, solid empirical data. That’s just what economist Richard Rahn delivers in this article in the Washington Times. If you don’t have time to read the 2006 Heritage Foundation/Wall Street Journal “Index of Economic Freedom,” at least read Rahn’s summary of it.
Suppose you were appointed global economic czar, and your task was to bring the world’s per capita income up to the level of Ireland’s (almost that of the U.S.). Would you:
(A) Insist the world’s rich nations transfer substantial wealth though massive foreign aid to the poor nations?
(B) Insist all nations adopt policies that would make them as economically free as the top 10 freest economies today?
If you answered “B,” go to the head of the class. This shows you have a good understanding of both history and economic reality about what works and what doesn’t.
If you answered “A,” welcome to the Kofi Annan, Jacques Chirac, Gerhard Schroeder school of willful economic ignorance.
Strong assertions. Fortunately, the statistics that follow not only illustrate the connection between economic freedom and prosperity, but also the lack of connection between receiving foreign aid and prosperity. This is one of those statistics-packed articles that I would love to memorize, if I was any good at memorizing statistics.
A number of bloggers have expressed grave concerns over Google’s decision to accomodate the demands of the communist government in its web search offerings in China.
David Mills at Mere Comments writes that Google is “serving a brutal government and helping it oppress its people, even if its service will prove only partially effective.” He complains that Google’s motives are purely pecuniary, and that the company is only acceding to the government’s wishes because “If it didn’t help the Chinese government oppress its people, it wouldn’t make much money in China.” Mills notes that Google is following Microsoft and Yahoo search engines in making these concessions
It seems a pretty easy judgment to make: Google is selling out. My first instinct is to agree and throw my lot in with those condemning Google, Microsoft, and Yahoo. Google executives have described it as a “difficult decision.” But Mills writes, “There is no ethical dilemma, because they do not have to do business in China at all.”
But this is the point at which such judgments themselves are rather simplistic and superficial. First of all, Google does have a responsibility to its shareholders to seek out new areas of profitability, and the most populous nation on the planet can hardly be overlooked.
The fact is that the people of mainland China are living under a repressive regime. The lack of such fundamental rights as free expression and speech are completely alien to us in the West, and so we react strongly when we hear about censorship and denial of human rights abroad.
But the question then becomes, “What is the best way to move China toward economic, political, and religious freedom?” It has long been assumed by proponents of liberal democracies that these three aspects of freedom are inextricably linked. If you truly have one, then you truly have all three. That position is being put to the test in China and other countries, which are seeking to liberalize elements of the economic and business sectors without substantially altering their hold on religious and political freedoms.
If you’re like most Americans, the answer is probably “No.” Faced with loss of market share and declining revenues, Ford announced a restructuring plan that would cut nearly a quarter of its workforce and close 14 plants over the next six years. The moves are intended to bring the auto giant back to profitability by 2008.
What has caused the competitiveness of Ford to plummet? It’s part of the larger trend among American automakers. Ford’s “Way Forward” plan was preceded by GM’s flirtation with a “cloud of bankruptcy” and was followed by DaimlerChrysler’s announcement of layoffs (many of which would be in Germany).
NBC Nightly News featured a story on the U.S. auto industry’s woes on Tuesday night (Netcast available here). Patriotism is being replaced by pragmatism, says NBC’s Anne Thompson.
MSNBC’s Roland Jones writes, “Like its U.S. rival GM, Ford has struggled in recent years with a loss in U.S. market share to Asian rivals, a decline in sales of its large SUVs because of higher gasoline prices and a crippling healthcare bill and pension costs for its U.S. workforce and retirees.”
Robert Brueggman of the University of Illinois-Chicago offers a contrarian take on suburban sprawl in US News and World Report.
I’m not as relativistic as Brueggman is with respect to the aesthetic question: A lot of suburban shopping centers, highways, and neighborhoods are ugly—or at least boring—and don’t deserve to be preserved in the longterm. (Yes, a lot of urban buildings, highly respected by the architectural elite, are also ugly, in my opinion.) But Brueggman makes good points about the way most people view the benefits of suburbia and places the whole question in historical perspective.
For more on urban planning, Christianity, and markets, see the Spring 2003 issue of the Journal of Markets & Morality.
“The political left in America is emerging victorious,” writes Patrick Chisholm, and its true because “the era of big government is far from over. Trends are decidedly in favor of that quintessential leftist goal: massive redistribution of wealth.”
Over the past two decades, “Republicans’ capture of both Congress and the White House was, understandably, a demoralizing blow to the left. But the latter can take solace that “Republican” is no longer synonymous with spending restraint, free markets, and other ideals of the political right.”
Chisholm cites the fact that since 2000, “During the first five years of President Bush’s presidency, nondefense discretionary spending (i.e., spending decided on an annual basis) rose 27.9 percent, far more than the 1.9 percent growth during President Clinton’s first five years, according to the libertarian Reason Foundation. And according to Citizens Against Government Waste, the number of congressional ‘pork barrel’ projects under Republican leadership during fiscal 2005 was 13,997, more than 10 times that of 1994.”
And that’s just the tip of the iceberg, since “discretionary spending is dwarfed by mandatory spending – spending that cannot be changed without changing the laws.”
Read the whole thing: “Triumph of the redistributionist left.”
Bill Robinson at The Huffington Post says that the real “enemies of marriage” consists of “those who treat it as a commodity, a temporary merger, a corporate buyout,” citing the impending fourth divorce of billionaire Ron Perelman.
In typically overblown fashion, Robinson asks, “Where are the Defense of Marriage Nazis when marriage is actually under assault? Why aren’t they boycotting Revlon? Is it possible billionaires and celebs are undermining this sacred institution more than ‘the gays’? David Hasselhoff, Babyface, and Christina Applegate, are just this week’s divorce stories. What kind of world are we living in when Eminem remarrying his ex-wife is considered the love story of the day?”
On the one hand, Robinson is right to point to divorce as the most pervasive threat to the institution of marriage. We shouldn’t forget that the biblical allowance for divorce is quite limited and was enacted only because of the reality of human sin, because our “hearts were hard,” and intended to function as a preservational check on further corruption.
But this doesn’t mean there aren’t other threats to marriage, which may just have the potential to be just as dangerous and insidious. It really isn’t an either/or question, but rather a both/and. For example, Acton senior fellow Jennifer Roback Morse highlights the move from gay “marriage” and polygamy, from “creating legal institutions to accommodate same sex couples and creating legal institutions to accommodate multiple spouses.”
In today’s Townhall.com column, Morse writes of the situation in Canada, which “have proven that the advocates of marriage are not being hysterical when they warn of the cultural and legal slide into polygamy.”
It’s a bit ironic to note how the world’s argument against the traditional Christian position has changed over the last few decades. When marriage and divorce laws were being relaxed in the last century, the move was hailed by feminists and others as a liberation from patriarchy and monogomous tyranny. When Christians opposed the change of such laws, they were labeled Neanderthals. But now that gay “marriage” is the issue du jour, the world asks, “Where are the Defense of Marriage Nazis when marriage is actually under assault?”
Christians need to witness to the world with humility and recognition of the realities of hypocrisy. When “born-again” Christians are “just as likely to divorce as non-Christians,” there are some huge problems. But this doesn’t mean that there aren’t other threats, or that Christians shouldn’t speak up. It just means that we should be consistent and careful in our witness. Indeed, Christian silence might end up being the greatest threat to the institution of marriage.
Richard Burr has an excellent commentary in the Weekly Standard on the growing — and for some reasons puzzling — popularity of hybrid vehicles. Puzzling because these things don’t get the promised gains in fuel economy and don’t seem to work very well.
Imagine buying a Chevy Impala or a Toyota Camry and being told that you can’t run the air conditioner on high. Or you need lessons from the dealer on how to brake the vehicle in order to recharge the battery more efficiently. No, you couldn’t imagine that.
Burr, who is associate editor of the Detroit News editorial page, points out that the hybrid owner is really making a statement about his or her environmental sensitivity. What’s more, the government is subsidizing these manifestoes on wheels.
Hybrids have become the environmental equivalent of driving an Escalade or Mustang. Who cares if they deliver on their promises as long as they make a social statement? Taxpayers should. The federal government subsidizes hybrid fashion statements with tax breaks that benefit the rich. The average household income of a Civic hybrid owner ranges between $65,000 to $85,000 a year; it’s more than $100,000 for the owner of an Accord. The median income of a Toyota Prius owner is $92,000; for a Highlander SUV owner $121,000; and for a luxury Lexus SUV owner it’s over $200,000.
If the government wants to subsidize automobile purchases, may I suggest it add the 2006 Camaro Concept just introduced at the Detroit Auto Show to its list of favored vehicles? It has a 400 horsepower engine with cyclinder deactivation technology that, General Motors says, gets 30 mph on the highway. A nice little government subsidy might persuade GM to put this gorgeous car into mass production all the sooner.
John H. Armstrong tackles the question, “How Should Government Deal with Poverty?”
He writes, “A regular argument made, at least from some evangelical political voices from the political left, is to cite numerous Old Testament texts about poverty and then suggest that one of the central concerns of a just government is to solve the problems associated with poverty.”
He cuts to the heart of such fallacious reasoning, recognizing “No one who has an ounce of compassion disagrees that Christians should care about poverty and its associated social ills. The issue here is not ‘Should we care about poverty and the problems related to it?’ Rather, the question is, ‘What is the best way to respond to poverty?'”
Armstong narrates what the “profound” influence of Ronald Reagan on his point of view, and concludes: “The solutions to poverty are to be found in the free enterprise system and the sooner we stop bashing business and wealth making enterprises the better will be our overall response to poverty in America.”