Poverty is popular

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Posted on Apr 06 2000
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The Commonwealth’s private sector is, as we know, stressed. We spend a lot of time and energy talking about it. But let’s beg the basic premise and ask this question: Do we NEED private sector?

Answer: No. We can decide to become a welfare state. Uncle Sam can foot the bill easily.

There’s no economic law that says societies will choose prosperity and opportunity over poverty. Most, in fact, deliberately choose the economic low road. Don’t ask me why–I don’t know why- -but it really doesn’t matter why, does it? The “how” is important, since it pertains to the science of economics. But the “why” is more a matter of psychology or sociology, and I’ve never known an economist who’s well versed in either field.

Economists do, however, have to become a bit philosophical, and even cynical, when the clean science of theory has to mesh with the mob realities of political muscle. Economics, unfortunately, doesn’t take its course in a vacuum. Governments and mobs have the power to curtail markets and reduce wealth production.

Which is why we see such a yawning discrepancy between the potential wealth of economies, and the actual wealth. In terms of raw resource endowments, Mexico, Russia, and Malaysia should be rich; Japan, Hong Kong and Switzerland should be poor. So what happened here? What factor is so wildly different that the resource rich are economically poor and the resource poor are economically rich?

The answer: People in these various countries have behaved differently. Some have created economic environments in which markets enjoy some degree of freedom and reliability. Others, driven by envy, corruption, and even superstition, have chosen the path to poverty.

All the armchair, self-appointed guardians of humanity love to hoot and whine and howl and preach about the world’s poor and downtrodden societies. They’re all hypocrites, though, unless they actually uproot their butts and move to the societies that they want to “help” so much. I’ll give people in the Peace Corps and Habitat for Humanity some credit: at least they’ve got the guts to leave the lush bosom of American suburbia and move to distant and often squalid foreign lands. Most Americans don’t have that kind of courage.

I’m certainly nobody to laugh at anyone’s misfortune, but sympathy can’t all together replace reason. Whenever a natural disaster strikes some poor country, we’re confronted with images of the poor and wretched and displaced. Which really is a bummer. But we also have to consider that the lack of resources they have to aim at their disaster recovery is usually a direct result of corruption, envy, superstition, and the consequent lack of free markets. And in this regard, I have no sympathy at all. I think about how they’d treat me if I tried to do business on their turf.

There’s a lesson in all of this for the Commonwealth, as the economy continues to flounder. There’s no law of economic anti-gravity that will propel us to prosperity.
The Commonwealth can choose not to improve the economic landscape and can consequently chose to have less wealth. Don’t tell me that’s a strange choice, because it’s the choice that most societies make.

No, we don’t need a private sector. Some people value it, but many–perhaps most–people don’t. Poverty is more popular than you think.

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