Government Makes Us Poor

Government Makes Us Poor

Wednesday, October 5, 2011

Here's my fantasy: Libertarians are elected to the presidency and to majorities in Congress. What would happen next? Well, if libertarians were "in charge," you'd have more freedom and prosperity.

Freedom frightens some people. They say if no one is in charge there would be chaos. That is intuitive, but think about a skating rink. Before rinks were invented, if you proposed an amusement in which people strap blades to their feet and skate around on ice at whatever speeds they wish, you'd have been called crazy. There's got to be speed limits, stoplights, turn signals. But we know that people navigate rinks safely on their own. They create their own order, with only minimal rules.

Society would work the same way — and does to a large extent even today. "Great part of that order which reigns among mankind is not the effect of government," Thomas Paine, the soul of the American Revolution, wrote. "It has its origin in the principles of society and the natural constitution of man. ... Common interest (has) a greater influence than the laws of government."

If libertarians were "in charge," there would be laws to protect us from foreign enemies and those who would steal from us or injure us. Today, by contrast, under the rule of Democans and Republicrats, we're drowning in rules — 160,000 pages' worth. Micromanagement kills opportunity and freedom.

Maybe if there were a way to have more competition among governments, things would be better. Competition forces people to become more efficient and to get rid of stupid rules. What if we let people take over some unused land in America to create areas with fewer rules, simpler legal systems, smaller government?

I explored that subject last week with Michael Strong and Magatte Wade, founders of the Free Cities Project.

Strong said, "We want to encourage thousands of people to create new governments that have different rules, each competing for customers with the best education and best health care, the most peace and prosperity you could imagine."

Of course, state governments would have to approve this.

"There are already Native American reservations in the U.S. ... They can become more free. Honduras already has something like this. In Senegal, we're encouraging a move toward an autonomous city-state that would allow for peace and prosperity."

Wade is Strong's wife and an entrepreneur from Senegal, where she saw firsthand how bad rules prevent people from creating prosperity.

"We need jobs. Who creates jobs? Entrepreneurs," she said.

But Senegal is awash in rules. There was a government monopoly on cement. When the government allowed competition, prices fell by a third.

She started a beverage company.

"It was an ordeal. I did it because I am from Senegal. I have an interest in trying to improve things. But for an American company ... why would they put themselves through such a thing?"

"What people don't realize is the developing world is massively overregulated," Strong said. "Africa is the most regulated continent on earth."

In the Congo, it requires 18 documents to import anything.

Wade added: "The fact we have so many rules — who benefits most? Multinationals."

"And crony capitalists," Strong added. "Corruption in Africa is a symptom of massive overregulation."

Are there any free cities along the lines Strong and Wade envision?

"Hong Kong and Singapore are the best examples," Strong said. "Now they are among the wealthiest places on earth."

And there is a free city in Dubai because the emirate wanted to create a financial sector, but sharia law prevented it.

"Dubai was brilliant," Strong said. "They looked around the world. They saw that Hong Kong, Singapore, New York, Chicago, Sydney, London all ran British common law. British common law is much better for commerce than is French common law or sharia law. So they took 110 acres of Dubai soil, put British common law with a British judge in charge, and they went from an empty piece of soil to the 16th most powerful financial center in world in eight years."

It's what libertarians have said: Freedom works, and government, when it grows beyond the barest minimum, keeps people poor.

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