Posted on 03/20/2004 8:28:46 AM PST by T-Bird45
Why can't Iraq do what American pioneers did? Why haven't Haitians done it, or Russians?
What enabled ordinary farmers and merchants to build the world's richest and most powerful nation? Why for two centuries has America been the dream destination of both ambitious immigrants and impoverished refugees?
Not far from Florida's shore, Haitians are once again killing each other over who will lead. This November, if we U.S. citizens tell our president to pack up and leave the White House, he's gone.
But as amazing as the smooth transfer of power is, even more astonishing is how little the change affects the fortunes of most of us. School children are taught the genius of American federalism, but the equally important economic system set up in the late 1700s is too little appreciated.
Had it been unable to generate great wealth, the nation would not have survived very long.
To hear today's presidential candidates talk about growing jobs, managing trade, reviving manufacturing and improving the lot of the little guy, you might think the president runs the economy. Actually, it mostly runs itself. This American economic experiment has proved to be the best thing ever done for the little guy.
Prior to the American Revolution, a free economy was only a theory. Its leading proponent was a quiet Scottish academic named Adam Smith, whose 1776 book ``The Wealth of Nations'' was widely read by the leaders of the American Colonists who were trying to start a new country.
What gave this small group of American farmers and merchants their confidence? Why did they think they could improve on the monarchies and highly regulated economies that had created the British Empire and all the other great powers of their era?
That question is the topic of a useful new book, ``Adam Smith and the Origins of American Enterprise'' by a New York University professor, Roy C. Smith, no relation to Adam.
What Adam Smith figured out, just by observing closely and thinking logically, was that the best way to manage workers and investors would be to encourage them all to follow their self-interests. Such freedom was a radical idea in 1776, when most of the world assumed that kings should control property and that it wasn't proper for commoners to try to better themselves.
Smith predicted that a simple system of fair justice, financial integrity, free markets, protection of property rights and light taxation would produce economic progress like the world had never seen.
That is not how the British economy worked. If you were a mill worker, you would be arrested if you tried to take your textile know-how out of the country. Economic rules were designed to build wealth by importing cheap raw materials and exporting valuable manufactured goods.
To that end, the Colonies were required by law to remain economically primitive. They were not allowed to buy from anyone except the British or to build a manufacturing plant or bank.
Even so, Smith noticed that the Colonies were growing much faster than Great Britain. He predicted that they would overtake Britain in 100 years, and history proved him right.
Much credit must go to the practical-minded Colonial leaders - Thomas Jefferson, Alexander Hamilton and others - who made Smith's theories work in the real world.
Today's voters would be well- advised to review U.S. history and rediscover the power of simple honesty and freedom. One example cited by Roy Smith is how the brand-new nation dealt with its debt, which, together with the war debts of the 13 states, amounted to a crushing 15 percent of the value of all the property in the country.
The temptation was to write it off or pay bondholders perhaps 10 cents on the dollar. Hamilton convinced lawmakers that the federal government should pay it all off, even the states' share. This surprising display of financial integrity made international news.
``Many wealthy Europeans were looking for a safe place to put their money,'' Roy Smith writes. Hamilton gave it to them.
Word spread of the great potential of this new, self-improving society where the government was honest and fair deals were available. Property was protected, even a foreigner's. Between 1790 and 1800, the population increased 36 percent. And still today immigrants pour in, hoping for work and a chance to build equity in homes and businesses.
Wherever freedom has been denied - such as on the slave plantations of the South or in the dictatorships of South America - the broader economy and public welfare have always suffered, just as Smith predicted.
Yet still today, political leaders try to win votes by promising special favors with someone else's money.
The world itself is an economic laboratory in which we discover that the richest countries are the ones with economies that are the most free. What is most astonishing is how many people, just like 18th-century British leaders, refuse to see it, and when they see it, refuse to believe it.
Unfortunately, I think the line above is less true than it used to be in both federalism and basic economics. However, it seems a lot of young people are overcoming this handicap.
I may have to check out this new book on Adam Smith, it sounds like a good one for the permanent home collection.
Wars, trade policy, etc can profoundly affect a nation with limited natural resources. If you grow your own, you are one step ahead in the game.
This inference is garbage. Japan isn't rolling in natural resources and neither is Britain. Hong Kong has virtually none (except a port), and neither does Singapore.
Russia may have the richest natural resources in the world.
Besides oil, Iraq has significant sources of uranium, precious metals, water, soils, and access to the Gulf. It's quite enough for them to prosper. Haiti has marvellous weather, and could have been an island paradise. The difference is liberty under the rule of law. All other factors pale by comparison.
Genesis 49:26 The blessings of thy father have prevailed above the blessings of my progenitors unto the utmost bound of the everlasting hills: they shall be on the head of Joseph, and on the crown of the head of him that was separate from his brethren.
Actually, we're all standing on top of and surrounded by "natural resources" every place on the planet.
This circumstance has always been true for humans; but without reason, liberty, and property rights, these "natural resources" remain valueless.
But there are other large countries with lots of natural resources. Why isn't Brazil or Argentina in the same stratum as the US? If natural resources guaranteed prosperity why did the Soviet Union fail? How did a country like Japan with few natural resources have so much growth in the 20th century? Or Hong Kong? Or Taiwan?
Neither does Japan or Hong Kong or Taiwan.
Hawaii does OK by it. Cuba once did too.
It doesn't matter -- it is all going to go away in 2 generations. Between the flood of immigrants (legal and illegal) and their steadfast refusal to assimilate and Liberal politics which ignores all credos of wealth generation in favor of blatant socialism (such as the EIC) the tenents of our political and economic system are being hacked of at groud level.
Today in the LA Slimes, a writer had the termity to say -- and the Slimes had the audacity to print -- a letter from someone who called for the "High 5 plan" 5% tax on the 5% richest Californians for 5 years (he was protesting the hike in Jr College fees). This blathering idiot doesn't even realize that not only will more businesses relocate OUT of California, but so will the "rich" people (who of course don't work) who alreay pay 80% of taxes anyway! So, instead of the current % or the 5% added, they will get ZERO!
Folks, I am glad I don't have kids. This is the first recorded generation that feels that things will be worse for the next generation. And with good cause.
</Gloom and Doom rant>
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