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Posted on 06/11/2002 12:04:12 PM PDT by RJCogburn
On May 2 the best friend of the world’s poor died at home in London. Peter Bauer was 86 and had just been named winner of the first Milton Friedman Prize for Advancing Liberty, awarded by the Cato Institute.
Never heard of Peter Bauer? That’s because his analysis of poverty in the developing world and his solution to it weren’t shared by the political and media establishment or by mainstream development economists, such as Gunnar Myrdal and John Kenneth Galbraith. They all favor socialism for the “third world.” Bauer favored individual freedom, private property, the rule of law, and limited government: that is, capitalism. That’s why you haven’t heard much about him.
Development economists have a dozen reasons the laws of economics that work so well in developed countries do not work in poor countries. Their rationalizations come down to a few main points: that poor people do not respond to market incentives; and that they won’t invest now in order to reap a larger return later. This is known as the “cycle of poverty,” which can be broken, development economists said, only by government planning and massive handouts from the West. Unfortunately, when countries were getting free from the colonial system after World War II, their Western-trained autocratic leaders listened to Myrdal and Galbraith. The result was a decline in material well-being and decades of miserable poverty. Meanwhile, guilt-ridden Western leaders sent billions of dollars in foreign “aid” to those countries, achieving little besides the fattening of the bureaucratic class and the politicization of society, which only aggravated their condition and even provoked civil wars.
Through it all the Hungarian-born Bauer’s lone, gentle voice painstakingly showed why socialist development polices would doom the people of the developing world. He started out with a deceptively simple question: If the development economists were right, how did anyone ever get rich? After all, poverty is mankind’s natural state. The human race did not start out with capital, and before the first people grew affluent, there was no one to provide foreign aid.
So how did it happen? Bauer, through empirical studies of West Africa and Malaysia and an elaboration of economic theory, showed that capital is the effect, not the cause, of material progress. The causes are ambition, hard work, supportive cultural attitudes, and a rule of law that protects property; in a word, capitalism. Where those conditions obtain, progress follows. Hong Kong, which was extremely poor after the war, is only the most striking example. Asia is full of others examples.
In one of his best-known essays, “Western Guilt and Third World Poverty,” Bauer showed that the West need not feel guilty for world poverty. The poorest of the poor countries are the ones that have had the least contact with the capitalist countries. The richest of the newly developed countries were colonies until recently. (Hong Kong was a British possession with little democracy until 1997.) The guilt trip is just a way for elitist third world leaders to extort money from rich Westerners. But the money has not raised the living standards of the people. Only market reforms have accomplished that.
In other words, advocates of free-market globalism (not the government-managed kind) can hold their heads high. Free trade with the developing world is good for everyone concerned. In fact, it is the only route out of the abject poverty so many in Africa, Asia, and Latin American find themselves in.
Bauer also was an early opponent of government population-control programs. For him, the simple question is: who should make decisions about having children, parents or the state? The answer is obvious. Moreover, he pointed out that a growing population is not an impediment to economic progress — quite the opposite. The populations of England and America grew dramatically when those countries were first getting rich. In much of the developing world, the problem is too few people to support an infrastructure capable of efficiently moving goods to markets.
Finally, where the mainstream development economists’ writings drip with condescension for the apparently helpless poor, Bauer’s words glow with goodwill and respect. The inhabitants of the developing world are people, he reminded us. They need freedom too.
Except for U.S. workers who lose their jobs, or see their income stagnate.
But free trade is good for business, which is why business-funded Cato Institute supports free trade.
Fortunately, there was no one at that time "enlightened" enough to tell us that what WE needed was an entrenched bureaucracy and unlimited handouts from our sugar-daddies in Europe. As a result, we're the most prosperous nation in the history of the world.
What a coincidence.
Despite all your pansy whining, Americans are doing just fine, thank you. The average American WORKER (as opposed to those who pretend to work while whining all the while about how much better then next guy has it--looked in the mirror lately?) has the highest standard of living BY FAR of any nation on earth.
In contrast, look at Sweden (home of Myrdahl) which adopted the sort of "compassionate, caring" government-run economy decades ago, and has seen its standard of living go into the toilet. American blacks have a higher standard of living than the average Swede.
Sorry, pal, but your place is reserved in the dustbin of history. Why not go ahead and jump in, and save yourself the further embarrassment of being noticed for the cretin you are?
Excellent post. I wish more people were so unafraid of speaking the naked truth.
How do you define "standard of living".
BTW - The typical European worker gets around 8 weeks vacation, not a bad "standard of living".
From prior posts, Tuco seems to prefer the Soviet style of employment as summed up by one of its commisars. "They pretend to work and we pretend to pay them."
"The average American WORKER (as opposed to those who pretend to work while whining..."
I believe Illbay defined his "Standard of Living" quite adequately.
Static observations about a dynamic process will always yield incomplete analysis and and forever doom solutions based therein to following not leading. Jobs lost to unneeded products (ever notice how the world's just not making as many Spanish galleons as we did in 1588?) or services free workers to perform valued work enhancing both the wealth of a society and the esteem of the worker. Progress requires it. Jump on board cause if you ain't the lead dog, the scenery never changes.
Myrdal and Galbraith, fools that they were, didn't restrict their damage to the third world. Myrdal's ideas bankrupt the Swedes and Great Society types like Galbraith sentenced two generations of African Americans to poverty as wards of the state. These men and their ideas should be forever enshrined in the same Hall of Infamy with the perpetrators of 9/11, Pearl Harbor, and other atrocities.
Such as shoes, garments, steel, and now IT sofware and engineering.
Boeing is outsourcing their commercial engineering to Russia, financial companies (i.e., Merrill Lynch, Bear Sterns), are outsourcing their IT work to India, etc.
And I believe you don't know what you are posting about!
Very well said.
This should be made into posters and put up in every public school in the country.
It discusses the failures of state planned economies seen in the last century.
The entire documentary in three parts is now on their website:
Commanding Heights
I have found it to be very informative about economic issues.
Quite right you are. Needed products produced inefficiently expose those who produce them to the buffeting winds of change. I believe the first census in 1790 showed 90% of the population were farmers. Today, it's what? 2% or so? Oh dear, what are all those non-farmers doing? Congress needs to investigate. What did the Oracle Marx have to say about this insufferable injustice?
You know what his big pitch was? "We have liberal vacation and sick leave, and a GREAT retirement system!"
In other words, "come work as little as possible for us, and look forward to the time when you don't have to work at all."
If we ever get to the point in this country where the majority are salivating over the chance to have eight weeks' vacation every year, it will be all over for the American Dream.
Everyone wants the deal for themselves when they spend the money, whether it's on a car, a stereo, the toaster, a loaf of bread. But they can't seem understand why an employeer wants to pay as little for labor as possible. If the only thing you can do is shovel dirt, well there are a lot of people who can meet that minimum criteria, and they may just want the work more than you do.
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