I recently watched a John Stossel episode, and he posed this very question: why is America rich? And we are rich, especially when measured by world standards. Even our poor are well off, compared to the poor of Haiti, Zimbabwe, and Afghanistan. Depending on whose data you rely, the United States come in at 6th (IMF data), 5th (World Bank data), and 8th (CIA World Factbook).
But why? Why do we enjoy such a high standard of living compared to the rest of the world? The answer is property rights.
Where you find clearly defined and well-enforced property rights, you will also find the basic ingredients for wealth creation. The ability to borrow against your property, the property you own, is the fuel that feeds our engine of economic growth. The banker need collateral before loaning you the money to start your own business, and often times that collateral is our property. But, there may be other reasons for our prosperity.
What other reasons can you offer to explain why America has fared so well? We’re a relatively young country, and we’ve come a long way quickly. Why? What is our secret to wealth creation?
Some might say America has become wealthy because it’s free. Perhaps. There are at least two kinds of freedom that come to mind: constitutional and economic. Constitutional freedoms are those like a free press, no unwarranted search and seizure, trial by jury, etc. Economic freedom relates to individuals having freedom to express their preferences through choice – retaining the fruits of your labor to buy what you want, instead of having your wages confiscated by the state and choices being made for you: social security (compulsory) comes to mind.
ReplyDeleteI think we started out strong in both categories, but what of our economic freedom? I see our economic freedoms shrinking slowly but methodically.
Brad,
ReplyDeleteYou may want to check out Peter Leeson's article "Two Cheers for Capitalism?" in one of the 2010 editions of Society: http://www.peterleeson.com/Two_Cheers_for_Capitalism.pdf
Awesome article - reinforces what we Libertarians already suspected. I would like to know more about these "surplus funds", built up in economically free countries, like the U.S. I've never come across that term.
ReplyDeleteI'm sure we burned through a lot of "surplus funds" over the past two years!
The surplus fund is an interesting concept. I haven't a clue how to get a concrete measurement of that thing. I saw it originally in Sanford Ikeda's book "Dynamics of the Mixed Economy." He writes that the bigger the surplus fund the longer an economy can tolerate interventionism.
ReplyDeleteHere's what I think it could be. It refers more to the social fabric of a society than any notion of monetary supply. America, for the most part, has always been free. Centuries of freedom have spawned generations of entrepreneurs, inventors, and risk-takers.
ReplyDeleteFreedom is in our blood; it’s in our genetic makeup, and we learn to adapt, somewhat, to state intervention. We don’t like it, but there’s no “quit” in us. We react and improvise to intervention in creative ways, always finding another solution, another path. However, over time intervention, if severe enough, will exact a toll. We lose our ability (and maybe desire) to fight, and slowly succumb. Let’s hope it never gets to this! This is why we blog – for the sake of liberty!
I heard BofA is raising fees on checking accounts, due in large part to Dodd-Frank.
ReplyDeleteWe should start a "I told you so" column on the blog. Over the next several years, if all this terrible legislation stands, we'd be able to fill such a column sky high.