ND Libertarian
Wednesday, January 26, 2011
Tuesday, December 14, 2010
John Stossel: Why do poor people remain poor? | Washington Examiner
Unlike people in the United States, Europe and Asian countries like Japan, South Korea, Hong Kong, etc., they don't lift themselves out of poverty.
Why not? What's the difference between them and us? Hernando de Soto taught me that the biggest difference may be property rights.
I first met de Soto maybe 15 years ago. It was at one of those lunches where people sit around wondering how to end poverty. I go to these things because it bugs me that much of the world hasn't yet figured out what gave us Americans the power to prosper.
I go, but I'm skeptical. There sits de Soto, president of the Institute for Liberty and Democracy in Peru, and he starts pulling pictures out showing slum dwellings built on top of each other. I wondered what they meant.
As de Soto explained: "These pictures show that roughly 4 billion people in the world actually build their homes and own their businesses outside the legal system. ... Because of the lack of rule of law (and) the definition of who owns what, and because they don't have addresses, they can't get credit (for investment loans)."
They don't have addresses?
"To get an address, somebody's got to recognize that that's where you live. That means ... you've a got mailing address. ... When you make a deal with someone, you can be identified. But until property is defined by law, people can't ... specialize and create wealth. The day they get title (is) the day that the businesses in their homes, the sewing machines, the cotton gins, the car repair shop finally gets recognized. They can start expanding."
That's the road to prosperity. But first they need to be recognized by someone in local authority who says, "This is yours." They need the rule of law. But many places in the developing world barely have law. So enterprising people take a risk. They work a deal with the guy on the first floor, and they build their house on the second floor.
"Probably the guy on the first floor, who had the guts to squat and make a deal with somebody from government who decided to look the other way, has got an invisible property right. It's not very different from when you Americans started going west, (but) Americans at that time were absolutely conscious of what the rule of law was about," de Soto said.
Americans marked off property, courts recognized that property, and the people got deeds that meant everyone knew their property was theirs. They could then buy and sell and borrow against it as they saw fit.
This idea of a deed protecting property seems simple, but it's powerful. Commerce between total strangers wouldn't happen otherwise. It applies to more than just skyscrapers and factories. It applies to stock markets, which only work because of deed-like paperwork that we trust because we have the rule of law.
Is de Soto saying that if the developing world had the rule of law they could become as rich as we are?
"Oh, yes. Of course. But let me tell you, bringing in the rule of law is no easy thing."
De Soto started his work in Peru, as an economic adviser to the president, trying to establish property rights there. He was successful enough that leaders of 23 countries, including Russia, Libya, Egypt, Honduras and the Philippines, now pay him to teach them about property rights. Those leaders at least get that they're doing something wrong.
"They get it easier than a North American," he said, "because the people who brought the rule of law and property rights to the United States (lived) in the 18th and 19th centuries. They were your great-great-great-great-granddaddies."
De Soto says we've forgotten what made us prosperous. "But (leaders in the developing world) see that they're pot-poor relative to your wealth." They are beginning to grasp the importance of private property.
Let's hope we haven't forgotten what they are beginning to learn.
Monday, August 9, 2010
Reason Magazine
Private Enterprise Does It Better
Why freedom and responsibility triumph over regulation and central planning
John Stossel | August 5, 2010
In Myths, Lies and Downright Stupidity, I bet my readers $1,000 that they couldn't name one thing that government does better than the private sector.
I am yet to pay.
Free enterprise does everything better.
Why? Because if private companies don't do things efficiently, they lose money and die. Unlike government, they cannot compel payment through the power to tax.
Even when a private company operates a public facility under contract to government, it must perform. If it doesn't, it will be "fired"—its contract won't be renewed. Government is never fired.
Contracting out to private enterprise isn't the same thing as letting fully competitive free markets operate, but it still works better than government.
Roads are one example. Politicians call road management a "public good" that "government must control." Nonsense.
In 1995, a private road company added two lanes in the middle of California Highway 91, right where the median strip used to be. It then used "congestion pricing" to let some drivers pay to speed past rush-hour traffic. Using the principles of supply and demand, road operators charge higher tolls at times of day when demand is high. That encourages those who are most in a hurry to pay for what they need. It was the first time anywhere in the world that congestion pricing was used. Bureaucrats were skeptical. Now congestion pricing is a hot idea for both private and public road management systems.
Likewise, for years there was a gap in the ring road surrounding Paris that created huge traffic problems. Then private developers made an unsolicited proposal to build a $2 billion toll tunnel in exchange for a 70-year lease to run it. They built a double-decker tunnel that fits six lanes of traffic in the space usually required for just two. The tunnel's profit-seeking owners have an incentive to keep traffic moving. They collect tolls based on congestion pricing, and tolls are collected electronically, so cars don't have to stop. The tunnel operators clear accidents quickly. Most are detected within 10 seconds -- thanks to 350 cameras inside the tunnel. The private road has cut a 45-minute trip to 10 minutes.
Indiana used to lose money on its toll road. Then Gov. Mitch Daniels leased it to private developers. Now it makes a profit. The new owners spent $40 million on electronic tolling. That's saved them 55 percent on toll collection. They saved $20 per mile by switching to a better de-icing fluid. They bought a new fleet of computerized snowplows that clear roads using less salt. Drivers win, and taxpayers win.
It also turns out that government roads often run more smoothly when drivers have more, not less, freedom.
This sounds paradoxical. Politicians often sneer at libertarians, saying, "You want to get rid of traffic lights?!" Well, yes, actually. In some cases, traffic moves better and more safely when government removes traffic lights, stop signs, even curbs.
It's Friedrich Hayek's "spontaneous" order in action: Instead of sitting at a mechanized light waiting to be told when to go, drivers meet in an intersection and negotiate their way through by making eye contact and gesturing. The secret is that drivers must pay attention to their surroundings—to pedestrians and other cars—rather than just to signs and signals. It demonstrates the "Peltzman Effect" (named after retired University of Chicago economist Sam Peltzman): People tend to behave more recklessly when their sense of safety is increased. By removing signs, lights and barriers, drivers feel less safe, so they drive more carefully. They pay more attention.
In Drachten, Holland, lights and signs were removed from an intersection handling about 30,000 cars a day. Average waiting times dropped from 50 seconds to less than 30 seconds. Accidents dropped from an average of eight per year to just one.
On Kensington High Street in London, after pedestrian railing and other traffic markers were removed, accidents dropped by 44 percent.
"What these signs are doing is treating the driver as if they were an idiot," says traffic architect Ben Hamilton-Baillie. "If you do so, drivers exhibit no intelligence."
Once again, freedom and responsibility triumph.
John Stossel is host of Stossel on the Fox Business Network. He's the author of Give Me a Break and of Myth, Lies, and Downright Stupidity. To find out more about John Stossel, visit his site at johnstossel.com.
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Wednesday, February 17, 2010
Green Death????
Tuesday, June 23, 2009
I'm from the Government and I'm here to.....
A cowboy named Bud was overseeing his herd in a remote mountainous pasture in Dakota country when suddenly a brand-new BMW advanced out of a dust cloud towards him. It really is getting this bad.... |
Thursday, April 30, 2009
"Danger, Will Robinson, Danger!"
Good thing-thanks to America's entrepreneurial spirit--there's insurance (via instapundit)