Sunday, May 14, 2006

Make Gravity History--article for Church Times (related to sermon below)

Make gravity history!

It’s outrageous that water flows downhill, away from those that have too little, towards those that have too much. Sharing it is a moral issue. Physicists may try to explain the world—we want to change it. The so-called laws of physics are nothing more than an excuse to maintain the moist and do down the dry.

Absurd? Yes. But so are the anti-poverty lobby’s economics. All too often the assumption is that there is a certain amount of wealth around, and if some people have too little, that’s because others have too much. But that is just as absurd when applied to wealth as it would be applied to water. Just as some countries are drier than others, some political and economic systems are better at creating wealth than others.

The big mistake is to apply the language of warmheartedness to government policy. Charitable giving is admirable on a personal level. Paid from taxation, it takes money from poor people in rich countries and gives it to rich people in poor ones. Worse, aid comes packaged with statist economic nostrums of collective ownership, state intervention in agriculture and industry and high taxation, all wildly misguided. Tanzania, for example, has received more aid per head (and probably more advice, were that quantifiable) than any other poor country—and is now worse-off than it was at the time of decolonisation.

It is as futile to try to solve the problem of global poverty by redistribution as it would be to irrigate the Sahara desert by airfreighting ice-bergs there. Imagine that by some improbable stroke of generosity and punitive taxation, the rich world raised a trillion dollars. Imagine that by some superhuman feat of organisation, it gave a one-off thousand dollar payment to every one of the world’s billion people living below the poverty line.

Of course, the money would soon run out. The causes of poverty—the bad roads, congested ports, clogged courts, corrupt officials, poor education, savings-averse culture, disease and so on, would be barely dented.

The real message of Christian Aid week should be not redistribution but enthusiastic support for faster growth in the world economy—and particularly of the developing world’s share in global trade. There are some obvious answers: to slay the dragons of rich-country protectionism, for example; or to offer generous scholarships and easy visas for developing-country students wanting to study in the west.

But the real problem is the foppish disdain that many in the rich world show for the causes of their own good fortune.

In particularly many Christians’ political and economic outlook is riddled with guilt and sentimentality. Rather than grapple with the real causes of both wealth and poverty, it is so much easier to follow the feelgood route of trivial or counterproductive gestures: demonstrating for “dropping the debt” or buying “fair trade” (more accurately: “fraud trade”) products.

It is quite wrong, as Nelson Mandela asserted last year in a speech of uncharacteristic foolishness, to think that poverty is abnormal. Poverty is where we all started.. Barely an eye’s blink ago in evolutionary terms, having a nice flint axe and a dry cave was the summit of human ambition. Modern prosperity is not the norm, but the result of specific institutions and habits. It is not just recent, but fragile—like water flowing downhill, wealth trickles away unless it is well husbanded. The good news is that we now know the rules of that husbandry. The bad news is that so many of us are too muddle-headed to put it into practice.

For a start: free trade and competition create wealth and jobs. Protectionism and monopoly destroy them. It is bizarre that these self-evident propositions still attract such hostility and suspicion. There is no example, anywhere in the developed or developing world, of a country that got poor because it traded too freely, or liberalised too fast. There are plenty of examples of countries that have stayed poor (or, even more tragically, become poor) by following the opposite policies.

From that it follows that anti-poverty lobby in the rich world is quite wrong to defend third-world countries’ “right” to protect their domestic industries. What that means is that the poorest people in the world pay high prices for sub-standard goods. I can see (thought I don’t agree with it) why a rich country like France chooses to protect its quaint agriculture and incomprehensible films. But why allow corrupt and self-interested elites in poor countries to rip off their own people?

Secondly, the more human and financial capital you can attract, the more value you add and the better you do. So the faster and easier movement of people and money across borders, as well as of goods and services, is a great engine of global growth. Instead of bleating, patronisingly, about “brain drains”, real poverty-busters should be making migration easier—in all directions. That would put the people-smugglers out of business, and let the “drained” brains return home easily, often and productively.

Thirdly, strong institutions make wealth grow both fast and stickily. Without property rights, respect for contracts and sound money, few make money in poor countries, and those that do tend to send it quickly to richer ones. Yet the bad governments of developing countries hobble the growth of the vital institutions: strong courts and central bank.

So if Christian Aid week must have a political message, I suggest some new slogans: Three cheers for global capitalism! Free Trade Now! Spread Democracy! Down with Despots!

That’s harder, of course, than grumbling about gravity—but wishful thinking won’t make water flow uphill.


Joe Otten said...

Comments here and (more supportively) here.

Edward Lucas said...

thanks. I don't at all think that charity is bad. Just that state-funded aid is usually counter-productive