by Jeffry R Fisher

Created on: August 19, 2010

Since the beginning of the industrial age, societal prosperity has been almost entirely determined by whether society is served by good government or cursed by bad or no government. Good government does not rule over the people but instead serves under them (impartially). It performs a very few vital functions such as: establishing stable money; defining standard weights and measures; recording, conveying and protecting real property title; enforcing contracts; and prosecuting violations of life and liberty. Good government otherwise leaves its people free in all creative pursuits.

Not surprisingly, whenever and wherever government has served creativity, prosperity has followed. Similarly, when and where government has encroached upon creativity, prosperity has suffered. Whole books (see below) have been written to illustrate this principle with examples involving both high and low birth rates, and both bountiful and scarce natural resources. All-white, European powers have stagnated under centrally-planned socialist government at the same time that economically liberated Asian "Tigers" boomed in spite of Europeans and Americans racist beliefs that Asian peoples were somehow inferior. Therefore, none of those other oft-cited reasons stands up to historical scrutiny.

Unselfish as it seems, simply shoveling money at third-world countries merely empowers the dictators who confiscate the aid and use it to solidify their power. Building factories to make jobs also fails where bad government steals land and improvements, and where corrupt officials demand bribes on every mile of road (often without even paving it). There are reasons that off-shoring goes to some countries with low wages and not other countries with even lower wages, and those reasons all relate to the few necessary functions of government listed above.

What should developed countries do then? In the spirit of removing the timber from one's own eye before picking a mote from a neighbor's, developed countries must first cure whatever corruption and mission-creep their own governments suffer before offering advice to others. That means ignoring both socialism's and crony-capitalism's harmonious siren song of crises, short-sightedness, complacency, and free-lunch fallacies.

Only after taking the medicine themselves can developed countries serve as believable models of good government. Then they can help poor countries (indirectly benefiting themselves in the process) by toppling kleptocrats, withholding support from corrupt/feckless governments, and offering to assist lame governments in developing the few vital institutions that governments should serve.

Once liberated and properly served, a country can attract capital and begin to build its own wealth, much as the dregs of European society did as dirt-poor immigrants to the young US over 200 years ago.

Further Reading:
"The Mystery of Capital" by Hernando De Soto
"Basic Economics" & "Applied Economics" by Thomas Sowell
"The Wealth and Poverty of Nations" by David S Landes

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