Perhaps I was too shocked to believe that people would use the terrorist attack at the World Trade Centre to further their ideological goals. But as I read postings on the Internet and letters to newspapers, and listened to news pundits, a common theme started to appear. America was bombed because America is rich and the rich are, by definition, exploiters who are responsible for the poverty of the world.
University of Chicago Professor of Anthropology Jean Comaroff was reported to have said that the terrorists were themselves “victims of capitalism” and that the inequality of wealth was responsible for the attack. Another academic, Prof. John Stremlau of the University of the Witwatersrand wrote: “Unless a fairer deal can be struck between the world’s rich minority and poor majority there is danger of terrorism on an even greater scale, using the same shocking methods but backed by a determination to force a major redistribution of power and wealth, risking global anarchy on a scale no coalition of governments could contain.”
This hyperbole is worrisome because one would hope that educated people would know better. Poverty is not some disease inflicted on people by evil conspirators. It is not the result of capitalism or globalisation. It is the default state of humanity. Each of us comes into the world with nothing. We are born poor.
Wealth is not the automatic result of good wishes or human desires. Wealth is created by human energy. And every time I hear about the inequality of wealth I wait to hear one mention of the inequality of productivity but this is never discussed.
It is assumed that abundant wealth automatically exists evenly distributed according to some egalitarian plan. Apparently poverty results when some evil capitalists interfere with this divine order by taking wealth away from the poor. Of course at one point in history the entire world was poor. As far back as we know the human species has suffered short and miserable lives where want was our constant companion.
Nor can it be argued that the wealth began to accumulate in parts of the world as the result of exploitation of the poor. After all, the poor have little to exploit, which is why they are poor. Wealth is not shuffled about like a stagnant deck of cards with the same fifty-two faces. But this is the premise behind all the comments we hear. However, when human energy is released within a certain social sphere the result is prosperity.
What is in that sphere? First, secure property rights. People do not care for resources that they cannot own. This undeniable truth results in the failure of socialism and the failure of all forms of communal ownership. Second, when someone produces he must be able to trade his produce with others. This allows a third important phenomenon: the division of labour. Human skills like natural resources are not evenly distributed. We are better off concentrating on what we do best and leaving others to do what they do best. This means that each of us produces more than we would if we tried to produce all of our own needs. The surplus is wealth something that has been very rare in human history. Together with the right to trade, division of labour encourages us to be more productive. And as wealth accumulates we begin to invest it in other wealth-creating ventures: this is capital. Little by little wealth increases and human misery is reduced.
There are other important factors as well such as the ability to enter into contracts and the legal enforcement of rights. When the correct principles are applied to a society, the result is one of increasing prosperity.
Certainly this is true. In the United States families that are “officially” poor are very rich in global terms. Some 99% of America’s poor have electricity, a flush toilet, and a refrigerator, 95% own a television set, 88% a telephone, 71% own a car, 70% have air-conditioning, 58% own a washing machine, 48% own a spin-dryer and 40% own their own home.
Those nations that have adopted “redistribution” instead of wealth creation as their economic policy have stagnated. When we look at the poor nations of the world we see societies without private ownership of property and secure property rights. We see cultures that attack wealth as materialistic and sinful, or place heavy restrictions on the ability to produce. Profits are often confiscated for the benefit of the ruling elite. Status, not merit is frequently the only way to get ahead.
So how are the rich nations supposed to create prosperity in the poor nations? If they “imposed” wealth creating values on other cultures they would be condemned as evil imperialists. Billions of dollars in aid have been useless. More aid has been given to Africa than to any other continent in human history. Yet, on the whole, Africa remains poor. Aid, if anything, has had a negative impact. Handing over money to corrupt governments does not raise the standard of living of the poor.
What is needed is an ideological revolution. And that means over-throwing the primitive concept that wealth is stagnant and only its redistribution can bring about prosperity. Without the rule of law, property rights, enforceable contracts and wealth-creating social values, no nation will become prosperous. The sad fact is that there is little the rich nations can do to make the poor countries wealthy. But there is much that the poor nations can do for themselves.
Source: Jim Peron is a freelance researcher and writer. This article may be republished without prior consent but with acknowledgement. The patrons, council and members of the Free Market Foundation do not necessarily agree with the views expressed in the article.
FMF\25 September 2001
