Property Rights, Freedom & Economic Development
It is an honor to speak before such a distinguished group on such an important topic, "Building a New Vision for Asia-Pacific Democracy and Human Rights." This morning we examined the recent dynamism of Asian democracy; this afternoon we shall consider the interaction between democracy and prosperity. The vision I shall offer can best be labeled a market-liberal vision, with a sharp focus on the primacy of property as the basis for both a free-market economy and a liberal constitutional order.
In such an order, freedom is the predominant value, and democratic government, to be legitimate, must respect the fundamental right to property--broadly understood as the rights to life, liberty, and the pursuit of happiness. My emphasis, therefore, is on limited government, first as a moral imperative and second as the means to economic development.
The failure of central planning and the collapse of communism in Eastern Europe and the Soviet Union have show n us that the best route to peace and prosperity is through limited government the rule of law, and free trade. We have also learned that electoral democracy (i.e., universal suffrage), in the absence of effective constraints on the power of government does not guarantee either liberty or prosperity.
Democracy and Prosperity
The title of this session, "Democracy and Economic Prosperity," should not imply that democracy is a precondition for material advance. As I noted above, universal suffrage is neither necessary nor sufficient for economic development. Indeed, we know that many democratic countries have poor track records in achieving sustained development. Why? The reason is simple: those countries have failed to limit the power of government and to expand economic freedom; they have failed to create the institutional infrastructure of a market-liberal order. On the other hand, Hong Kong, which has limited government and the rule of law but not universal suffrage, is consistently ranked number one in terms of economic freedom.
When democracy trumps liberty, human rights will suffer. If interest groups can capture government for their own ends at the expense of the public, economic freedom will be attenuated. Economic life will become politicized as protectionist and redistributive schemes corrupt the free market. The further the destruction of private property and freedom of contract is carried, the greater the damage to the market-liberal order. Property rights are an important human right--and that right includes the right to be left alone to trade according to one's comparative advantage. Restricting market exchange limits freedom of choice and reduces economic well-being. When political authorities replace the market, people lose their rights while government gains excessive power.
The right to vote, which is an important human right, should not mean the right to plunder other people's property. The first principle of a free society is to protect private property, which means the right to be left alone, the fight to compete or not compete, the right to exercise freedom of conscience, and the right to defend one's fundamental rights to life, liberty, and property.
Freedom and Development
To maximize individual freedom requires that coercion be minimized. A just government seeks to prevent harm by protecting persons and property. James Madison, the chief architect of the U.S. Constitution, wrote, "In a just and free government, the rights both of property and of persons ought to be effectually guarded." People will then be free to pursue their own happiness without violating the rights of others. It should not be surprising that such a regime is conducive to economic development. Indeed, it is only in the free society that true development can occur. As the late development economist Peter Bauer noted, "I regard the extension of the range of choice, that is, an increase in the range of effective alternatives open to people, as the principal objective and criterion of economic development. …