Prosperity Versus Planning: How Government Stifles Economic Growth

By David Osterfeld | Go to book overview

10
Property, Law, and Development

Government intervention, under the best of circumstances, has retarded economic growth, restricted economic development, and often resulted in famine, starvation, and serious malnutrition. While sometimes providing gains for the poor in the short run, it has placed them in a situation where, in the long run, they are poorer than they would have been in the absence of the intervention. Political control over all or a large part of an economy generates an almost irresistible temptation for political elites to use that control to benefit themselves. Thus, government intervention seldom takes place for the best of intentions. More commonly, intervention in the form of licensing restrictions, tariffs, and marketing boards has been used by local elites to enrich themselves at the expense of the poor and to insulate their own positions in the socioeconomic hierarchy from competition from potential economic rivals. The result has been the creation of a caste structure characterized by a permanent ruling elite and an equally permanent poverty-stricken underclass. It has also been used by the elites to persecute and even to exterminate their political enemies by, for example, the deliberate creation and perpetuation of famine.

What is sorely needed is the creation of a wall of separation between the political and economic spheres. Restricting government activity to the enforcement of laws protecting the person and property of individuals, to the creation of an enabling environment, would not only eliminate those obstacles to economic growth, it would simultaneously eliminate the ability of political elites to manipulate markets for their own personal benefits. Such a wall of separation would therefore go a long way toward ensuring not only economic growth--the quantitative increase in economic output--but also economic development--improvement in the quality and variety of goods and services that are widely available in a society.

The strategy for achieving such an environment is double-pronged. It requires, first and foremost, a policy of privatization: the elimination of as much government activity as possible. And second, it requires decentralization: the handling of all remaining government activity as locally as possible.

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Prosperity Versus Planning: How Government Stifles Economic Growth
Table of contents

Table of contents

  • Title Page iii
  • Preface vii
  • Contents xi
  • I - Theoretical Framework 1
  • 1 - The Three Worlds 3
  • 2 - Economy, Government, and Culture 19
  • II - The Key Variables 59
  • 3 - Food 61
  • 4 - Resources 84
  • Notes 102
  • 5 - Population 104
  • III - Economic Development: Engines and Obstacles 137
  • 6 - Foreign Aid 139
  • 7 - Multinationals 162
  • 8 - Migration 194
  • 9 - Corruption 204
  • Note 218
  • IV - Conclusion: The Enabling Environment 219
  • 10 - Property, Law, and Development 221
  • Notes 245
  • References 247
  • Index 265
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