Freedom and the Ultimate Resource

by Don Boudreaux on January 15, 2008

in Foreign Aid, Property Rights, Standard of Living

The Wall Street Journal‘s Mary Anastasia O’Grady summarizes the findings of the latest – the 14th – Heritage Foundation / The Wall Street Journal Index of Economic Freedom.  Here are the opening paragraphs of Ms. O’Grady’s summary:

Are the world’s impoverished masses destined to live
lives of permanent misery unless rich countries transfer wealth for
spending on education and infrastructure?

You might think so if your gurus on development
economics earn their bread and butter "lending" at the World Bank.
Education and infrastructure "investment" are two of the Bank’s
favorite development themes.

Yet the evidence is piling up that neither government
nor multilateral spending on education and infrastructure are key to
development. To move out of poverty, countries instead need fast
growth; and to get that they need to unleash the animal spirits of


The Index also reports that the freest 20% of the world’s economies
have twice the per capita income of those in the second quintile and
five times that of the least-free 20%. In other words, freedom and
prosperity are highly correlated.

As Julian Simon taught us, the ultimate resource is the free human mind.  A land rich in petroleum, arable land, and iron ore and other minerals is useless to a society of humans incapable of rational thought and intolerant of change.  Nor would such a land of potential plenty realize its potential if its inhabitants are restrained by tyranny or by widely shared misconceptions that individual enterprise, innovation, profit, and the pursuit of worldly pleasures are degrading or sinful.

But unleash people from the countless foolish and rent-seeking constraints imposed by government and from constraints imposed by their own superstitions and they will create resources.  They will flourish and prosper, not only materially but also culturally and intellectually.  A free people can and will build a dynamically prosperous society in even relatively barren and inhospitable places such as New England, Arizona, and Hong Kong.  An unfree people will languish in poverty even in lush paradises such as much of Central and South America and in lands teeming with ‘natural’ resources such as Congo and Russia.


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