Capitalist Oasis

by Don Boudreaux on November 28, 2010

in Growth, Property Rights, Standard of Living

Here’s a letter to an e-mail correspondent:

Thanks so much for your e-mail in response to my letter on Bill Gates missing Julian Simon’s point.

You question my use of Chad as evidence for the validity of Simon’s thesis.  You write: “It is true that Chad is poor and is sparsely populated, but much of Chad is a desert.  People cannot survive in deserts, so that land area in Chad doesn’t count really.”

You’re correct that much of Chad is a desert, but incorrect that people cannot survive in deserts.  Consider Las Vegas.

That city is all desert, yet it’s one of the richest places on the globe.  Vegas’s riches come from market-friendly institutions: secure property rights and free trade with people who live outside of Vegas.  Las Vegas imports citrus fruit from California; water and electricity from Lake Mead; vegetables and grains from around the U.S. and the globe; clothing from Asia and Canada; lumber from Oregon and Alabama; insurance coverage from Hartford and London; airline services from Chicago and Dallas….. the list is practically endless.

Market-friendly institutions and trade make great wealth possible even in the hostile environment of deserts.

If Las Vegas can support a large population at high standard of living, there’s no reason why Chad cannot do the same.

Sincerely,
Donald J. Boudreaux

(Note: No need to remind me that Vegas’s water – and, I suspect, also electricity – are subsidized.  While I oppose these subsidies, their existence does not undermine my point here – which is that, in a society with sufficiently extensive and robust market-oriented institutions, the natural environment of a place loses much of its ability to influence the standard of living of its denizens.)

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