The Pursuit of Global Prosperity

I have often pointed to the errors, systemic and others, in the Wyoming economy. I have repeatedly explained the false sense of job security that comes with a large share of the work force on tax-funded jobs. I have also noted how our largely mono-industrial economy was a big factor in giving Wyoming the nation's slowest private sector growth during the trough of the Great Recession.

I stand by this analysis as well as my recommendations for a better fiscal policy in our state. We Wyomingites would be much better off if our state's GDP was growing faster and creating more private-sector jobs than it has done over the past few years. Recently the state economy has grown stronger, but it is still far from as strong as it could be.

However, there is a dimension to our choices of economic policy, both as a state and as a country, which is often overlooked in the public policy debate.

This dimension has to do with global poverty.

In the last quarter of the 20th century large parts of the world lifted themselves out of poverty: China, India, Malaysia, Indonesia, Vietnam and Korea, to name a few. For most of the population this meant a life in the global middle class.

The Soviet sphere collapsed and hundreds of millions of people could pursue happiness in the absence of oppressive government.

Next stop for the prosperity train is Africa. Global corporations are discovering pockets of economic environments where they can invest with reasonable prospects of stability and profit.

Trade and foreign direct investments are finding their way to the most abjectly poor corners of the world. We could be heading for a new era of global prosperity – were it not for the mismanagement of the economies in the old, industrialized countries.

In Latin America, once an immigration magnet stronger than the United States, Argentina and Venezuela have derailed their economies in the name of "economic justice". Brazil is fence sitting, torn between the pursuit of free-market prosperity and the lure of entitlements.

Up north, the United States is still an economic superpower but over the past 25 the welfare state has grown irresponsibly large. It is still manageable and we are moving forward economically, but not at the pace we could.

But the real black sheep in the industrialized family is Europe. For three decades its political leaders have squandered prosperity for the sake of income redistribution. Europe has entered a stage of economic stagnation that can last for decades. Today's European economic landscape has adopted some characteristics of Soviet sphere economies.

Europe has, partially and unintentionally but nevertheless destructively, adopted the static statism that characterized countries like Poland, Czechoslovakia and Hungary before the Iron Curtain came down.

The common denominator for the stagnation now spreading through the industrialized world is, plain and simple, the welfare state. Growth well below capacity in Europe as well as North America is an entirely self-inflicted problem. The fatally erroneous belief that government has a productive role to play in the economy inhibits the creation of prosperity in parts of the world where the conditions for creating prosperity are better than anywhere else.

This structural mismanagement of some of the world's wealthiest economies have global ramifications. By keeping their economies from growing, Europe's political leaders hold back demand for products from countries on the verge of climbing out of poverty. By holding back the forces of prosperity, America's political leaders prevent the creation of a surplus that otherwise could provide funds for development and investment projects in developing countries.

Instead of unleashing the prosperity machine we know as capitalism and economic freedom, governments in Europe and North America spend far too much time trying to preserve their welfare states. When their government-run entitlement programs promise more than taxpayers can pay for, they resort to growth-hampering austerity measures, aimed not at reducing the presence of government in the economy but at saving the very structure and philosophy of the welfare state.

The result, again, is stagnation and industrial poverty.

The First World's obsession with the welfare state thus prevents the proliferation of prosperity to parts of the world still struggling in poverty. By means of economic freedom, nationally and globally, the relatively wealthy can help the poor toward a better life.

Instead of raising taxes and putting more of our own people on welfare, we owe it to the rest of the world to maximize our creation of prosperity. We can only do that by relieving our own population of the shackles of the welfare state. With the ingenuity of capitalism and dynamics of economic freedom we will have more money to trade with developing countries, as well as more surplus to donate to and invest in productive development projects in the poorest parts of the world.

Economic freedom has elevated billions of people from abject poverty to a respectable standard of living. It has elevated entire continents into true prosperity, and allowed entrepreneurs and investors to accumulate incredible wealth. It can do the same for those still in poverty. All it takes is that we in the most prosperous nations of the world sort out our priorities and responsibilities.