Tuesday, July 17, 2007

Political Oppression Leads to Economic Growth?


It may at first appear so:

...being unfree may be an economic advantage. Dictatorships are not hamstrung by the preferences of voters for, say, a pervasive welfare state.

So the future may look something like the 20th century in reverse. The unfree nations will grow so quickly that they will overwhelm free nations with their economic might. The unfree will see no reason to transition to democracy.

Meanwhile, democracies may copy many of the market-friendly policies of the dictatorships, but it seems unlikely that free citizens will choose to reduce their own political freedoms.

But looks can be deceiving:

...fear not for the consilience of liberty and utility. Kevin Hassett is citing Arrow when he should be invoking Robert Solow. The poorer countries are playing "catch-up" by adopting Western technologies and business practices. In the classic Solow model catch-up will give them a higher rate of economic growth but of course they still have a lower level of per capita income. And why are those same poorer countries playing catch-up more today than they did thirty years ago?

Because they are freer.

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