09 May 2008

Mike Moore on why many poor countries are poor

Yes, former Labour Prime Minister (well for a few weeks anyway) hasn't got it wrong. Unlike the doomsayers on the left, he paints an optimistic picture about poverty in his Dominion Post column:

"In the past 60 years, more wealth has been created than in all of history. The number of people living on less than a dollar a day has dropped from 40 per cent in 1981 to 18 per cent in 2004. During the same period, the numbers living on less than $2 a day have dropped from 67 per cent to 48 per cent."


That hasn't been because of charity. Moore points out that:

"Private ownership works. Open economies always do better, competition and trade drive up better results and drive out corruption, as well as allocate resources more efficiently. A free market without solid, trusted institutions, property rights, independent courts, a professional public service and democracy is not a free market but a black market."

Yes yes, though we may argue about how much of a public service is needed, he's got it! However it is more than just having corrupt free institutions it is about getting the hell out of the way of doing business:
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"in Egypt it can take 500 days, 29 visits and 29 agencies, compliance with 315 laws, and costs 27 times the monthly minimum wage to open a bakery."
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Funny how so many on the left think that somehow the world is impoverishing countries that actually are badly governed and overgoverned in many respects. He concludes that property rights are what is needed, so that the poor can leverage off what they own, have access to courts when their rights are infringed upon and can protect what they produce.
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"We can establish property rights which will encourage people into the formal economy. It's not that radical, it simply suggests that poor people in poor countries should have the rights that rich countries have. Perhaps that's why they are rich."
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Now can someone tell the Labour, Green and National Parties?

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