The Pillars of Prosperity

Enjoy this preview of The Power of the Poor:

Leading up to the release of The Power of the Poor, Free to Choose Media is asking bloggers to write about institutions that could help the world’s poor achieve prosperity. Here are my thoughts on two that don’t work, and three that can succeed:

• Eminent domain hurts the poor people it’s supposed to help. In the name of ending blight and growing the economy, eminent domain disrupts poor people’s lives and businesses. It pushes the poor into worse areas and repeatedly forces them to start all over. Protection against eminent domain is important around the world as well as right here in Missouri.
• Reparations are well-intentioned but ineffectual. To understand why, read this Wall Street Journal article about a California civil servant who goes to great lengths to track down artists and send them royalties. Compensating artists a few years after they’ve sold a painting is extremely difficult; compensating entire ethnic groups generations after wrongs were committed against them is impossible. If we waste resources on a wild goose chase like reparations when we could be promoting policies that matter, we’re only perpetuating the injustice.
• Access to credit gives the poor a chance to break the cycle of poverty. Organizations like Enterprise Mentors International and the Grameen Bank allow the poor to invest in profitable ventures and to sustain themselves and their families.
• Freedom to cross national borders helps poor people, including the ones who stay behind. This series in the L.A. Times details how immigrants’ remittances serve as seed money for startup businesses in their home countries. This is one brand of foreign aid that enriches the poor rather than benefiting government officials.
• Free trade is the free lunch. Milton Friedman focused on individual countries in this speech explaining why we have nothing to lose and everything to gain from free markets, but the same is true for the global economy as a whole. Trade rewards initiative and entrepreneurship on a grand scale, whereas the local economies to which the poor are frequently confined by trade barriers have little to offer. And the open exchange of goods gives the world’s poor immediate access to products that were developed in rich countries — products that would take years for their own countries to copy.

Those are my ideas. To see what Hernando de Soto thinks, watch The Power of the Poor!

The Power of the Poor airs October 8 at 9:00 p.m. on PBS.