5 Magic Apps For Prosperity
In his famous 1964 “A Time for Choosing” speech, Ronald Regan recounted a story:
“Not too long ago, two friends of mine were talking to a Cuban refugee, a businessman who had escaped from Castro, and in the midst of his story one of my friends turned to the other and said, “We don’t know how lucky we are.” And the Cuban stopped and said, “How lucky you are? I had someplace to escape to.” And in that sentence he told us the entire story. If we lose freedom here, there’s no place to escape to. This is the last stand on earth.”
I was brought back to this speech and this story when I opened my email this morning to an alert from Visual Capitalist, a wonderful website that produces graphics of important data sets. This morning’s alert was to show the richest and poorest nations in the world based on per capita income.
The top 3 richest are in Europe: Luxembourg, Ireland, and Switzerland. The 3 poorest are in Africa: Burundi, Sierra Leone, and Malawi. Europe versus Africa.
Looking at these charts should make one wonder. But in a world of diversity, there will always be rich and poor, but the important questions are why are the rich rich and the poor poor.
The social justice intelligentsia would have people believe that poor are poor because the rich are rich. As if the rich took wealth from the poor. They would also have people believe that poverty is a function of resources. Yet the poorest nations are in Africa where resources are ample, and the richest nations are in Europe where resources are sparse.
If recent history has shown anything, the drivers of longer term economic and social prosperity are not geography or resources. It is not climate or race. The difference is the software that these countries run.
It has been seen, time and time again, anywhere and everywhere, that the key ingredients, the five magic apps for prosperity are:
the rule of law;
limited government;
low taxes;
property rights; and
competitive markets.
Evidence? Sure. Look at North Korea vs South Korea, East Germany vs West Germany. Look even at North America and South America.
You will note that democracy is not on that list because these are the apps for economic and not political freedom. China has proven that you can increase a nation’s wealth by running these economic magic apps. But China has also shown that economic freedom creates pressures for political freedom which is why it is starting to delete these apps, and watching its economic prosperity slowly erode.
What is the lesson here? Well, these wealthy nations, including Australia, that have become wealthy and prosperous by running these five magic apps, by having the rule of law, limited government, low taxes, property rights and competitive markets are, slowly deleting these apps. And wealth and prosperity is slowly being deleted in parallel. The first sign of the economic atrophy is inflation. Next will come recession/depression. What comes next? Have a look at the nations that don’t run these magic 5 apps.
After economic freedom disappears, then political freedom will disappear.
As Ronald Regan said: “If we lose freedom here, there’s no place to escape to”.
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