By Douglas Kruger
ELECTIONS loom and one issue leads: our cost of living is frightening.
So here is the most urgent question for candidates. Do you understand what makes nations richer or poorer?
If you’re a candidate, can you answer it? If not, how are you planning to help? How do you know you won’t make things worse?
In 2016, I wrote a bestselling book called Poverty Proof, and, in the opening chapter, I noted something strange. If you perform an online search for the leading causes of poverty, you will find that activist groups dominate the search results. They display a remarkable level of consensus, blaming three things in particular: “It’s climate change”, “it’s inequality”, “it’s a lack of social welfare by governments.”
But seek out properly researched studies and respectable literature on how nations become wealthy, and something will jump out at you: the answers do not correspond. They are not the opposites of these so-called causes.
If the answers did correspond, then studies on how to make nations more prosperous would list solutions like, “solve climate change,” or “promote greater equality,” or “increase social welfare.”
But they don’t. They don’t even mention such things.
Climate change, for starters, is a non-factor in the generation of national prosperity. No nation in history has ever become prosperous by “solving climate change”.
Then there is the notion of economic equality. This, of course, is the great goal of Marxist Communism. In every place it has been attempted, it has consistently made everybody poorer.
For nations like Venezuela, the results have been catastrophic. A nation that was once the wealthiest in South America quickly became one of the poorest in the world. At one point, their socialist government made it illegal to report a baby perishing of starvation in a hospital because doing so made socialism look bad.
Even among wealthy nations, the damage was marked. Take Sweden.
In a period that Swedes term their golden age, between about 1870 and 1970, the country enjoyed an unusually low level of government regulation and a free-market system. Swedes employed their excellence, innovation and hard work and became one of the top three wealthiest populations on earth per capita.
Then they implemented a socialist system premised on notions of equality and social welfare. Almost immediately, Sweden dropped out of the top ten wealthiest nations on earth per capita, falling to around 30th position. Their country did not become more prosperous as a result of these policies, but rather, merely survived them, and that squarely due to pre-existing prosperity.
What about the last one: increased welfare. Does that help?
In “Wealth and Poverty”, George Gilder shows that every time governments increase social welfare spending, they dampen the compulsions to work and produce, which are the very creators of wealth. Gilder writes that defenders of the welfare state assume it has a massive effect on the needy’s condition but little impact on their willingness to fend for themselves. They could not be more wrong.
Economic historian Dr Thomas Sowell concurs, over the course of several books detailing economic trends of the past century. He concludes that these programmes do massive intergenerational harm to the very people they purport to help. All in the name of “kindness”.
So, what’s going on? It’s as if there are two separate conversations here, and they are completely different.
One conversation is premised on political ideology. It poses as kindness. It seeks Marxist goals, and greater control for governments. To achieve control, it needs more people dependent on social welfare, and more people to believe that the only solution to environmental issues is greater government control, and it seeks to level differences by expanding state power. The word “control” quickly becomes conspicuous.
By contrast, reputable wealth literature barely even talks about governments. Where it does, it generally argues that governments should “get out of the way” and free up businesses and entrepreneurs. Remove tax and regulatory burdens. Remove hurdles and obstacles. Make sure the available infrastructure is excellent, so businesses can operate more smoothly.
The previous century shows that “trade” is THE great source of wealth generation, and wealth generation, in turn, is the only true solution to poverty.
Where governments understand and support this, people prosper to degrees undreamt of by our ancestors. As Yuval Harari notes in Sapiens, capitalism is the most successful idea in human history. Nothing has ever lifted more people out of poverty. It also acts faster than any other documented force.
And so I repeat: which of our candidates for government understand these basics? Do they know what causes poverty and what causes prosperity? Or are they only interested in “appearing kind”, while actually advancing Marxist ideologies that expand government control and make the island poorer?
If we want a more prosperous Jersey, the people we elect to power must have this basic level of economic education. They must understand that governments cannot and do not generate wealth. Only trade does this. And the only way in which governments can interact with trade is either to encourage more of it, or to get in its way. Get in its way, and everything becomes slower, worse, more expensive. Our cost of living continues to skyrocket. Kindly sounding Marxism equals strangled businesses, which equals higher grocery costs.
These are the true levers of wealth and poverty. To make us poorer, harm and restrict trade.
Tax it more. Get in its way with ever more regulation, ever more interference.
To make us wealthier, don’t.
Instead, bend over backwards to ensure that every Jersey business has a smooth and easy time of it, and keeps a maximum of its profits, thus incentivizing more business, more wealth, more prosperity, and via the magic of the Laffer curve, more money in the coffers, despite a lower tax burden.
As a Jersey leader, you can either help or hinder. So… are you a Marxist? Or would you prefer a prosperous Jersey?
