1994 – Governments Create Poverty

By Walter E. Williams

I’ve visited a number of poor countries. In countries like South Africa, Mexico, Brazil, Jamaica and the Bahamas, poor people are unimaginably much poorer than our poor people. But you don’t have to be in those countries long before you develop an appreciation for their rich entrepreneurial spirit. In some cases, you see that spirit when you get through customs and become bombarded by people selling everything from food, watches and clothing to taxi rides and tours. With that spirit, you really have to wonder why they’re still poor.

A large part of the responsibility for the grinding Third World poverty lies with their governments. Jamaica has a serious transportation problem. Entrepreneurial Jamaicans could buy mini-vans to provide jitney services. But because of the government’s policy of granting restrictive and exclusive import licenses, plus taxes, a mini-van that could be purchased here for $16,000 might cost a Jamaican close to $50,000. Similar handicaps can be found in many other areas of potential business ownership.

Take South Africa. Here is a country faced with great political pressures for economic development you’d think it would welcome its citizens importing U.S. computer software programs, mobile and portable telephones, educational equipment and other high-tech goods. However, in many cases, there are high tariffs and, in some cases, outright prohibition on their importation – talk about shooting yourself in the foot.

In many countries, most notable those in South America and Africa, in order for a person to get into the simplest business, like being a seamstress, requires hurdling a system of impossible regulations and official corruption where bribes and kickbacks are the order of the day. Plus, simple tools required for the business are likely to cost multiples of what an American businessman.

When you see the robust entrepreneurial spirit in some of these countries, you can easily understand why these people are such successes when they immigrate to the United States. Because these countries are too poor to have our kind of welfare, the people must work to survive. That necessity coupled with a greater measure of economic freedom helps explain their success in our country. Therefore, we observe the seemingly perplexing phenomena: Indians tend to do well everywhere except India; Vietnamese do well everywhere except Vietnam. As for Jamaicans and other Caribbean people, when they come to the United States, they’ve managed to earn a family income higher that the average American.

In order for the worlds poor to become more prosperous, what they need is a greater measure of economic liberty. You can prove this several ways. Most American immigrants hit these shores poor. We were a Third World country. There was no foreign aid. What we had going for us was a large measure of economic liberty. There weren’t the economic roadblocks found in many countries today. A simpler proof of the benefits of economic liberty comes if you list today’s most prosperous countries. Richer countries like the United States, Hong Kong and Japan have a larger measure of economic liberty, while countries with grinding poverty, like Brazil, Mexico and most of Africa, have extensive government control and regulation of the economy.

During my visits, I found that the elite and politicians feed their poor people the same attention-diverting line fed by our elite. They say more handouts (foreign aid) are needed. They blame the poverty on colonialism. That’s just like our elite, who address poverty by calling for handouts and blaming racism. The last thing both elite proposes is economic liberty and the right to be free from government interference.




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