The Skeptical Liberal: 07/03/2005 - 07/10/2005

The Skeptical Liberal

How can we live together in peace, prosperity, and harmony, while retaining our liberties as autonomous individuals who can, and must, create our own values? -- J.M. Buchanan


Hike to the "M"

I finally hiked up to the "M" (see picture) this morning. I biked up to the parking lot at the base of the trails (about 5 miles) and hiked from there (one-and-a-half miles). At the base of the trails, one is faced with the choice between the "rigorous" path and the "popular" path. I took the path more often taken. But half way up that path, I was presented with another choice: continue on the path I had chosen, or take the "M" cutoff. Thinking the cutoff might redeem my earlier choice (and maybe save some time), I took it. I proved to be half right: the cutoff made up for my earlier decision to depart from the narrow (but not so straight) path. Consequently, it did not save me any time. But I finally arrived at the top, and sat down to enjoy the view of Bozeman and its environs. Then I walked down the same path I had taken coming up, and biked back to the apartment. Total time: a little more than 2 hours (I was back before 9 am). About 50 minutes of biking, and a little more than an hour of hiking. The combination is great, and I hope to go again over the weekend, assuming it doesn't rain.

I've begun work on converting my May and early June writings on Malthus into a PERC Policy series paper. I also attended two graduate student seminars in the last two days. One was on a strategy to reduce noise pollution at the intersection of Puget Sound, the Strait of Juan de Fuca and Georgia Strait (in order to help the resident killer whale population). The other was on groundwater governance structures. The graduate student fellows at PERC have to give 3 seminars over the course of the summer. Each seminar has the same structure: the student has 5 minutes to use as they wish, and then the audience begins to ask questions and make comments (basically, an adaptation of Chicago rules). In a sense, the seminar turns into a collective working session on how to solve the problem the student is addressing. Lots of ideas, disagreement, discussion, etc. Wonderful experience for the students, and enriching for me also.

This will be a working weekend, in the hope of getting ahead on my own project because next week there are several more seminars and meetings with graduate students. I also plan to interview a couple of PERC fellows who undertook graduate studies at Chicago. But I do plan to go down to Bangtail Bikes on Saturday and Sunday mornings to watch the Tour de France live.


More on Africa and Live 8

Bruce's comments (see comments below) came on the heels of an email from Fernando Leon regarding China - Africa relations, giving me a chance to respond to both.

Bruce is right that stable property regimes aren't enough to solve Africa's problems. All I wanted to argue was that they are a better place to start today than what Live 8 is doing. Let's assume that we can't, or won't, adopt the "change every government we don't like" option (in Africa, it's all too often: "meet the new boss, same as the old boss"), and that, while culture matters, trying to change it through policy is nonsense. (NOTE: I don't accept the argument that African culture makes people unfit for integration into the global economy, but I know Bruce also rejects that argument, so I won't rehearse the arguments here). That leaves your "social engineering" option, and the question of redistribution.

True, creating property rights requires legal changes that may look like social engineering. But de Soto's method of legalizing what is already possessed escapes some of the worst elements of progressive social engineering. He does not set up a plan for what "should be" done, but simply provides a means of entitling what people "down below" have already done. In most countries, the land occupied by individuals and families is public land. Giving them title to what they have possessed for years simply legalizes prior arrangements. Admittedly, it does get more difficult when the public land has previously been granted by the country's president to his friends. And that takes us to the more difficult question of political leadership. A "titling" program requires political leadership, and some will question whether African governments are willing to provide that leadership. Perhaps, and perhaps not. The actual cost of a "titling" program to a government is fairly minimal (people are already living on the land, and it is not being used for other purposes), and the political benefits of showing leadership are substantial (more stability and a good chance of re-election). In the cases were political leadership does not get behind a "titling" program, legislative moves to devolve some powers to local communities can begin the process of constraining the national government.

(ASIDE: A question I haven't thought about a lot comes from research being done by Rob Fleck and Andy Hanssen of Montana State regarding the neighborhood effects of good and bad government. With regards to the issues here, the question is whether political leadership with regards to a "titling" program in a region characterized by "bad" government might not have the negative effect of migration from neighboring countries that undermines the benefits the nation's citizens received from "titling" program. Andy and Rob's research suggests that these neighborhood effects are a major reason why we see "clusters" of good and bad governments. But their research also suggests that good governments tend to have positive effects on the goverance of neighboring countries, so the possible negative effects of migration may be relatively short-lived.)

What I've said about the benefits of a "titling" program may suggest my response to the question of redistribution. If redistribution is done from the top down, the inevitable result will be that the political leadership's friends will get more, and people will get less. A "titling" program approaches redistribution a different way: let's formally recognize what people already possess, rather than giving them more. De Soto estimates that the poor of the world possess (without title) trillions of dollars of assets. For them, those assets are "dead capital" because they can't be brought into the legal sector. All de Soto wants to do is turn that "dead capital" into mutable assets. The process of doing that will simultaneously change our measurement of "wealth" in developing nations, and reduce the poor's costs of doing business. Hence, they simultaneously are able to gain in terms of measured wealth and in terms of enhanced economic options.

Fernando asked about China-Africa relations. Should we support greater Chinese aid for corrupt governments? My foreign affairs pals in IR at JMC will probably disagree, but I don't really see the diffence between Chinese aid in this case and US aid. From the African end of things, a significant portion of foreign aid will be siphoned off into the hands of the political leadership, or will be directed to projects that help the leader's political situation rather than actually helping people. What we want to do is encourage the establishment of systems which restrain governments' abilities to do this. Property rights regimes and/or community-based development projects are a start. Most of the concern about Chinese aid is more about foreign policy than it is about which source of aid will help people more.


Live 8

Africa holds a special place in my heart. When I heard about the Live 8 concerts, I was glad to see a global voice being raised on behalf of Africa's poor. And when I looked further into what the Live 8 organizers wanted to promote -- more and better aid, truly freer trade, and debt reduction -- I was generally pleased. And any chance to hear U2 should be taken.

But . . .

Altogether too much focus on nations, and not people. Helping African nations is not the same thing as helping African citizens. People will not necessarily be helped by more aid flowing through governmental hands, and forgiving national debt also may not help the poor. Even freer trade won't help if people aren't free to develop their own comparative advantages (when are we going to give up the Ricardian notion that nations trade, and realize that international trade is simply an extension of trade between people across national boundaries?).

What Africa really needs is governments that restrain themselves, in order for their citizens to expand their own possibilities. Expansion of markets can help this process, as it is in China (where private property rights are slowly emerging as entrepreneurs call for protection against the possibility of arbitrary government seizures of property). But Africa's kleptocracies don't want to restrain themselves. What the international community can do is help create institutional structures that constrain governmental power in Africa. The devolution of power over resources and other decisions closer to the citizen level is important, as is the development of community decision-making bodies that actually control local resources. But nothing would be as helpful as the creation of stable property rights for individuals.

One of my former students, from Kenya, read Hernando de Soto's The Mystery of Capital, and said, "this is what east Africa needs." I agree. The path to establishing legal property rights is not an easy one, and is not sexy enough to bring out millions of people for a world-wide concert and party. But it is the foundation upon which the changes Live 8 wants to see would actually be built. Without the legal foundation for capitalism, free trade, expanded aid, and debt reduction are just sound bites. I just hope the sound bites get people thinking about what would really help.

For more, see de Soto's Institute for Liberty and Democracy.