Wednesday, March 23, 2005
Economic and political freedoms.
Over at the Becker/Posner blog, Gary Becker assesses the state of thinking about the relationship between political and economic freedoms:
Since both economic and political freedoms are highly valued, it is essential to understand how they interact as nations evolve. The history of different countries during the past century strongly indicates that economic freedoms over time typically push societies toward political freedoms. To take a few examples, South Korea, Taiwan, and Chile all started their economic development under military regimes. Korea and Taiwan both began freeing their economies around 1960 after centralized direction of their economies failed to produce economic growth. Chile began opening its economy under General Pinochet in 1981, also after his centralized approach to the Chilean economy failed. Within two decades, all three nations had achieved, or were moving rapidly toward, political democracies, with vibrant competition for elections among competing parties, and a mainly free press.As a counterexample to the first paragraph, what about Singapore? And this sort of thinking is, perhaps, a little too determinist for my way of thinking. Last year I read the memoirs of James Lilley, who was the U.S. Ambassador to South Korea in the late 1980s. By his account, there was nothing fated about the decision of the right-wing rulings to decline to crack down on pro-democracy protesters -- it was a very near thing.
The path from political to economic freedom, by contrast, is slower and more uncertain. It took India over four decades to begin to loosen its extensive controls over private companies, labor markets, start-ups, imports from abroad, and numerous other activities. It still has a long way to go. Mexico has had a free press and considerable political freedom for a century or so, but economic freedoms did not begin to evolve until the latter part of the 1980’s. Israel has fierce competition among political parties, but continues to have an overly controlled economy.
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