The American Spectator

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Property and Its Discontents

By Tom Bethell on 4.24.08 @ 12:06AM

This article ran in the March 2008 issue of The American Spectator. To subscribe to our monthly print edition, click here.

Ten years ago I published The Noblest Triumph, about the venerable topic of property and its relationship to wealth. It turned out to be a groundbreaker of sorts. The Harvard historian Richard Pipes published Property and Freedom at about the same time, and then numerous books and articles on property matters began to appear. It was clear that a prolonged taboo had finally been broken.

Property is the central institution of Western civilization. Yet for at least a hundred years it had been ignored, neglected, or disparaged. At the time, it seemed to me, few academics, economists included, understand its importance. Yet without private property there can be no freedom and without secure and transferable property rights societies will forever remain impoverished. Private property also makes a key contribution to justice, classically defined as giving to each his due.

How could the intelligentsia have been so deceived for so long? It's a question that we may well be revisiting in the coming decades, in light of the growing power of the environmentalists. They too encroach upon property rights and restrict our liberties, but in pursuit of a new cause. Notice that the Green Revolution followed hard upon the heels of the demise of the Red. The Soviet Union collapsed in 1991 and the Green political agenda was proclaimed at the Rio Conference of 1992.

In the 19th century, the attack on property had been forthright. Marx's Communist Manifesto advocated the abolition of private property at a time when its central role in both economics and freedom was still not really understood. Property was attacked before it was analyzed. For Adam Smith and others in the 18th century the rights of property were said to be "sacred." But sacred things are (deliberately) not studied very carefully. To an amazing extent, progressive intellectuals of the 19th century were simply thrilled by the liberating prospect of presiding over a new social order.

Skepticism set in only when socialist regimes, by then established all over the world, proved to be impoverished tyrannies without exception. The tide didn't turn until the 1970s. Even then, the U.S. State Department was still undermining its own allies with property-destabilizing "land reform" programs in various parts of the globe. Regimes subjected to U.S.- initiated property upheavals were overthrown in South Vietnam, Iran, and Chile. (In Chile, a counter-revolution launched just in time by the notorious Gen. Pinochet saved that country from an imminent Cuban-style dictatorship.)

A similar folly nearly toppled the government we were supposedly helping in El Salvador. More recently, the World Bank encouraged the Mugabe regime down Zimbabwe's road to tyranny with a land reform program of its own. (I don't think Americans were involved in that one, but nothing would surprise me.)

With the failure of the most important Communist experiment, in the Soviet Union, it was grudgingly conceded that the socialist hand was unplayable. Only then did property resurface as a respectable topic, discussable in academic journals and conferences. The economist Steven Cheung said in 1983 that for many years property rights had been an "untouchable area" for doctoral theses. As late as 1989, the Commerce Department's Statistical Abstract of the United States claimed that East Germany's GNP per capita was higher than West Germany's -- a total absurdity.

At the end of his career, Sen. Daniel P. Moynihan attempted to find out why the CIA's statistics for the Soviet economy had been so exaggerated. I don't think he ever found out. It turned out to be about one-tenth of what the CIA had estimated. Paul Samuelson's best-selling economics textbook published a chart in edition after edition showing that the Soviet economy was growing more rapidly than that of the U.S. The chart finally disappeared in the 1985 edition.

I do admire Boris Yeltsin's great comment (made in 1991) that Communism was a noble idea but should have been tried out first in a smaller country, to see if it worked. You would have thought so.

WHAT HAS HAPPENED in the last two decades, since Communism withered? A major development is that the revolutionary brigades have found a new (green) flag to rally around. This in turn has spurred the creation of numerous local property rights groups. More generally, it has also become acceptable to examine economic and political issues through the lens of property. The Index of Economic Freedom, published by the Heritage Foundation and the Wall Street Journal, puts strong emphasis on the security of property in the 162 countries it examines. That index shows a high correlation between economic freedom and GNP per capita. Rich and free go together -- something that was not understood in the 1950s or 1960s.

The dire forecast of 1997, when the Chinese took over in Hong Kong, happily turned out to be wrong. Hong Kong is now reckoned to be the world's freest economy. But the most significant change of the past decade has been the huge advance made by China itself. Its phenomenal growth could not have happened if its rulers (Communist in name only) had feared that allowing people to become rich would pose a threat to their own security. On the contrary, the government understood that wealth is counter-revolutionary. Essentially, China has followed the path earlier taken by Taiwan.

Something similar is underway in Russia. There is a tendency today to vilify Vladimir Putin, for reasons that amount to little more than nostalgia for the Cold War. But Russia's major cities have been transformed by capitalism, which is to say by the growing security of private property. When I was in Moscow in 1990, I witnessed the sad spectacle of hundreds of young Russians waiting in line for over two hours to enter the one McDonald's that had recently opened. Russia now has a flat tax regime and a real economy (which it did not have under Soviet rule). The same is true of the Eastern Europe countries. Within a decade, if they maintain their present course, they are likely to become more attractive to business than Western Europe.

MEANWHILE, AMERICA'S FOREIGN POLICY establishment still doesn't know what it's doing. Wherever we administer foreign aid, ill-chosen American medicine is sure to go with it. There has been little improvement in Africa, or in Latin America. Countries like Afghanistan that once seemed to be on the path to westernization have since slipped back into lawlessness. Pakistan may be headed in the same direction.

The main error today is the belief that what these countries need is democracy. This seems to be the sole prescription, and it is a foolish one. The American destruction of the Saddam tyranny in Iraq, followed by the quixotic attempt to plant a democracy in the rubble, was only the latest illustration of this naïve faith. We seem to forget that democracy is workable only after other stages of government are securely in place.

Letter to the Editor

topics:
Foreign Policy, Joe Biden, Vladimir Putin, Economics, Business, Islam, Environment, Books, Law, Iraq, Iran, Russia, Pakistan, Africa, Communism, Oil