As Goes China, So Goes the World?
The Chinese government unveiled a new law last week that is expected to strengthen property rights. Imagine that. This is exactly the kind of legal foundation needed to propel the country even further into the global, free market economy.
More importantly -- and I think this is very cool -- it could set the stage for something even more remarkable.
When you examine the events that make up world history, it's rather depressing. For thousands of years, brutal violence and oppression on the behalf of dictatorial governments have prevented people from working and living under the umbrella of economic freedom and self reliance. But get ready...we're on the cusp of a new era. For the first time in human history, a majority of the world's population could be economically free in the very near future.
As things unfortunately stand now, 74% of the world's inhabitants are identified as not being "free", according to data taken from the 2007 Index of Economic Freedom (which was produced by the Wall Street Journal and the Heritage Foundation).
Of the 164 recognized nations worldwide, these people live in 86 countries considered to be either "repressed" or "mostly unfree". But if you analyze the data, you'll see that a very large majority of these people live in China and India. Both countries, of course, are embracing the free market. If they stay on course, this index will be top heavy, not bottom heavy.
Category Population Free 402,108,639 Mostly Free 405,294,070 Moderately Free 907,976,749 26.1% Mostly Unfree 4,238,438,436 Repressed 620,694,169 73.9% TOTAL 6,574,512,063 100.0%
To be sure, I'm under no illusions. This is just one subjective rating. And China is still run by the Communist Party, which continues to have an awful record on political freedom and civil liberties. But this property rights law is just one of many encouraging signs of economic freedom that will increase the standard of living in China.
Their economy continually puts up double-digit growth. Their global trade - imports and exports - have more than doubled since 2001 to $1.74 trillion, making it the third largest trader in the world, behind the United States and Germany. And their Shanghai stock market index has responded accordingly, increasing by 130% just last year.
More anecdotally, Forbes Magazine lists 20 billionaires hailing from China. And last October, free market economist John Rutledge pointed to a new reality TV show in China that rewards entrepreneurial contestants with seed money to start their own businesses.
Kudos to Treasury Secretary Hank Paulson who, a few days ago, urged China to continue reforming its laws to encourage more commerce and wealth production.
But, like Paulson, we should be very worried about Congress' new flirtation with protectionism. If the United States closes its borders to burgeoning countries seeking freedom, it will have a devastating negative effect. As Frederic Bastiat once said, "when goods don't cross borders, armies will."
