A Nobel Prize for Republican Policies

It’s nice to see the Nobel Prize in Economics go to three scholars who have, as the Associated Press puts it, “found that freer societies are more likely to prosper.” It vindicates one of our favorite pronouncements — from, of all people, President Carter * — that “The great democracies are not free because we are strong and prosperous. I believe we are strong and influential and prosperous because we are free.”The announcement today in Sweden is that the economics Nobel goes to Daron Acemoglu, Simon Johnson, and James A. Robinson for having “demonstrated the importance of societal institutions for a country’s prosperity,” as the Nobel committee of the Royal Swedish Academy of Sciences phrased it. Messrs. Acemoglu and Johnson work at MIT, while Mr. Robinson is at the University of Chicago.“Societies with a poor rule of law and institutions that exploit the population do not generate growth or change for the better,” the citation says, hailing the economists’ “deeper understanding of the root causes of why countries fail or succeed.” Mr. Acemoglu says the group’s work “favors democracy.” Economic liberty and political liberty are, as we’ve often put it, warp and woof in the fabric of freedom.On that head, Mr. Robinson tells the AP that “he doubts that China can sustain its economic prosperity as long as it keeps a repressive political system.” He points to “many examples in world history of societies like that that do well for 40, 50 years.” Yet, he adds, “What you see is that’s never sustainable.” Feature, say, the Soviet Union, which “did well for 50 or 60 years.” How much longer, then, can Beijing’s streak of prosperity last?That’s a question on the minds of China watchers — and, no doubt, the mandarins at Beijing — amid the economic tremors in the Middle Kingdom. Yale’s Stephen Roach warns that China risks “falling into a Japanese-like quagmire characterized by stagnation and deflation.” Mr. Roach ties that to the “bursting of a major debt-fueled asset bubble.” That itself is the product of President Xi’s attempt to run the economy from Beijing.“The classic impasse of autocracy,” is how Mr. Roach puts it, as Mr. Xi attempts to steer China back toward a Maoist model of economic and political centralization. That marked a great leap backwards from the embrace, albeit to only a degree, of free-market principles under Deng Xiaoping. His lifting of state restrictions began in 1979 and yielded an economic miracle of sorts, featuring some 30 years of 10 percent growth. Today, as Communist China’s economy sputters, Beijing is scrambling to borrow more to cover the cost of stimulus spending. That fails to address the root cause of the economic trouble, though — the heavy hand of the party. “Only greater freedom for private innovators and entrepreneurs” can fix the Chinese economy, a Wall Street Journal editorial observed the other day, “and Mr. Xi refuses to allow it.”Mr. Xi and his camarilla might want to take a page from Mr. Carter. It was his embrace of deregulation — giving power to private enterprise from federal bureaucrats — that helped spark America’s “quarter-century economic boom” between 1983 and 2008, Senator Gramm observes in a recent op-ed. Mr. Carter lifted stifling federal restrictions on “airlines, trucking, railroads, energy and communications,” Mr. Gramm explains. Mr. Carter offered his insights on democracy and freedom in a speech in 1977. Without his moves, Mr. Gramm avers, “America might not have had the ability to diversify its economy and lead the world in high-tech development” in the post-industrial era. That “helped fuel the Reagan economic renaissance,” making “possible the powerful innovations that remake our world,” Mr. Gramm says.Yet Mr. Carter’s party appears to have abandoned the wisdom of the Man from Plains as they slouch toward Senators Warren and Sanders’ brand of homespun Marxism. Plus, too, a growing populist faction in the GOP seems increasingly enamored of regulation and industrial policy with a rightist tilt. These threats to prosperity are all the more reason to hail the work of the new economic Nobelists — from Beijing to Washington, D.C.___________________* Recipient, in 2002, of the Nobel prize in peace.

A Nobel Prize for Republican Policies

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