17 August 2005

Economics & Prosperity II

Continuing with excerpts from The Fraser Institute's What Everyone Should Know About Economics and Prosperity. This is from Part II, Seven Major Sources of Economic Progress:

2. Freedom of Exchange: Policies that Reduce the Volume of Exchange Retard Economic Progress

There are various ways that countries stifle exchange. First, many countries impose regulations that limit entry into various businesses and occupations. If you want to start a business or provide a service, you have to fill out forms, get permission from different bureaus, show that you are qualified, indicate that you have sufficient financing, and meet various other regulatory tests. Some officials may refuse your application unless you are willing to pay a bribe or make a contribution to their political coffers. Hernando De Soto, in his revealing book The Other Path, found that in Lima, Peru it took 289 days for five people working full-time to meet the regulations required to legally open a small business producing garments. Furthermore, along the way, ten bribes were solicited and on two occasions it was necessary to pay the bribes in order to get the permission to operate "legally"...Needless to say, policies of this type stifle business competition, encourage political corruption, and drive decent people into the underground (or what De Soto calls the "informal") economy.

You know where this is going... If The Jenius had changed "Lima, Peru" for "Anytown, Puerto Rico," and "garment factory" for practically any other type of business, over 95% of the local readers of that quote would have nodded and not considered it out of place. Without a doubt, the main elements of the De Soto description apply here: over-complication of regulations, possible corruption, tar-slow start-ups and a reliance on the "gray economy" that saps the power of Our monies.

The solution? How about more effective laws? How about higher ethics? How about clearer thinking? How about doing something--anything--that breaks the current insanity routine and aims at making something good happen? It doesn't take a Society to do that, it just takes an Individual. Any Individual. Hopefully, Every Individual.

The Jenius Has Spoken.

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