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Twelve Economic Concepts Everyone Should Know

By Richard N. Lorenc


When I tell people that I work at the Foundation for Economic Education, they sometimes ask: “What economic ideas should people understand?”

We at FEE have thought about this quite a lot for our articles, courses, seminars, and videos. We have distilled “economic thinking” into 12 key concepts. The following list has guided us internally for a few years, and I figure it’s now time to share it with the world.

1. Gains from trade: In any economic exchange, freely chosen, both parties benefit–at least in their own minds.

2. Subjective value: The value of any good or service is determined by the individual human mind.

3. Opportunity cost: Nothing is free, and the cost of anything is what you give up to get it.

4. Spontaneous order: Society emerges not from top-down intention or planning but from individuals’ actions that result in unplanned outcomes for the whole.

5. Incentives: Individuals act to maximize their own reward.

6. Comparative advantage: Cooperation between individuals creates value when a seller can produce a given item or service at a lower cost than the buyer would spend to produce it himself.

7. Knowledge problem: No one person or group knows enough to plan (and force) social outcomes, because information necessary for social order is distributed among its members and revealed only in human choice.

8. Seen and Unseen: In addition to the tangible and quantifiable effects, there are quite often invisible costs and unmet opportunities to any action or policy.

9. Rules matter: Institutions influence the decisions individuals make. For example, property rights extend from the reality of scarcity which demands that ownership must be vested in individuals and not a collective.

10. Action is purposeful: Each person makes choices with the intention of improving his or her condition.

11. Civil society: Voluntary association permits people of all backgrounds to interact peaceably, create value, cultivate personal character, and build mutual trust.

12. Entrepreneurship: Acting on an opportunity to gather underused, misused, or undiscovered resources and ideas to create value for others.

You might think about all the ways and places these principles appear–as you shop, socialize, and plan your future. As we like to say, economics is everywhere!

Republished from FEE.org

Richard N. Lorenc

Richard N. Lorenc is the Chief Operating Officer of FEE and serves as managing director of FEE’s Youth Education & Audience Research (“YEAR”) project to develop and promote new content and distribution techniques for free-market ideas.

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New South African Airways bailout package shows government is not committed to transformation

By Martin Van Staden

With low economic growth prospects, ever-increasing unemployment and destitution, government appears to be more concerned with the useless prestige and status that comes with our national airline, than the wellbeing of the South African people.

In mid-July, EWN reported finance minister Malusi Gigaba saying that “too much money has been invested in cash-strapped South African Airways (SAA) in the form of guarantees and bailouts” and that government was going to seriously try to waste no more resources on “inefficient state-owned entities”. In an about-face, Gigaba now says that Treasury is considering a R13 billion bailout for the national carrier.

Proposing such a bailout in the midst of a tax shortfall is evidence of government’s deep-seated contempt for the people of South Africa and a preoccupation with satisfying its short-term and short-sighted ambitions. Its intention to introduce more and more taxes to finance programmes like the National Health Insurance (NHI) is mindboggling, let alone the proposal made earlier this year that, in addition to television licences, it would consider requiring licenses for other devices to boost revenue for the national broadcaster. The Davis Tax Committee too is considering increasing wealth taxes.

These desperate attempts to get its hands on more revenue are unnecessary in the face of the most obvious solution – significant tax transformation – and dangerous, in that it is unlikely that businesses, especially small ones, can survive for much longer in such an environment. Companies like General Motors and AngloAmerican already have either left our shores or are in the process of reducing their investments.

ANC MP Pinky Kekana proposes that, to help our national carrier, government intervene and give to SAA air routes currently operated by other, profitable airlines. For her, this would be radical economic transformation. By what logic could forcing the productive and efficient private sector, which creates unquantifiable wealth for millions of people every minute of every day, to yield to the ineffective and bloated dinosaurs of the public sector radically transform anything? South Africans already find more affordable and higher-quality travelling products with foreign airlines. Even domestically, it is estimated that SAA contributes less than a quarter of commercial air travel.

If government wants more money, it should look to decreasing taxes and repealing regulations across the board to allow significant economic growth to occur. In turn, more South Africans will become taxpayers and contribute to the national purse. But, even if this should happen, the national purse should not be an ATM for state companies that have proven time and time again that they are unable to stand on their own two feet in the market. Both SAA and Eskom have been given repeated opportunities to become profitable, but each ‘second chance’ ends with yet another ‘turnaround’ strategy. These companies are lost causes which South African taxpayers are propping up with no benefit to themselves, and certainly none to the poor.

Radical economic transformation would be to get rid of wealth sucking, economy strangling state-owned enterprises that are firmly rooted in the social engineering logic of the apartheid regime to fulfil, as the first apartheid labour minister Ben Schoeman explained, “State control on a large scale” that replaces personal responsibility with a “system of State responsibility.”

There will be no radical economic transformation while government and state-owned enterprises get first dibs on the hard-earned produce of the people. The people have a natural right to keep what they earn, and government is under an obligation to spend what it takes from the people wisely. What we are seeing now, however, is a commitment by government to itself, and not to the people.

 

Republished from AfricanLiberty.org

Martin van Staden is Legal Researcher at the Free Market Foundation and Academic Programs Director of Students For Liberty in Southern Africa.

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Money Is the Real Social Contract

By Baudoin Collard

Despite major inconsistencies, the social contract theory remains one of the most prominent founding myths of our societies. Is it possible to revisit this dogma to correct its deficiencies?

The social contract theory finds its origins during the Enlightenment era in the 18th century. In the context of challenging royal institutions, philosophers like Rousseau and Hobbes sought to answer the following questions: How are societies born? Why do humans decide to live together? Where do governments derive their legitimacy?

According to Rousseau, an implicit contract binds men together to form a society. Through this contract, men relinquish some of their freedom to the state. In return, the state provides justice and security. This way, the general welfare is protected from special interests through the legislature, elected by the people.

The social contract theory has had a major influence on Western philosophy. As attractive as it is, the theory suffers from fundamental flaws.

First, no one has ever signed such a contract. One can argue that elections represent a tacit renewal of the contract. But in this case, abstention should be considered. And what about countries like Belgium where voting is compulsory?

Second, history teaches us that human societies emerged well before the institutions that govern them. It is the society that begets the institutions and not the reverse. Moreover,  these institutions have been set up in bloody wars and revolutions.

Lastly, according to Rousseau, since the parliament represents the people, the minority must accept any decisions taken by the majority in the name of a nebulous “general interest.” In the 19th century, Alexis de Tocqueville had already mentioned the risk associated with this belief. Such a system drifts into a tyranny of the majority.

If we looked closer, we would see an institution inseparable from the human society that could perfectly fulfill this role of the social contract: money.

Is Money a Social Contract?

Money is proper to man. Historically, no society could develop without the support of some form of money. Conversely, the concept of money is meaningless when taken out of its social context. It is from its acceptance by users that money derives its legitimacy and value. Men voluntarily adopt money because they benefit from it.

By facilitating exchanges, money allows specialization — the source of new technological developments. As a store of value, it allows users to save, which is the source of investment and protection against the hazards of life. Investment and technological progress both generate growth. This is the fundamental reason why men unite: in order to draw greater benefit from each other’s labor.

Currency Manipulation

If money is the cement that binds society together, what happens when this cement disintegrates? The German hyperinflationbetween 1921 and 1924 is certainly one of the most tragic examples of monetary collapse, but it is far from an isolated case.

Given its critical role, it may be tempting for a minority to manipulate the currency to its advantage. If the phenomenon is not new, it has also become more complex over time.

An early example occurred with the use of minted coins.

Originally, coins ensured the weight and quality of the currency. But gradually, the right to mint coins has become a state monopoly. This has allowed governments to control currency and extract a rent (seigniorage and sometimes debasement).

The invention of the banknote was a major technological evolution. Originally introduced to facilitate increased trade, banknotes have gradually become a monopoly of the power in place. As a striking example, Napoleon Bonaparte gave the monopoly of printing bank notes to the Bank of France, of which he was a major shareholder.

The creation of central banks is the logical continuation of the state’s growing influence over money. Under the pretext of stabilizing money issuance and protect depositors from banking crises, the creation of central banks actually greatly facilitated state indebtednesswar funding, and ultimately inflation.

Speaking of inflation, here is precisely what Keynes said about it:

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.”

From Social Contract to Social Control

But inflation is not the only stab to the social contract of money. From the moment the money is imposed by the government rather than freely chosen by citizens, it loses its legitimacy. Initially acting as a social contract, money in state hands becomes a tool of social control. It allows a minority to exploit their privileged position for profit and power.

The states impose the use of their currency in more or less subtle ways. In the most authoritarian countries like China, the currency is subject to strict controls.

Exchange rates are set by the government and capital movements are tightly monitored. In the so-called democratic countries, the currency is imposed through legislation and numerous regulations. For example, the official currency is the only one allowed for the payment of fines and taxes. Banking and insurance regulations require individuals to invest a proportion of assets in state bonds, to inform the government of all transactions above a certain amount, etc.

In terms of social control by the currency, governments can be very creative. One example is the introduction of price and wage controls. Another example is the introduction (and increasingly pervasive use) of the food stamp program.

A more pernicious threat now hangs over the money with the disappearance of cash so desired by our governments. The abandonment of cash threatens to increase our dependence on the banking system. It also increases the stranglehold of states over their citizenry by facilitating the establishment of taxation on savings accounts or even an outright confiscation of bank accounts, as was the case in Cyprus.

Freeing the Money

All monies do not fulfill their social contract equally. Among fiat currencies, large differences exist, depending on the objectives of central banks and economic policies. So if we compare the consumer price index (a proxy for inflation), we observe that the US Dollar has lost about 54 percent of its purchasing power over the last 30 years.

The Swiss Franc saw a decline in purchasing power when it was limited to 31 percent and then 14 percent for the Japanese Yen. At the same time, the currency’s purchasing power fell by more than 99 percent in Mexico, Turkey, and in many countries of the former Soviet Union.

Gold and precious metals enjoy a lasting credibility because these commodities are difficult to manipulate. Precious metals have also provided an effective hedge against inflation and other monetary turpitudes throughout history. Gold is still a reserve currency of choice for central banks.

Finally, a new form of currency has recently emerged: the cryptographic currencies among which Bitcoin is undoubtedly the most famous. Bitcoin appeared in 2009, at the height of the subprime crisis and bank bailouts by the taxpayers. If they have often aroused disbelief in their infancy, these cryptocurrencies now enjoy a combined capitalization largely exceeding $100 billion.

More fundamentally, cryptocurrencies are the perfect illustration of the competitive bidding of private currencies. This is similar to what was proposed by Friedrich Hayek in his book “The Denationalization of Money.” 

Since the use of these currencies is free, their value fluctuates according to the interest they generate and the resulting demand. Their course is closely linked to the services they can provide, as a means of payment, and their credibility, as a store of value. The proliferation of these cryptographic currencies is a full-scale laboratory experiment for the future of money.

Money Guarantees a Free Society

Money, even more so than democracy, embodies the essence of the social contract. Its legitimacy comes from its acceptance, freely chosen by all users. 

The fundamental role of money in exchange explains its catalytic action in the seeding of the development of human societies, long before the emergence of democratic institutions. Finally, currency manipulation inevitably causes the decline of a society,as democratic as it may be.

Nothing better sums up money that Ayn Rand’s quote:

“Money is the barometer of a society’s virtue.”

Money is a tremendous source of emancipation for the society. It promotes cooperation and peaceful exchanges between humans, no matter their views, gender, origin or preferences. It is the conductor that imperceptibly regulates the human action.

Conversely, anyone who aims to suppress money should be prepared to substitute it by a planned economy with cohorts of bureaucrats who impose by force. Anyone who denounces the dictatorship of money should recall that the worst tyrannies are those where citizens were deprived of their currency. And if money is regularly accused of being the root of all evil, it is all too often the victim of those who control it. Rather than blaming the money, let’s blame those who corrupt it.

Perfect currencies do not exist. As the brainchild of fallible humans, monies are bound to constantly face primal temptations. Failing to find such an illusory ideal, the freedom to choose currencies is the best guarantee of having sound money in a free society.

 

Republished from FEE.org

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Millennials Are in a Love Triangle with Capitalism and Socialism

By Andrew Taylor

There’s been a lot of talk recently about how Millennials – the generation born between roughly 1980 and 2000 – think about economics. Much of it was sparked by the fanatical support for self-described “Democratic Socialist” Bernie Sanders from young people in the Democratic primary for president last year.

Gallup found in April 2016 that, whereas Hillary Clinton had a net favorability rating of -23 among 18-24 year-olds, Sanders’s score was +39.

Harvard University poll administered at about the same time revealed how this has been translated into policy views. The survey reported that only 42% of Millennials supported capitalism. According to a contemporaneous Gallup poll, that was about 10 percentage points lower than the general population. The Harvard survey showed 33% of Millennials wanted socialism.

So Millennials have economic attitudes that are different from older Americans. But is their economic behavior different? Do they walk the socialist walk?

Here, the evidence is decidedly mixed.

Health Care

Socialists tend to embrace public goods because all citizens can consume them. Millennials certainly like them. A Pew Research Center poll from June revealed 45% of 18–29-year-olds favored a single-payer health care system. This was 14 percentage points higher than any other single age group.

Census data show Millennials adopted health insurance more rapidly than any other age cohort when Obamacare began in 2014-15. I’m not entirely sure what kind of political philosophy this behavior illustrates, but it does seem to suggest Millennials embraced the Affordable Care Act, legislation most people believe moved health care in this country solidly to the left.

Recycling and Personal Consumption

Socialism, unlike capitalism, makes a virtue of constrained personal consumption. A major reason for this, of course, is that it is less suited to production. But the connection has helped fuse ecology to socialism in the platforms of left-wing parties across the globe.

You may have heard the argument that Millennials are more environmentally conscious than the rest of us – they don’t use plastic shopping bags or flush the toilet, etc. A survey commissioned by Rubbermaid reported earlier this year that two-thirds of Millennials would give up social media for a week if everyone at their company recycled.

Interestingly, however, the data on behavior do not bear this out. A 2014 Harris poll conducted for the Institute of Scrap Recycling Industries (ISRI) revealed that whereas roughly a half of respondents over thirty said they “always” recycled, only a third of the younger group did.

Millennials talk about saving the planet for humanity, behavior a socialist mindset deems heroic, but they do not seem to be doing more than anyone else to secure our world’s survival.

Transportation

Millennials also use public transportation much more than other groups. Over one-fifth ride a bus or train on a daily or almost-daily basis according to a Pew survey from late 2015. This was nearly double the proportion of any other age group.

Indeed, younger people seem to have much less love than their elders for that ultimate of American private goods, one’s own car. The number of licensed drivers in both the 24-29-year-old and 30-34-year-old cohorts decreased by about 10% between 1983 and 2014 according to the University of Michigan’s Transportation Research Institute. The drop for 18-year-olds was a fifth. At the same time, everyone over 45 continues their love affair with the automobile.

This seems consistent with the socialist rejection of material goods, but whether this is correlation or causation is unclear.

Sharing Economy

Moreover, Millennials have almost single-handedly nurtured the “sharing” economy – a marketplace in which peer-to-peer transactions are facilitated by a software platform that permits participants to divide consumption, as exemplified by Uber and Airbnb. According to Vugo, 57% of all ridesharing customers are aged 25 to 34.

The sharing economy may sound quite socialist because it seems to eschew private ownership. But as Duke professor Mike Munger has pointed out, people, in general, wish to consume the services that tangible goods provide, not the goods themselves. The sharing economy, in fact, provides access to the services of more material goods than the user would otherwise have – whether that’s a five-minute ride in a car or a two-day stay in a house. Its fundamental principles, therefore, are capitalist.

Entrepreneurialism

A 2014 Bentley University survey of Millennials reported that two-thirds of respondents expressed a desire to start their own business. But Millennial behavior is different. An analysis by the Wall Street Journal last year found that the proportion of Americans under 30 who own a business has dropped by 65% since the 1980s. Millennials might say they want to be Mark Zuckerberg, but they’re not particularly entrepreneurial.

There does exist therefore a disconnect between Millennial economic attitudes and behavior. What explains it? The generation is intrigued by the idea of socialism. It embraces many of its values and the public policies that would bring it about. But Millennials’ behavior is ambiguous. Entrepreneurship in private enterprise is not a particularly appealing career path to them in practice.

Additionally, Millennials’ reduced consumption is probably as much a function of economic necessity as it is a sacrifice of their personal wants to some grand social plan. The Great Recession has left them playing financial catch-up. A Pew analysis of census data reveals 15% of 25-to-35-year-olds still live with their parents. Traditionally that fraction has been around one tenth. A 2016 study by the left-leaning Center for American Progress found that Millennials make less than Gen Xers did in their early 30s. They only earn about the same as Boomers, who are 30 years older and 50% less likely to have graduated from college.

So perhaps there’s another explanation: When they appear to be rejecting capitalism, it’s often because Millennials are simply adjusting America’s core economic principles to new technologies and economic realities.

Reprinted from Learn Liberty.

 

Andrew J. Taylor

Andrew J. Taylor is professor of Political Science in the School of Public and International Affairs at NC State University. He received his Ph.D. from the University of Connecticut and teaches courses in American politics, including Introduction to American Government, the Presidency and Congress, the Legislative Process, Public Choice and Political Institutions, and the Classical Liberal Tradition.

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ASUU, the Government and Tertiary Education in Nigeria: The Way Forward

By Ashton Dagana

Since 1999, successive governments have at least two things in common; ASUU and strikes. ASUU strikes. The ASUU strikes always follow the same pattern; initial noise about a possible ASUU strike, a warning strike, government ignores ASUU all along, the public isn’t particularly interested, ASUU goes on long strike, everyone gets interested, government and ASUU meet over and again, agreements are signed, ASUU goes back to school, tick tock tick tock, repeat cycle.

As usual with most things Nigerian; no one really cares about a sustainable solution that ensures there is no repeat of a bad situation, attention is often paid to what Nigerians would call ‘patch-patch’ solutions. Each government deals with ASUU in a way that ensures ASUU returns to the classrooms, knowing fully well that the underlying problem of why ASUU goes on strike remains perpetually unresolved. Like debts and corruption cases, they pass on the ASUU burden to future governments. It is why over 18 years into our new democratic experience; our universities continue to face exactly the same challenges they faced in 1999. Poorly funded, absenteeism of lecturers, normalization of the handouts menace, strikes, dilapidated infrastructure and the inability to compete globally. This simply means that we are not going to fix our universities and the recurrent ASUU challenge with the same Band-Aid approach we used in the past. We need a far more sustainable solution. The challenges of our universities and indeed other tertiary institutions are not that these challenges exist; it is that these challenges more or less remain the same over decades. What we must now do is solve them and work out ways of meeting new challenges and not continue to sink under the weight of the same challenges decades on.

We should not be in this position where all the lecturers in virtually all the public universities can go on strike at the same time. None of the countries where the children of the rich and powerful go to school abroad have this model. Our leaders, including even some of the privileged lecturers have their children in schools everywhere but public schools where they are exposed to some of the menace already mentioned above. Like with most of the challenges Nigeria has had to deal with over the course of almost its entire Independent existence, the problem is centralization and control by the Federal Government. The current structure does not work and we already know that. What we probably aren’t so sure of is how to move forward.

The universities should be run by Trusts. Government should simply give grants. Trustees should include private sector big wigs and people that can help raise money and endowments for the University. They will also check fraud by the VCs, which is very rampant. At the moment, at least six former or current Vice Chancellors are under investigation by the Economic and Financial Crimes Commission, EFCC. There are verifiable rumblings for the arrest of some others. Some of them have even been charged. This piece is not about the obvious so I will not be elaborating on that but I should add that University administration has since been taken by the general Nigerian malaise; corruption. The Trust sets the terms and conditions for employment. That way, each lecturer is an employee of the trust, not directly of the Federal Government. For instance, if UNILAG lecturers choose to strike against their Trust, the strike will only affect UNILAG. This is the same problem we have with Health and why doctors constantly go on strikes. These problems have become permanent simply because we choose the same Band-Aid solutions that are not sustainable and far reaching over much more sustainable and effective ones.

The FGN appoints people as Ministers of Labour or portfolios of the type and automatically assumes that they were born as skilled negotiators. No negotiation skills. No training. Two things then happen. First, each strike is an opportunity for the Labour Minister or the cronies to make money. In the past, huge sums were ferried at night to Labour leaders to persuade them to call off strikes. The Minister, of course, got a huge cut and it was in his interest to collude with the unions to hold out for more money, while publicly “appealing to them to go back to work.” Secondly, the glory for him was that he had successfully ended the strike. He would therefore sign anything, knowing fully well that government could not afford it. In his mind, ‘the next Minister can worry about that.’ This, just so he can say, “when I was Minister, I ended the strike.” This is all that matters to them in a country where the interests of personalities continually trump the collective interest. Today, they agree with ASUU. Tomorrow, Non-Academic Staff of Universities will claim that you can’t give ASUU alone and so they go on strike too. The Minister will sign another agreement with them. ASUU will get angry again and the cycle continues. The exact same thing we do with Doctors of NMA and Health Workers under JOHESU. It’s a sad expensive joke, really.

While one is sympathetic to the claim that agreements should be honoured, the quantum of ASUU’s claim is put at about N1.2 Trillion. In 2009 when this was agreed, this was about 25% of the Budget. Someone was illogical enough to sign this on behalf of government. To move forward, there may be a need to overhaul the system altogether. This reset of the system could even cost an entire academic year but if it fixes this particular problem permanently, it would be a very useful sacrifice to make for the sake of the future. Since 1999, ASUU has embarked on some 12-strike actions that lasted about over years cumulatively.

ASUU through the individual universities establish university staff schools without consultation with government. There is apparently an agreement with the government on funding the staff primary schools and secondary schools. Government had in the past agreed to fund the primary schools 100% and part-fund the secondary schools. Then the universities open the schools up to outsiders and charge handsome fees. They pocket those fees and don’t remit a kobo to the FGN. The schools want government to pay the teachers that they – the schools – recruited. They want government to maintain the schools while they pocket the fees they charge. This, according to available reports is part of their reasons for striking. I wonder, did a government official sign these agreements without making it clear these schools were to serve the children of the staff of the schools or make it clear government funding would not cover for discretion taken by the schools outside of the agreement?

ASUU has organised resistance to IPPIS, the government biometric payroll system that has already helped to weed out thousands of ghost workers in several ministries, this so that they can continue to create ghost workers. There is an estimate from a reliable source at IPPIS that some 30% of the people ASUU is striking for are ghost workers. Part of government’s negotiations should therefore be to do biometric capture so that they know who they are paying. The situation is the same with hospitals. They refuse to go on IPPIS, recruit illegally and create ghosts. That way, the salaries government sends are spread to half pay for all and government is then accused of owing salaries when it has paid everybody it gave approval to be recruited in full. Government gets to be used and treated like an entity whose failings mean nothing, when in reality the people are the government.

Government needs to cut a deal with ASUU but must think sustainability when going to the table. A recent news report has the current Education minister Adamu Adamu saying the ASUU strike will be over in a matter of days. This simply means that we are about to wash and rinse the same dirt from the previous playbook. This means that in the very near future, another government, if not this one even, will have to call ASUU back to the table again, when they embark on yet another strike. The government must go all out to overhaul this system once and for all by divesting and relinquishing control and ending this centralization that favours everyone else but the very people the universities were set up for, the students.

Ashton Dagana, a Quantity Surveyor writes from Port Harcourt. (ashtongana@gmail.com)

Republished from AfricanLiberty.org

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IMANI: Update on Efficiency in Ghanaian Ports – A Discussion with Stakeholders & Vice President Bawumia’s Commendable Efforts

IMANI Centre for Policy and Education has been studying the challenges – both current and potential – that negatively impact trade in Ghana. These challenges have been analysed under two major areas: 1) trade competitiveness and diversification, and, 2) trade facilitation and port efficiency.


IMANI published its first major report in June 2017. The paper, titled ‘’IMANI’s ‘Efficiency’ Report on Operations at Ghana’s Tema Sea Port; More Needs Doing’’ can be assessed @ http://www.imaniafrica.org/2017/06/27/imanis-efficiency-report-operations-ghanas-tema-sea-port-needs/

This article provides a summary of the research that has been undertaken into port efficiency and performance in Ghana, which includes discussions with and the perspectives of various stakeholders such as the Ghana Ports and Harbours Authority (GPHA), Meridian Port Services (MPS) Ltd., the Ghana Institute of Freight Forwarders (GIFF), and a and a shipping line executive.

The importance of an efficient port for trade, development and economic growth cannot be understated. Efficient ports facilitate trade competitiveness and greatly increase revenue mobilisation. The appropriate question to pose now is what makes Ghanaian ports inefficient, and what are the salient challenges they face? One pertinent issue that was mentioned by nearly all stakeholders involved the inefficiencies within the cargo clearing process. These include 1) long cargo clearing and processing times, 2) the multiplicity of agents in the inspection and customs processes, 3) the absence of paperless processes throughout.

Long cargo clearing and processing times

During IMANI’s interview with a shipping line executive, the lengthy cargo clearing processes at the ports was highlighted as a serious issue. Most importers are unable to clear their containers within the 7-day demurrage-free time. This observation was also noted by GIFF. In addition, GIFF stated that in an ideal and efficient situation, it should take approximately 5 days for goods to be cleared at customs. However, this is not the case in reality. It can even take more than a fortnight for goods to clear. The unnecessary delays affect both the ability of importers to quickly distribute their goods, and tend to lock up much needed capital for other business operations. Importers are required to pay container detention fees and demurrage deposits to shipping lines prior to a container being cleared from the port. Container deposit fees serve as a guarantee that importers will return containers back to the shipping line in time, once their contents have been emptied. GPHA estimate that shippers pay over $100 million in container demurrage annually to the government, in ports throughout the country. The longer the cargo clearing and processing time, the longer the funds sit with the shipping lines, and the fewer funds are made available for the importer’s business. This challenge is compounded as the repayment of container detention fees often takes a while to come into effect.

Multiplicity of regulatory agents in the inspection and customs process

Multiplicity of regulatory agents and the duplication of roles during the physical examination is also a serious inhibitor of efficiency at the Port of Tema. Custom Examination Officers physically examine container, alongside about 18 agents from different Ministries, Departments and Agencies (MDAs) – sometimes more – which is highly unnecessary, allows room for corrupt activities, and lengthens the whole inspection and customs process. As GIFF so adequately described, ‘the more layers you have, the more corrupt the port is’. This issue was also brought up by MPS, who mentioned that the inspection and customs processes were duplicated. Other stakeholders including the Ghana National Chamber of Commerce and the GPHA have also decried the challenge of multiple regulatory agencies and their impact on efficiency at the port.

mandatory joint inspection has been announced by Vice President Dr Bawumia to address this challenge. This policy is expected to take effect from 1 September, 2017. Under this policy, not all containers will be inspected, only those with a certain risk level. A risk engine will be introduced, which will assign risk levels to importers depending on the level of their compliance. Further, if an inspection is necessary, only the agencies required for the inspection will be informed, and they will have to sign in electronically to confirm their participation.

The absence of paperless processes

The lack of paperless processes at the Ports is another significant inhibitor of efficiency. However, MPS Terminal is the only terminal operator at the ports that has implemented a paperless system, which has allowed it to become a leader in port efficiency.

As of Monday 7 August 2017, Ghana Community Network (GCNet) began to pilot paperless processes at the Tema Port. This is one part of the three highly commendable policy ideas put forward by the Vice President. The policy ensures that by 1 September 2017, all transactions at Ghanaian ports will be 100 per cent paperless, enabled by an electronic system, which will be powered by GCNet. It will also ensure that the processes and players along the value chain from exporters, cargo tracking, warehousing, freight forwarding, payment systems, free zones, regulatory bodies and shippers all operate on an electronic basis.[1] These will greatly improve trade facilitation, revenue mobilisation and port efficiency and has significant impacts for economic development across the nation. Moreover, the introduction of paperless systems will also make multiple inspections and the role of superfluous agents and MDAs redundant.

Additional measures to improve port efficiency

Additional measures taken by Vice President Bawumia, to be put into effect by 1 September, 2017, also include the removal of internal customs barriers. This means that duties will be paid on goods that are destined for re-export, and no vehicles will be able to leave the ports without paying their duties, as a new automated gate opening system will be linked to the risk engine for inspections. Consequently, these new measures will expedite the inspection process and ensure that duties are paid where they are due. Moreover, the resultant decline in the complexity of inspection and control procedures will lead to a decline in costs, delays and minimise corrupt and informal payments which would have been used to speed up processes, and even make government agents and importers compliant to such unlawful situations.

Commendable efforts

Vice President Dr Bawumia and the NPP Government must be commended on the practical measures that are currently being put into place to improve port efficiency in Ghana, and ensure that the nation becomes one of the most competitive ports within the sub-region, and in the long-term, even globally. These measures are necessary to stimulate national economic development, increase tax revenues and minimise the corrupt practices among importers, customs officers and clearing agents. With these measures in place, and the active participation of key stakeholders, the nation will see positive and sustainable improvements in the realm of trade and economic development.

 

Republished from IMANI Ghana

This update was compiled by Ms. Anita Nkrumah and  Ms. Nana Dei-Anang with IMANI’s Centre for Economic Governance and Political Affairs. For interviews please call 0554309966 or 0302972939.

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The Regulatory State Is the Enemy of Economic Mobility

By David Boaz

Why are Americans less likely to move to better opportunities than they used to be? The Wall Street Journal reports:

When opportunity dwindles, a natural response—the traditional American instinct—is to strike out for greener pastures. Migrations of the young, ambitious and able-bodied prompted the Dust Bowl exodus to California in the 1930s and the reverse migration of blacks from Northern cities to the South starting in the 1980s.

Yet the overall mobility of the U.S. population is at its lowest level since measurements were first taken at the end of World War II, falling by almost half since its most recent peak in 1985.

In rural America, which is coping with the onset of socioeconomic problems that were once reserved for inner cities, the rate of people who moved across a county line in 2015 was just 4.1%, according to a Wall Street Journal analysis. That’s down from 7.7% in the late 1970s.

One particular problem with today’s immobility is that people find themselves in areas where jobs are dwindling and pay tends to be lower. Why don’t they move to where the jobs are? This comprehensive article for the Journal by Janet Adamy and Paul Overberg points to a few factors:

For many rural residents across the country with low incomes, government aid programs such as Medicaid, which has benefits that vary by state, can provide a disincentive to leave. One in 10 West Branch [Mich.] residents lives in low-income housing, which was virtually nonexistent a generation ago.

And then there are regulations that discourage mobility:

While small-town home prices have only modestly recovered from the housing market meltdown, years of restrictive land-use regulations have driven up prices in metropolitan areas to the point where it is difficult for all but the most highly educated professionals to move….

Another obstacle to mobility is the growth of state-level job-licensing requirements, which now cover a range of professions from bartenders and florists to turtle farmers and scrap-metal recyclers. A 2015 White House report found that more than one-quarter of U.S. workers now require a license to do their jobs, with the share licensed at the state level rising fivefold since the 1950s.

Brink Lindsey wrote about both land-use regulations and occupational licensing as examples of “regressive regulation”—regulatory barriers to entry and competition that work to redistribute income and wealth up the socioeconomic scale—in his Cato White Paper, “Low-Hanging Fruit Guarded by Dragons: Reforming Regressive Regulation to Boost U.S. Economic Growth.”

The Journal notes that:

The lack of mobility has become a drag on the entire U.S. economy.

“We’re locking people out from the most productive cities,” says Peter Ganong, an assistant professor of public policy at the University of Chicago who studies migration. “This is a force that widens the urban-rural divide.”

Ganong made similar points in a Cato Research Brief, “Why Has Regional Income Convergence in the U.S. Declined?

Declining mobility hurts U.S. innovation and economic growth and widens the rural-income culture gap. Government regulation plays a major role in declining mobility. But as Lindsey noted, those regulations are “guarded by dragons”—”the powerful interest groups that benefit from the status quo, all of which can be counted upon to defend their privileges tenaciously.” Despite the potential for agreement by right, left, and libertarian policy analysts on the problems with regressive regulation, all those wonks together may be no match for organized dentists, barbers, massage therapists, and homeowners who perceive that they benefit from keeping others out.

 

Reprinted from FEE.

David Boaz

David Boaz is the executive vice president of the Cato Institute and the author of The Libertarian Mind: A Manifesto for Freedomand the editor of The Libertarian Reader.

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World Youth Day: The Concept of Youth Investment, Peace and Security

By Ugbabe Adagboyi Damian

Every year since 1999, the United Nations has continued to celebrate the youths all over the world. Eighteen years after, the youths have continued to gain increasing recognition as agents of change in the society – since they have very important roles to play in deterring and resolving conflicts, and are key constituents in ensuring the success of both peacekeeping and peace building efforts. Hence, their inclusion in the peace and security agenda of the Sustainable Development Goals (SDGs) of the United Nations. The 2030 Agenda for Sustainable Development committed to fostering peaceful and inclusive societies and affirmed “Sustainable development cannot be realised without peace and security”. Goal 16 aims to ensure responsive, inclusive, participatory and representative decision-making at all levels. The World Programme of Action for Youth, which provides a policy framework and practical guidelines to improve the situation of young people, also encourages “promoting the active involvement of youth in maintaining peace and security”.

For the purpose of achieving the 2030 Sustainable Development agenda, it is considerable to adopt a conventional definition of youth; assess the concept of youth investment and how it can ensure the success of both peacekeeping and peace building; as well as suggest ways the incentives tailored towards youth investment can make meaningful impact on them.

According to Wikipedia, The terms youth, teenager, kid, and young person are interchanged, often meaning the same thing, but they are occasionally differentiated. Youth can be referred to as the time of life when one is young. This involves childhood, and the time of life which is neither childhood nor adulthood, but rather somewhere in between fourteen and twenty-one years of age.

The UN Convention on the Rights of the Child of 1989 defines a child as any human person who has not reached the age of eighteen years.

To bring home the definition, we shall adopt the definition of the African Youth Charter; that a youth is any human person who falls in the age bracket of fifteen and thirty-five. However, the task that lies before us should make us think in line with Robert Kennedy that, “the world demands the qualities of youth: not a time of life but a state of mind, a temper of the will, a quality of imagination, a predominance of courage over timidity, of the appetite for adventure over the life of ease”.

The concept of youth empowerment and youth investment are interchanged, often implying the same thing. On the contrary, youth empowerment is a form of political heart-buy of youths for continuity. Most African politicians and their governments have bastardized the concept and have used it to manoeuvre their immediate social environment. Many of them believe that empowerment mean to purchase and distribute either of, motorcycles, tricycles (popularly called “Keke” in Nigeria), wheelbarrows, hairdryers, Knapsack sprayers, and stipends in form of social transfer benefits, etc. In as much as this is a plus to the society, there are little or no evidence that the beneficiaries expressed any form of predominance of courage over timidity; developed a superior state of mind or have any quality imagination that can spur innovation to permanently lift them out of poverty. It is evident that many of the beneficiaries have no appetite for adventure as they are limited to what they know and do, and are hardly proud of their skills since they remain restless and agitated. They also develop high sense of entitlement and feel marginalized; believing that what they have received can only keep them surviving each moment and not living in each moment.

The concept of youth investment sees beyond tenure. It is a concept that seeks to improve young people’s outcomes through better funding opportunities, programmes and initiatives that build the capability and resilience of young people so they have the skills and confidence to engage positively in, and contribute to, their societies. These outcomes support increased educational achievement, greater employability, improved health and less state intervention. The economic and social landscape of the world is rapidly changing with the developments in technology affecting the way we think, live and work, the young people forming about 70% of the African population need to acquire the digital, entrepreneurial and enterprise skills to be participate and contribute to the social and economic growth of their societies.

 This concept has three key strategies: leadership development, volunteering and mentoring. These can be achieved little or no stress but with the political will power to grow the economy and sustain peace and security.

The following key components of the strategies includes; maximising scarce resources through collaborating with corporate, non-governmental, and other government organization, improving data collection and analysis to enable funding based on knowledge of what works and for which group of young people, a clear mission statement and continuous appraisal of outcomes, and targeting investment to where it will have the most impact.

Therefore, if we intentionally adopt these strategies, guided by its component; and ensuring accountability, integrity, and inclusiveness we can build and shape a peaceful and secured Africa.

 

This piece was originally published in AfricanLiberty.org

Ugbabe Adagboyi Damian

Twitter @ugbabeD

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Corruption Rises as Economic Freedom Falls

By Richard M. Ebeling

The corruption of government officials seems to be as old as recorded history. For example, the ancient Roman senate passed laws against such political corruption in the first century, B.C. They defined a corrupt act as “whenever money is taken and a publicly-conferred duty is violated.”

Local magistrates in the Roman Empire were permitted to legally receive cash gifts of up to 100 gold pieces a year, but anything beyond this amount was considered “filth.” There was also a separate criminal category against what was called concussio, or the “shakedown” and “extortion.” A Roman official might claim to have a legal order against someone and demand a bribe not to enforce it against the individual’s person or property.

Emperor Constantine issued one of the strongest decrees against corruption during this time in A.D. 331. Those found guilty of such crimes might be exiled to an isolated island or a far-off rural area, while others might even be condemned to death. A judge, for example, might be executed if he had acquitted someone guilty of murder for the right price.

Ranking Corruption

Today, high levels of political corruption remain one of the major problems people confront around the world. While most of us think of such corruption as primarily impacting the hundreds of millions who live in the underdeveloped and developing parts of the globe, it touches those of us fortunate enough to live in the industrially developed Western democracies.

The Berlin-based non-profit organization, Transparency International (TI), annually surveys various forms of corruption around the world by various measures and types. A score of 100 in their 2016 Corruption Perception Index means the absence of any political corruption. A score approaching zero suggests a society in which little happens or gets done without layers of governmentally corrupt processes for people to get through in their daily lives. TI points out that “No country gets close to a perfect score” on the index.

However, according to Transparency International many of the least corrupt nations around the world are in the European Union and North America. In fact, Denmark ranks the least corrupt worldwide, followed by New Zealand. Among the remaining top ten of least corrupt countries are: Finland, Sweden, Switzerland, Norway, Singapore, the Netherlands, Canada and Germany. All of them have scores of 80 or better on TI’s scale of 100 having zero corruption.

The United States, however, is only ranked 18 with a score of 74. That placed America just below Belgium, Hong Kong and Austria. But the U.S. did rank above Ireland, Japan and Uruguay. And, happy to report, America is above France, which had a score of only 69.  

The most corrupt nations of the EU, perhaps not surprisingly, are in Eastern Europe, in those countries that had been part of the former Soviet bloc. Poland only scored 62, followed by Slovenia (61), Lithuania (59), Latvia (57), Czech Republic (55), Slovakia (51), and Hungary and Romania (58).  On the other hand, Greece, a longtime member of the EU, only earned a score of 44.

Former Soviet republics further to the east are even worse. The Russian Federation and Ukraine only scored 29, with the former Soviet republics in central Asia – Kazakhstan, Turkmenistan, Uzbekistan, for instance – barely making it above the low 20s range on the scale.

Africa, Asia, and Latin America

The lowest TI scores are generally earned in Africa and parts of the Middle East and Asia, with some other very corrupt countries in Latin America. The most corrupt countries on the planet, according to TI, are Somalia (10), South Sudan (11), North Korea (12), Syria (13), Yemen (14), Sudan (14), Libya (14), and Afghanistan (15). But in corruption depravity, Venezuela, Iraq, and Haiti are not far behind them.

In fact, on the Transparency International scale there are hardly any countries in Asia, the Middle East, Africa or Latin America that make it even to the 40s mark on their political corruption scale. The vast majority of the countries in these parts of the world are in the 30s and 20s, or less levels under TI’s scale.

As part of their annual survey on global corruption a few years ago, TI also asked people the frequency with which they had to pay bribes to government officials of one type or another in attempts to get by in their daily lives. In North America, one percent of Canadians surveyed said they bribed someone in government. In the United States that reply was given by two percent of the people asked.

But even in countries that have long been members of the EU bribery was reported. The worst occurred in Greece, where 27 percent of the people said they paid bribes during the preceding year. In most of Western Europe the bribery level was around 2-3 percent of the population, though the number was 6 percent in Luxembourg. (The bribery question was not asked in Germany and Italy.)

Bribery is far more endemic in the rest of the world. Africa suffers from political bribery the most, with 42 percent of all those in the countries surveyed saying they had paid bribes. The most extreme case was found by TI in Cameroon, where 79 percent – almost four out of every five people – admitted paying bribes, with the number being 40 percent of the people in neighboring Nigeria.

Bribing the Police

In Asia, the overall rate of bribe giving was reported to be 22 percent of the population. The highest rates were found in Cambodia (72 percent), Pakistan (44 percent), the Philippines (32 percent), Indonesia (31 percent), India (25 per- cent), and Vietnam (14 percent).

Finally, in Latin America, the average bribery rate was recorded at 13 percent of the people. But as in the rest of the world, it varies from country to country. Among the handful of Latin American countries surveyed, the highest rate was in the Dominican Republic with 28 percent. Bolivia followed with 27 percent.

Around the globe, the most bribes are paid to the police. In Africa, 47 percent of the respondents said they bribed the police; in Asia, 33 percent; in Latin America, 23 percent; and in Eastern Europe, almost 20 percent. Worldwide, about 17 percent of the people in the survey paid bribes to the members of law enforcement.

Bribing people in the judicial system came next, with the global response being about 8 percent of all those surveyed. About the same percentage around the world said they bribed government agents for business licenses and permits, though again the highest rates were in Africa (23 percent) and Asia (17 percent). But even in the United States and Canada, around 3 percent admitted paying such bribes.

Medical care is also a major area for such corruption. In Africa, 24 percent of the respondents said they paid bribes for access to medical services; in Asia, the response was 10 percent; in Russia and Ukraine, 13 percent; in Eastern Europe, 8 percent; in the EU, almost 5 percent; and in North America, 2 percent.

The Cause of Corruption

Political corruption, clearly, is found everywhere around the world and people, regardless of where they live, do not expect it to go away anytime soon. Yet, in spite of its global dimension, corruption pervades some parts of the world more than others and permeates certain corners of society to a greater degree. Why?

Part of the answer certainly relates to issues surrounding ethics and culture. The higher the degree of personal honesty and allegiance to ethical codes of conduct, the more we might expect people to resist the temptations of offering or taking bribes. However, economic and business analyst, Ian Senior, in his, Corruption – the World’s Big C: Cases, Causes, Consequences, Cures (2006), concluded that there were no significant correlations between high degrees of personal honesty and religious practice and less bribe-taking around the world.

A far stronger explanation can be found in the relationship between the level of corruption in society and the degree of government intervention in the marketplace. In a generally free market society, government is limited to the protection of the citizenry’s life, liberty, and honestly acquired property. The rule of law is transparent and assures impartial justice for all. Any other functions taken on by the government are few in number, such as a variety of public works projects.

Under these circumstances, government officials have few regulatory or redistributive responsibilities, and therefore they have few special favors, privileges, benefits, or dispensations to “sell” to some in the private sector at the expense of others in society.

The smaller the range of government activities, therefore, the less politicians or bureaucrats have to sell to voters and special interest groups. And the smaller the incentive or need for citizens to have to bribe government officials to allow them to peacefully go about their private business and personal affairs.

Influencing Market Outcomes

On the other hand, the very nature of the regulated economy in the interventionist state is to short-circuit the free market. The interventionist state goes beyond protecting people’s lives and property. Those in power in the interventionist state intervene by using government authority to influence the outcomes of the market through the application of political force.

The government taxes the public and has huge sums of money to disburse to various programs and projects. It imposes licensing and regulatory restrictions on free and open competition. It transfers great amounts of income and wealth to different groups through sundry “redistributive” schemes. It controls how and for what purpose people may use and dispose of their own property. It paternalistically imposes legal standards influencing the ways we may live, learn, associate, and interact with others around us.

Those in the government who wield these powers hold the fate of virtually everyone in their decision-making hands. It is inevitable that those drawn to employment in the political arena often will see the potential for personal gain in how and for whose benefit or harm they apply their vast life-determining decrees and decisions. Some will be attracted to such “public service” because they are motivated by ideological visions they dream of imposing for the “good of humanity.”

Some will see that bribing those holding this political power is the only means to attain their ends. This may be to restrict or prohibit competition in their own corner of the market or to acquire other people’s money through coercive redistribution. For others, however, bribing those who hold the regulatory reins may be the only way to get around restrictions that prevent them from competing on the market and earning a living.

The business of the interventionist state, therefore, is the buying and selling of favors and privileges. It must lead to corruption because by necessity it uses political power to harm some for the benefit of others, and those expecting to be either harmed or benefited will inevitably try to influence what those holding power do with it.

The Correlation between Freedom and Corruption

For 23 years the Heritage Foundation in Washington, D.C., has sponsored an annual Index of Economic Freedom (IEF). The IEF tracks a series of 10 measured indicators that include the following:

(1) business freedom; (2) trade freedom; (3) level of fiscal burden; (4) size of government; (5) degree of monetary stability; (6) investment freedom; (7) financial freedom; (8) protected private property rights and the general rule of law; (9) flexible labor markets; and (10) freedom from corruption.

The premise is that the greater the degree of individual freedom, the more secure property rights, the smaller the size and intrusiveness of government in the marketplace, and the greater the open competitive market environment at home and in foreign trade, then the more likely a society will experience rising prosperity and higher standards of living over time.

No country in the world is free from some degree of government intervention and regulation. Unfortunately, the nineteenth-century era of relative laissez-faire is long gone. But the extent to which governments intrude into the economic, social, and personal activities of their citizens does vary significantly around the globe. This includes the extent to which citizens are protected by an impartial enforcement of the rule of law, have the freedoms of association, the press, and religion, and the right to democratically participate in the selection of those who hold political office.

The Index of Economic Freedom, in its 2017 edition, estimates that based on composite scores of all ten indicators, the greatest amount of economic freedom can be found in the following parts of the world: Hong Kong, Singapore, New Zealand, Switzerland, Australia, Estonia, Canada, the United Arab Emirates, Ireland, and Chile. The United States ranks only 17 in the world by the Index of Economic Freedom benchmarks. Ten years ago, before the Barack Obama presidency, America ranked fourth in the world.

Regionally, North America, Western Europe, and Australia/New Zealand are estimated by Transparency International to be the areas of the world in which the lowest rates of corruption are to be found. The Index of Economic Freedom also ranks these parts of the globe as generally having the greatest amount of economic freedom or the least intrusion of government intervention (broadly defined) within the marketplace.

On the other hand, Africa, Asia, and Latin America are the parts of the globe with the highest reported amounts of bribery, and are also the areas that IEF estimates as far lower in the global rankings for degrees of economic freedom. Among the 180 countries included in the Index of Economic Freedom, many (though certainly not all) of the ones that Transparency International estimates as having particularly high levels of corruption are ranked at the bottom one-third in terms of economic freedom from government intrusion.

The correlation between a global low ranking in terms of economic freedom and a high reported rate of political corruption is certainly not one-to-one. There are many variables at work, including the extent to which different types of freedom used in the IEF surveys are restricted in the respective countries. Thus, domestic property rights might be legally more secure in one country compared to others, but that country may have a higher rate of price inflation and more restricted labor markets, resulting in it having a lower economic freedom ranking in the index compared to other nations.

But the assertion can be safely made that the wider and more intrusive the degree of government intervention, the greater the likelihood of a higher level of experienced and perceived corruption. The more the government interferes with marketplace transactions (e.g., through price and production controls, or import and export restrictions and quotas, or business licensing and permit rules, or high, complex, and arbitrary taxation), the more need and incentive for people to bribe those in political power to free or reduce the heavy hand of government over their lives.

Ending global political corruption in its various “petty” and “grand” forms, therefore, will only come with the removal of government from social and economic life. When government is limited to protecting our lives and property, there will be little left to buy and sell politically. Corruption then will be an infrequent annoyance and occasional scandal, rather than an inescapable aspect of today’s social and economic life around the world.

This piece was culled from FEE.org

Richard M. Ebeling

Richard M. Ebeling is BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina. He was president of the Foundation for Economic Education (FEE) from 2003 to 2008.

 

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A Liberty Reading List to Finish Up Your Summer

Summer is the perfect time to settle into a slower pace of life and savor a great book, whether it’s an old favorite that you continue to enjoy or an unfamiliar one with new ideas to ponder. And so before the summer ends, I have a challenge for you: I’m going to share five of my favorite books and essays with you, and I’m hoping you’ll read at least one before the beginning of the semester.

Not only are these fun summer reads, they are classic works that were foundational to my intellectual journey as an economist. They will shape the way you think about society while helping you articulate your beliefs about how to effect human prosperity and liberty across the world.

  1. “I, Pencil” by Leonard Read. This essay changed not only my views about the economy but my classroom teaching as well. It is timeless and action-packed. This short essay is written from the perspective of a pencil about how it came into being. There is so much economic thinking in this little story. It turns out that the ordinary pencil, which we take for granted and is seemingly so simple, is actually quite sophisticated: so much so that no one person, not even the CEO of the pencil company, knows how to make it. It is a story of the coordination of millions of strangers who come together to serve each other. If you haven’t read this essay, put it at the top of your list, and if you have, it’s a great one to read again!
  2. We the Living by Ayn Rand. Can you imagine the atrocities of living under Communist rule? This book takes us there, and it’s a great introduction to Rand if you are new to her work. We the Living remains my favorite Rand novel. It’s not a book about economics per say, but about economic systems and how they are so critical to whether we thrive or perish — both personally and socially.
  3. Economics in One Lesson by Henry Hazlitt. I love this short, pithy book written in 1946 by American journalist Henry Hazlitt because of how easy it is to understand — it’s both accessible and timeless. Hazlitt begins by encouraging us to think like economists by seeing the unseen and forcing us to take the long-term perspective so that we fully account for the costs of our actions. I come back to this book every year and am reminded of the power of the economic way of thinking.
  4. Basic Economics by Thomas Sowell. This book does not disappoint and is loaded with stories and evidence to help elucidate the economic way of thinking. Economist and author Thomas Sowell takes us through the market system of prices, property rights, profits and losses, and the mechanisms for increasing human productivity and prosperity. Using stories and evidence throughout, he helps us see the follies of policies that don’t properly incorporate the fundamental economic realities of the world in which we live. I not only love reading this book time and again, but it makes a great holiday gift as well!
  5. “The Law” by Frederic Bastiat. What if the law becomes a method of theft and plunder instead of an instrument of protection? In this compelling essay, Bastiat helps us see the importance of the rule of law as the foundation of a productive society. He tears down the old notions of political theorists who thought that elected officials could disavow themselves of their self-interest and greed and put on the cloak of the people to serve the common good. Bastiat shows us that the law is a force for good only when political leaders must also submit to it. Otherwise, it is a source of plunder. Originally published in 1850, Bastiat foreshadows the rent-seeking culture and special interests who distort lawmaking today.

Summer is a great time to catch up on the classics – and to reread your favorites with a new perspective. These readings will help you get a jump on the school year and engage in articulate discussion about these issues with your professors and peers.

I hope you find this list to be a helpful starting place in understanding economics and liberty. Which books and essays would make your top 5 list? And if you’ve already read the ones I’ve listed here, why do you think others should read them?

Reprinted from Learn Liberty.

 

Anne Rathbone Bradley

Dr. Bradley is Vice President of Economic Initiatives at the Institute for Faith, Work and Economics.

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