Clicking on banner ads enables JWR to constantly improve
Jewish World Review April 8, 2002 / 27 Nisan, 5762

Amity Shlaes

Amity Shlaes
JWR's Pundits
World Editorial
Cartoon Showcase

Mallard Fillmore

Michael Barone
Mona Charen
Linda Chavez
Ann Coulter
Greg Crosby
Larry Elder
Don Feder
Suzanne Fields
Paul Greenberg
Bob Greene
Betsy Hart
Nat Hentoff
David Horowitz
Marianne Jennings
Michael Kelly
Mort Kondracke
Ch. Krauthammer
Lawrence Kudlow
Dr. Laura
John Leo
David Limbaugh
Michelle Malkin
Chris Matthews
Michael Medved
MUGGER
Kathleen Parker
Wes Pruden
Sam Schulman
Amity Shlaes
Tony Snow
Thomas Sowell
Cal Thomas
Jonathan S. Tobin
Ben Wattenberg
George Will
Bruce Williams
Walter Williams
Mort Zuckerman

Consumer Reports

Is terror the flip side of globalization?


http://www.NewsAndOpinion.com | Is Latin America heading for trouble because liberal economics failed there? Does September 11 prove the sunny economic focus of the 1990s naive?

No, no and no, free marketeers would argue. But even they concede that making the case for the all-healing powers of commerce has become harder lately.

Beleaguered free marketeers may find useful ammunition in a new television documentary. On Wednesday evening in the US, PBS will air the first segment of a mini-series that lays out the free market world view on a scale not seen since Milton Friedman hosted Free to Choose 22 years ago. UK networks will show the series soon.

The Commanding Heights is largely historical, tracing the battle between free marketeers and central planners from the collectivisation of Soviet agriculture to the fires of September 11. (The title comes from that great wordsmith, Vladimir Lenin. Produced by William Cran, based on the book of the same title by Daniel Yergin and Joseph Stanislaw )

The series also offers a bit of wisdom for the now queasy, war-driven west: never forget economics. The overwhelming demands of a war - be it the cold war or the war on terror - must not obscure a simple truth: without the expansion of trade, there can be no long-term stability.

This is not as self-evident as it sounds. Governments tend to have two modes: the peacetime mode and the military one. And once the military mode switches on, economics tend to be subordinated. Free market steps are dismissed as a peacetime luxury.

Consider, first, the role of war culture and the challenge to markets in the past. Britain's sacrifices in the second world war created the mood of national solidarity that laid the ground for its postwar determination to build a better society. Under Clement Attlee and later Labour leaders this meant the nationalisation of industry and healthcare. Whatever the motivation behind them, these ideals were eventually a factor in bringing Britain to its economic knees. It was the fading of the culture of wartime unity that permitted the rise of that champion of markets, Margaret Thatcher, and Britain's 1990s successes.

In post-colonial India, the nation's awkward cold-war position between two superpowers led it to focus on self-sufficient modernisation, implemented from the top down.

"To develop meant to harness science and technology" - not to free them - as the producers of The Commanding Heights summarise. The British Raj was replaced by a "permit raj", a protectionist bureaucracy. Only after the cold war had receded did India liberalise and achieve the growth its over- engineered modernisation had failed to generate.

Latin America, too, had cold-war challenges to overcome. Soviet and Cuban influence helped bring to power Socialist leaders who wrecked their economies. Where it took place, the switch to freer markets was extremely painful for all involved. It is worth recalling that to reform Chile, economist Milton Friedman had to associate with the Augusto Pinochet regime and therefore subject himself to a worldwide hate campaign (some of the best footage in The Commanding Heights shows Mr Friedman's jaw tightening as protesters disrupted his receipt of the Nobel Prize). But the results Mr Friedman generated were more humane than socialism: a violent dictator's free market plan yielded, eventually, the end of dictatorship and a chance of prosperity.

In the case of the Soviet Union, the headquarters of the control culture, we also learn a few things. The producers of The Commanding Heights interview Oleg Gordievsky, a Soviet official who spied for Britain. His handlers were interested only in his military information: "The west neglected the foundation of the argument, the economy" - the Soviet Union's vulnerable under- belly. Western intelligence reports generally vastly overestimated the strength of Communist bloc economies. (As recently as the late 1980s, our most esteemed analysts were convinced East Germany's economy was as big as Britain's.) Cold-war myopia deprived western leaders of vital knowledge.

Last, there were the outliers, the Middle East and Africa - cold-war casualties of another sort. Some of their territories were cold-war battlegrounds - such as Angola and Afghanistan. Others suffered indirectly from the cold-war policy of containment, which tolerated dictatorship in exchange for the promise of secure oil flows (Saudi Arabia, Iraq). The result was that citizens of both groups were shut out of globalisation, helping to foster a climate in which terrorism could breed more easily.

And now? In Latin America, liberalisation is again challenged. The Commanding Heights tells us liberalisers should not be deterred. If, as the programme argues they should be, property rights are honoured and individual enterprise is rewarded, prosperity is not impossible.

In the Middle East, the message is that war alone cannot make the rest of the world safe. Today the spotlights are trained on the chemical stores of Saddam Hussein, as they once were on Moscow's missile arsenal. But without economic and political liberalisation, stability will not come.

These points may seem obvious but they are worth rehearsing at this moment of peculiar uncertainty. However horrible the threat of terrorism, however disastrous the economic troubles of certain regions, the challenges today are less than those that were presented by communism.

The concerned guardians of markets should take heart. The lesson here is that hesitation alone can lose them the spot they have secured on the commanding heights.


JWR contributor Amity Shlaes is a columnist for Financial Times . Her latest book is The Greedy Hand: How Taxes Drive Americans Crazy and What to Do About It. Send your comments by clicking here.

Up

03/20/02 Bush gives aid but seeks results
03/13/02 The Danger in policy by numbers
02/26/02 :States' smokescreen for tax hypocrisy
02/20/02: Echoes of leadership against a global threat
02/13/02: Jackson Vanik May be a Useful Analogy When Thinking About the Middle East
02/07/02: Budgeting for victory: Requiem for a peace dividend
02/05/02: The detectives of 1930s pulp fiction had a nose for clients bearing gifts. Sadly, those consulted by Enron did not
01/22/02: Allow all American children a decent chance
01/15/02: Do not disturb the profit-sharing revolution
01/09/02: It is dangerous to elevate a currency as a political emblem if the need for other economic reforms is obscured
01/03/02: There is only one way for a free thinker to bring up children
12/20/01: Why America's economy always bounces back
12/18/01: When it comes to taxes, Washington lawmakers can learn a thing or two from The Honeymooners
12/13/01: Bush opens a new era
12/12/01: A flamboyant reversal for the Democratic party
12/06/01: Threat of an oil embargo on the U.S. is a bluff
11/29/01: Which is more important--the war or diplomatic comity?
11/20/01: Unbalanced by a wealth of oil and diamonds
10/17/01: Afghanistan Needs a General MacArthur
09/27/01: The US has gained an understanding of the costs of war for which its European allies have hitherto wished in vain
09/13/01: War against terrorism will rise from the ashes
08/15/01: Geography is no excuse for the state's economic stagnation. Its policymakers should take a leaf from Ireland's book
08/07/01: Teamsters may pay a heavy price for winning its batle in Congress
07/25/01: Towards a patent-free nirvana?
07/17/01: History proves the lasting value of tax cuts
07/10/01: Stem cell research has awakened a bitter debate in Washington but voters care more about other electoral issues
07/03/01: America foots the bill for Europe's largesse
06/26/01: America the litigious, land of the lawyer's fee
06/20/01: Five reasons for gloom about global growth 06/18/01: Show pity for Alice in Tax Wonderland
06/13/01: America must take a French lesson in trade
06/11/01: Time to dream the impossible dream for Iraq
06/07/01: Whatever happened to simple?
06/04/01: When the relationship between companies becomes as close as a marriage, the eventual break-up is often very painful
06/01/01: Loving and hating the Bush tax bill
05/30/01: Will Grisham soon be unemployed? In America's courts these days, there's no room left over for legal fiction
05/22/01: Republicans sample the rhetoric of confidence
05/16/01: Boeing has been promised $60m to site its headquarters in Illinois. The deal looks a poor one for taxpayers
05/14/01: Adam Smith in love
05/09/01: Those rotten Russian capitalists
05/07/01: Why tax havens provide shelter for everyone
05/04/01: Middle classes pay for get-the-rich folly
05/01/01: Money can't buy happiness? Think again.
04/26/01: Calling America's rogues and entrepreneurs
04/19/01: High earners right to feel lonely at the top
04/11/01: The right must learn the comfort of strangers
04/04/01: When domestic law arrives by the back door
03/30/01: A Lexus tax cut suits the jalopy driver
03/27/01: The unchallenged dominance of King Dollar
03/20/01: Natural selection of an intellectual aristocracy
03/16/01: The hidden danger of a regulatory recession
03/14/01: Is the American condition that boring? Why so many Oscar nominated movies aren't set in America
03/07/01: Trampling on the theory of path dependence
03/05/01: Fighting the good fight
03/01/01: It is time for Fannie and Freddie to grow up
02/27/01: IT's important
02/22/01: The guilty conscience of America's millionaires
02/14/01: The benefits of helping the 'rich'
02/09/01: The Danger and Promise of the Bush Schools Plan
02/05/01: Crack and Compassion
01/31/01: Debt is good
01/29/01: Clueless
01/24/01: A gloomy end for a half-hearted undertaking
01/17/01: The challenge of an ally with its own mind
01/15/01: An unexpected American family portrait
01/10/01: A fitting legacy for America's beloved dictator
01/08/01: The trick of tax 'convenience'
01/03/01: Time to stop blaming Greenspan over taxes
12/11/00: So smart they're dumb
12/06/00: How economic bad news came good for Bush
12/04/00: The Boies factor
11/30/00: "The inevitable demands for recounts erupted like acne…"
11/28/00: Fair play and the rules of the electoral game
11/23/00: The shining prospect beyond a cloudy election
11/21/00: Try the Cleveland model
11/16/00: A surprising winner emerges in the US election
11/09/00: Those powerful expats
11/07/00: What's right for America versus what works
11/02/00: Time to turn off big government's autopilot
10/30/00: Canada beating America in financial sensibility
10/26/00: When progressiveness leads to backwardness
10/24/00: The most accurate poll
10/19/00: The Middle East tells us the hawks were right
10/17/00: The split personalities of America's super rich
10/10/00: 'Equity Rights' or Wake up and Smell the Starbucks
10/04/00: Trapped in the basement of global capitalism
09/21/00: The final act of a grand presidential tragedy
09/21/00: Europeans strike back at the fuel tax monster. Should Americans follow?
09/18/00: First steps to success
09/13/00: America rejects the human rights transplant
09/07/00: Minimum wage, maximum cost
09/05/00: Prudent Al Gore plans some serious spending
08/31/00: A revolution fails to bring power to the people
08/28/00: A reali$tic poll
08/21/00: "I Goofed"
08/16/00: Part of the union, but not part of the party
08/09/00: Silicon Alley Secrets
08/02/00: Radical Republicans warm up for Philadelphia
07/31/00: I'll Cry if I Want To
07/27/00: Cold warrior of the new world
07/25/00: The Estate Tax will drop dead
07/18/00: Shooting down the anti-missile defence myths
07/14/00: A convenient punchbag for America's leaders
07/07/00: How to destroy the pharmaceutical industry
07/05/00: Patriots and bleeding hearts
06/30/00: Candidates beware: New Washington consensus on robust growth stands the old wisdom on its head
06/28/00: White America's flight to educational quality
06/26/00: How Hillary inspired the feminist infobabes

© 2001, Financial Times