Thursday, January 26, 2006

Hamas Tests Democracy

Winning elections involves building coalitions. Politics is a game of addition. As a rule, the process pushes politics toward the middle, moderation, "the Golden Mean." But politics builds upon the most deeply-felt longings and needs of its participants. When the economy isn't working, with unemployment high and incomes low, extremist outcomes are more likely.

Democracy may not last in Palestine. But Hamas' rise to power there seems almost certain to focus more attention on the issue that brought its victory--the completely unsatisfactory state of Palestine's economy. Fatah's corruption gave Palestinians a ruling group that had it faced real competition earlier, would have better understood the imperative of making the economy work. And Israel too much secures its future through military power now, jobs for Palestinians later.

Hamas is changing Palestinian priorities, and whose to say the people of Palestine--and Israel--won't benefit as a result? Democracy requires listening, and it requires patience.

Tuesday, January 24, 2006

State Department Endorses Capitalism + Democracy = Peace

Secretary of State Rice has endorsed the worldview expressed by this blog. In her address to Georgetown’s School of Foreign Service (1/18), Rice said:

"The fundamental character of regimes now matters more than the international distribution of power. In this world, it is impossible to draw neat, clear lines between our security interests, our development efforts and our democratic ideals [emphasis added]. American diplomacy must integrate and advance all of these goals together."

Our security interests are nations at peace. Our development efforts revolve around encouraging and supporting free markets that create widespread prosperity, and help secure democratic ideals. Capitalism + Democracy = Peace.

Rice also recognizes, in the words of Tip O’Neill, that “all politics is local.” The face on a regime can change tomorrow; stability comes from having the right system, not from successfully wooing a potential friend. Rice is rejecting concentrating on an “international distribution of power” that takes nations at face value, accepting their current leaders along with their flags and passports. We should instead look behind each nation’s external power to the strength or weakness of the system that supports it—to its internal (“local”) politics.

To move forward, toward a world at peace, we encourage the development of nations, one at a time, that build free enterprise economies that lead to democracies.

Saturday, January 21, 2006

American Exceptionalism

America is more an idea than a place or culture. It is the "land of opportunity" in its most meaningful sense, welcoming people from anywhere and providing the legal framework for newcomers with little to offer but hard work the chance to open a business and begin competing with firms generations old. Americans believe, along with Abraham Lincoln, that the United States is a nation "conceived in liberty, and dedicated to the proposition that all men are created equal." And equality means a fair shake at competing in our markets.

Our remarkable Bill of Rights, forged over 200 years ago, protects the individual against Big Government and the tyranny of the majority. It secures democracy and helps capitalism flourish. The genius of capitalism and democracy is freeing every individual to the opportunity to contribute to their fullest potential--which makes the economy prosper and makes government better.

De Tocqueville created the term "American exceptionalism" as part of his 1831 effort to explain America to Europe. In the 20th Century, we fought in two world wars and a Cold War to help make the world "safe for democracy," taking abroad our belief in American exceptionalism. The Vietnam War represented a defeat for the U.S., and for American exceptionalism, and tought a generation of Americans to be on guard against leaders who make war to expand democracy.

Today, America remains divided over the issue of how far we should go to secure democracy aborad. Iraq sharpens the debate. Yet can we all agree that America is part of the world, it cannot exist in isolation, and how other countries use and support their human resources has to be of concern to us?

Thursday, January 19, 2006

Free Markets Create Wealth

Tom Friedman, in his important work The World is Flat, discusses how free markets best create wealth in developing countries (p. 323). Friedman quotes from a study by the World Bank's International Finance Corporation, which studied developing world wealth creation, to make these five points:

One, simplify and deregulate wherever possible in competitive markets, because competition for consumers and workers can be the best source of pressure for best practices, and overregulation just opens the door for corrupt bureaucrats to demand bribes. "There is no reason for Angola to have one of the most rigid employment laws if Portugal, whose laws Angola adapted, has already revised them twice to make the labor market more flexible," says the IFC study.

Two, focus on enhancing property rights. Under de Soto's initiative, the Peruvian government in the last decade has issued property titles to 1.2 million urban squatter households. "Secure property rights have enabled parents to leave their homes and find jobs instead of staying in to protect the property," says the IFC study. The main beneficiaries are their children, who can now go to school."

Three, expand the use of the Internet for regulation fulfillment. It makes it faster, more transparent, and far less open to bribery.

Four, reduce court involvement in business matters.

And last but certainly not least, advises the IFC study, "Make reform a continuous process ... Countries that consistently perform well across the Doing Business indicators do so because of continuous reform."

Competition. Continuous reform. Creation of wealth.

Tuesday, January 17, 2006

Moving Forward

We want a world at peace. We know peace takes work. How do we bring peace closer? Democracy, because democracy is about listening, and it's about patience. When Winston Churchill talked about democracy being "the worst form of government except for any other that has been invented," he was speaking from the frustration of leading a democracy, where one has to listen and has to be patient. Democracy calls for tolerance.

Peace and democracy. Taylor Branch said yesterday, speaking of Martin Luther King's life on the day dedicated to him, that King was completely committed to the
nonviolent path that leads to voting and winning elections. As Branch noted, "Every vote is a piece of nonviolence." Ballots, not bullets.

And capitalism? Capitalism is the foundation of progress on democracy and peace. In 1900, only 8% of the British population voted, but Britain was successfully capitalist, and its system not only produced a full-fledged democracy at home by the 1920's, it also yielded up the largest democracy on earth with Gandhi's India. In Japan, Taiwan, and Korea, capitalism came first, then democracy. China is now moving down the same path.

The three great ideas of our century are moving the world forward.