A better path

Savvy WORLD subscribers for years have seen that I have little prophetic ability. My "Paine's brain" column in our Jan. 30 issue proved that once again. I wrote that stopping ObamaCare might require "one of the 60 senators in Harry Reid's corrupt coalition to have a rebellion of the conscience," as in the classic film Mr. Smith Goes to Washington.

I typically hand in my columns well before the cover date, and on Jan. 1 I did not anticipate something even more extraordinary than an individual change occurring on Jan. 19-a whole liberal state switching from faith in Washington to an emphasis on liberty. Future scholars might debate not only God's providence in 1775 but His role in the Massachusetts miracle of 2010.

Now the big question is whether President Obama will think that his problem is merely a failure to communicate. He should read the work of Peruvian economist Hernando de Soto Polar, who describes the "tremendous conceptual error" of his country's leaders in words that should make the Obama administration tremble: "the assumption that, in an urban society swamped by migration, a ruler can know everything that is going on in the country and that a new social order can be built on this presumed knowledge."

As de Soto notes, "In such a society, with millions of people whose specialization makes them interdependent, with complex systems of communication between producers and buyers, creditors and debtors, employers and employees, with a constantly evolving technology, with competition and a daily flow of information from other countries, it is physically impossible to be familiar with and directly run even a small fraction of national activities."

Anyone without a high AQ-arrogance quotient-knows this.

Here's one other relevant de Soto quotation: "It is not rulers who produce wealth: they sit behind desks, give speeches, draft resolutions and supreme decrees, process documents, inspect, monitor and levy, but they never produce. It is the population that produces." That population demands a basic fairness: It is not prepared, either in Peru or the United States, "to accept a society in which opportunities, property, and power are distributed arbitrarily."

De Soto's breakthrough book was The Other Path (1989). He wrote it at a time when a Maoist terrorist group, Shining Path, seemed close to taking over Peru. De Soto saw in "property" not the enemy of the poor but their greatest economic hope: The poor needed to gain clear title to their land and homes so they could use that property as collateral for loans that would allow them to become entrepreneurs.

In The Other Path de Soto celebrated peaceful entrepreneurial disobedience. Peruvian powers tried to lock up markets: De Soto praised street vendors who disobeyed regulations and expanded informal trade. Peruvian powers tried to lock up public transportation: De Soto praised drivers in their vans, station wagons, and mini-buses who disobeyed regulations and got people to work. Leftist ideologues favored governmental redistribution. De Soto praised the initiative of those without homes who moved onto uninhabited and unimproved land.

The worldwide evidence is that big government redistributes wealth to bureaucrats and hurts the poor. People get rich not by investing labor or capital in productive enterprises but by gaining political influence. Businesses begin competing not to serve customers but to build ties with bureaucrats. Political efficiency becomes more important than economic efficiency. Liberal ideologues talk about curtailing lobbyists but in actuality increase their reach: As de Soto notes, "In the redistributive state, the enviable capacity to be generous with other people's money is an invitation to corruption."

De Soto's 1989 critique of Peru's rulers applies equally well to Obama-ites who see government as "a mechanism for sharing a fixed stock of wealth among the different interest groups that demand it." The redistributionist ethos does not acknowledge "that wealth and resources can grow . . . and that even the humblest members of the population can generate wealth." We need pro-entrepreneurship policies that redistribute wealth to those who are shaking up society, not to those who are shaking down business leaders.

Regarding healthcare, it doesn't both me if some doctors become rich by saving lives. Our society becomes poorer if those who could be great doctors instead see that self-preservation requires them to become not-so-great politicians and lobbyists. If you have a question or comment for Marvin Olasky, send it to molasky@worldmag.com. To hear commentaries by Marvin Olasky, click here.