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Freeing American Families

Blog Post | Health & Medical Care

Freeing American Families

In their new paper, Vanessa Brown Calder and Chelsea Follett propose reforms to make family life easier and more affordable.

Fertility is on the decline in the United States and around the world. Although some commentators celebrate population declines for environmental or other reasons, others fear that below‐​replacement fertility will result in negative economic and social consequences. As a result, many countries are pursuing various policies intended to boost fertility rates, such as baby bonuses, cash benefits for families with kids, paid family leave, and universal childcare. In the United States, members of Congress in both parties favor greater federal intervention to boost fertility rates or to support families more generally.

However, such policies are costly and have limited effects on fertility. International evidence indicates that expensive efforts to subsidize childbearing have failed to raise countries’ fertility to replacement levels and sustain fertility rates there. They typically fail even to meet policymakers’ more modest fertility objectives. Recent estimates suggest that fertility initiatives in the United States would be similarly misguided, with some $250 billion in annual subsidies needed to achieve a modest increase of 0.2 extra children per woman.

Although policymakers should avoid implementing similar initiatives, many other reforms would make family life easier and more affordable. This study proposes reforms to labor laws, child safety policies, tax and trade policy, and health policies that affect birth and conception, in addition to education, housing, and safety policy changes that would reduce the cost of raising children. Evidence suggests that some of these reforms could boost fertility, for instance, by reducing work‐​life tradeoffs or other intensive parenting requirements. However, these reforms are also worthwhile as standalone measures that improve family life.

Read the full paper here.

Blog Post | Urbanization

Introducing Centers of Progress: 40 Cities That Changed the World

“Cities, the dense agglomerations that dot the globe, have been engines of innovation since Plato and Socrates bickered in an Athenian marketplace,” as urban economist Edward Glaeser explains in his book The Triumph of the City.

Athens’s storied breakthroughs in philosophy are but one example of how cities have often been the sites of pivotal advances throughout history. Kyoto gave us the novel. Bologna gave us the university. Florence gave us the Renaissance. Paris gave us the Enlightenment. Manchester gave us the Industrial Revolution. Los Angeles gave us cinema. Postwar New York gave us modern finance . . . the list goes on. As Glaeser also notes, “Wandering these cities—whether down cobblestone sidewalks or grid-cutting cross streets, around roundabouts or under freeways—is to study nothing less than human progress.”

If you’re not able to travel to each of these extraordinary cities, perhaps the next best thing is to embark on a virtual tour from the comfort of your home. To that end, I wrote a book surveying 40 of history’s greatest urban centers, showcasing each city at a moment in time when it notably contributed to progress.

Centers of Progress: 40 Cities That Changed the World offers a fact-filled yet accessible crash course in global urban history, spanning from the agricultural revolution to the digital revolution. This book affirms the importance of cities to the story of human progress and innovation by shining a spotlight on some of the places that have helped create the modern world.

The book’s chapters can guide you through the Library of Alexandria, the stock exchange of Dutch Golden Age-era Amsterdam, and the pubs of Edinburgh during the Scottish Enlightenment, all in an afternoon.

Centers of Progress “takes the reader on a time-travel cruise through the great flash points of human activity to catch innovations that have transformed human lives” at their moment of invention, according to writer Matt Ridley in the insightful foreword that he kindly provided. Come explore Agra as the Taj Mahal was erected and Cambridge as Isaac Newton penned the Principia. Meet engineers in Ancient Rome, Silk Road merchants in Tang Dynasty Chang’an, music composers in 19th-century Vienna, and Space Age flight controllers in Houston.

Learning about past achievements may even hold the secret to fostering innovation in the present.

As I note in the book, “Although there are some exceptions, most cities reach their creative peak during periods of peace. Most centers of progress also thrive during times of relative social, intellectual, and economic freedom, as well as openness to intercultural exchange and trade. And centers of progress tend to be highly populated. . . . Identifying those common denominators among the places that have produced history’s greatest achievements is one way to learn what causes progress in the first place. After all, change is a constant, but progress is not.”

From the fall of the Berlin Wall to Hong Kong’s transformation from a war-ravaged “barren island” into a prosperous metropolis, many of the stories featured in Centers of Progress hold valuable lessons about the importance of ideas, people, and freedom. I hope that you will consider joining me on a journey through the book’s pages to some of history’s greatest centers of progress.

Blog Post | Energy & Environment

From Poverty to Progress

How division will stifle US prosperity.

This article originally appeared in the Washington Examiner on August 10, 2023.

Why isn’t everyone in dire poverty, hungry, diseased, illiterate, missing teeth, eking out a subsistence existence in the wilderness, and making do with Stone Age technology? After all, that’s how we started. Penury is the default state of humanity, as is a lack of technology. In fact, advanced technology and widespread prosperity are relatively recent innovations.

What has allowed all the progress we’ve experienced to date to take place? And what stands in the way of further advancement? In his valuable bookFrom Poverty to Progress: Understanding Humanity’s Greatest Achievement, Michael Magoon seeks to explain progress’s origins and enemies.

First, Magoon offers a sweeping overview of how the world has changed into a place where an increasing number of people enjoy prosperity, peace, advanced medicine, and other wonders of modern life. With graphs and data, Magoon demonstrates the historical and ongoing transformation of the human experience “from poverty to progress.” Magoon provides a valuable service in painstakingly recording the many ways in which our ancestors would envy modern life.

Magoon then explains the origins of the metamorphosis. He dispels popular but mistaken ideas about the roots of progress, such as the fallacy that progress comes from the government — he writes, “Throughout history governments have done far more to hinder progress than they have done to promote it” — or from politicians or top-down policies by brilliant planners. “Rather than flowing down from politics and government, progress bubbles up from society,” he notes.

Magoon then shows how that occurs. His theorized five keys of progress are food, trade, decentralization, industry, and energy.

A “highly efficient food production and distribution” system is a prerequisite for progress, he claims. The next two keys are the ability to engage in trade, mutually beneficial exchange, and decentralization of power, freeing humanity from the restrictions that come with a controlling central authority and fostering nonviolent competition.

Another key to societal advancement is developing at least one high-value-added industry that exports, he claims. As he notes, plentiful energy promotes progress. Historically, obtaining such energy has involved the use of fossil fuels.

With these five keys in hand, humans unlock new solutions and copy solutions others have achieved.

To unlock further progress, I would add an economic liberty key ensuring all of a society’s people can participate in the market processes of innovation and exchange. I might also add a communications technology key involving written language, without which transmitting ideas over time or across distances is difficult. Still, Magoon’s list holds considerable explanatory power.

The preconditions for progress that he names are relatively recent and rare in the grand sweep of history. Moreover, transitions toward attaining the keys to progress have not occurred everywhere at once and have only been achieved unevenly. Magoon thus recognizes that societies across history and the globe often differed dramatically in their tendency to stifle or foster innovation. He discusses many types of societies, such as hunter-gatherer societies, agrarian societies, herding societies, industrial societies, and commercial societies. He sees each society type as a logical adaptation to a particular environment.

The book concludes with an examination of the current constraints on progress, including geography, extractive institutions, geographic and cultural distance separating poor countries from rich ones and discouraging the former from copying the latter, monopolies stifling competition, historical legacies inhibiting change, and identity-based rationales for stagnation. (“We have our own ways.”) But he says the biggest threat to progress, which could unravel the conditions for innovation in the rich countries, is divisive ideologies.

Because society primarily comes from self-organizing, experimenting with solutions, and then copying the solutions that work, a centralized government driven by ideology inherently attacks the very foundations of progress.

Divisive ideologies split people into groups of good and evil, often along class, racial, religious, or urban/rural divides. Magoon notes that the ideology called “critical theory” (also often known as “wokeness”) may be a particular threat to progress because of its current spread in the United States, a major innovation center.

A thought-provoking and extraordinarily wide-ranging book, From Poverty to Progress is a must-read for anyone interested in the history, and future, of progress.

Blog Post | Health & Medical Care

Modernization and the Loss of Japan’s Samurai Culture Benefited the Japanese People

Economic, technological, industrial, and other progress radically improved the life of the ordinary Japanese citizen.

Imagine you’re a farmer in Japan in 1850. You pay homage to your feudal lord, wear clothes of plain cotton, eat rice and fish, and are mostly preoccupied with surviving the occasional famine and outbreaks of disease. You likely have no education. Fifty years later, life has changed beyond recognition. Farmers now have an education, have fertilizer to farm with, have access to vaccination, and can use the telegraph and the postal service. They have more money to spend, more leisure time, and access to mass media.

The 2003 movie The Last Samurai portrays Japan during this period of modernization. The film laments the loss of traditional samurai culture amid rising Westernization. The film is inspired by the Satsuma Rebellion, a revolt from disaffected samurai amid the loss of their privileged position in society.

Longing for a privileged past is not unique to Japan; many in Europe romanticize the medieval era as one of knightly chivalry. However, such portrayals usually look at history through rose-tinted glasses. The “good old days” is a common fallacy, with facts becoming more distorted the further one looks back in history.

What really happened in the era of The Last Samurai?

The period takes places after the Meiji Restoration, showcasing the Westernization of Japan. Before this period, Japan was ruled by Tokugawa shogunate, a military dictatorship that had dominated the island for over 260 years. It imposed the foreign policy of Sakoku—that is, one of extreme isolationism. Aiming to reduce the spread of Christianity and cement the power of the shogun, the islands of Japan became closed to foreigners. No one was allowed to enter or leave Japan, and foreign trade was virtually nonexistent. (There was some trade allowed from the Dutch through the island of Kyushu, notably in porcelain.) This period was one of peace, which many in Japan welcomed after the Sengoku Jidai (a period of civil war) of the 1500s.

Conservatives in Japan welcomed this closing of the country to foreign influence. At the time, Japan was dominated by the samurai class. Samurai, while traditionally warriors, had moved in peacetime to become aristocratic bureaucrats at the service of their daimyo, a feudal lord. Samurai had a monopoly on military force and controlled most of education. Merchants were seen as a lower class, even lower than farmers. Feudalism, a system where a lord would rent out land in return for labor from the peasantry, had ended in parts of Europe around 1500. Whereas competition among European powers had created the emergence of a middle class, Japan had remained socially, technologically, and militarily stagnant from 1639 onwards.

As described by Mitsutomo Yuasa in his study The Scientific Revolution in Nineteenth Century Japan:

The traditional society (feudalism) before the Meiji Restoration, namely the age of Edo of Tokugawa Shogunate, was based on pre-Newtonian science and technology, and on pre-Newtonian attitudes towards the physical world.

In 1853, Japanese isolationism came to an end. With the arrival of Commodore Matthew Perry demonstrating a textbook example of gunboat diplomacy, the United States forced an end to Japanese isolationism and the opening of Japanese ports to American trade. In the years that followed, Japan established diplomatic relations with the Western Great Powers and underwent a collapse of the ruling Tokugawa shogunate.

Japan then went through a period of rapid modernization, importing Western technology, ideas, and culture. Ian Inkster describes the impact:

By 1855, Western machinery and factory organization had been introduced at Nagasaki for the maintenance of warships, and a spurt of building began in 1860 under Dutch leadership. It was Englishmen who in 1867 constructed the first steam powered spinning plant, the Kagoshima Spinning Factory. . . . By 1882, the Osaka Spinning Company operated 16 mules, 10,500 spindles and was practically powered by steam. . . . From 1870 to 1872, 245 railway engineers arrived in Japan from Europe. . . . Telegraphic communication was also established by the British from 1871.

The industries that were revolutionized by foreign influence included the iron industry, mining, railways, electricity, civil engineering, medicine, administration, shipbuilding, porcelain, earthenware, glass, brewing, sugar, chemicals, gunpowder, and cement manufacture. Japan developed its staple industry and export product, silk manufacturing and spinning, under guidance from a Swedish engineer using Italian methods. The silk industry also employed a large amount of female labor in Japan, with more women in the industrial labor force in Japan than in any other country in Asia.

The development of technological innovations improved Japanese industry. Ryoshin Minami showed the growth in total horsepower between 1891 and 1937 was in the order of 13 percent annually. The figure below shows the growth rate of development of primary industries during the period between 1887 and 1920, as well as overall economic growth. In many of the years during that period, growth in private non-primary fixed capital was in the double digits.

By the 1890s, Japanese textiles dominated the home markets and competed successfully with British products in China and India. Japanese shippers were competing with European traders to carry these goods across Asia and even to Europe.

The Satsuma Rebellion occurred in 1877, as Japanese government restricted the ability to carry a katana (long sword) in public. Regardless of one’s thoughts on the right to bear arms, the reduction in the power of the samurai class was a win for ordinary Japanese people. Having access to modern medical techniques, transportation, and goods benefited the whole society, rather than just feudal elites. Indeed, many of the samurai were able to adapt to their new roles in a modern Japan, working in business or government. In the 1880s, 23 percent of prominent Japanese businessmen were from the samurai class. By the 1920s, the number had grown to 35 percent.

By 1925, universal manhood suffrage had been implemented, a stark contrast from the Tokugawa shogunate. The social structure had loosened, allowing societal advancement far more easily than in the feudal era. By 1897, 95 percent of citizens were receiving some form of formal education, in contrast to 3 percent in 1853. With a more educated population, Japan’s industrial sector grew significantly. Of course, the new system still had its problems, such as labor strikes and industrial unrest. However, Westernization brought far more economic freedom to the Japanese people. Attitudes to commerce changed. Merchants rose from being the lowest class to becoming a vital part of the burgeoning middle class.

In Japan, progress was seen in economics, science, technology, education, consumer goods, industry, and social mobility. Society and the traditional order had been uprooted, in an example of Schumpeterian “creative destruction.” The inflow of new ideas, of new ways of doing things, allowed people to become freer, wealthier, healthier, and better educated. The opening of Japan was fundamentally an opening to progress. By isolating itself, Japan fell behind the rest of the world. As it opened itself to competition, it was able to catch up, and in some cases, surpass other countries. And the ordinary citizen of Japan was better for it.

Blog Post | Economics

Unlocking Africa’s Potential | Podcast Highlights

David Ansara, the Chief Executive of the Free Market Foundation, a South African think tank, joins Chelsea Follett to discuss progress and problems in Africa.

Listen to the podcast or read the full transcript here.

What is the broad state of progress, free markets, and individual liberty in Africa today?

You must always be cautious about broad brushstroke assessments of Africa, but there are a few general trends we can observe.

During the post-liberation period, there was a trend towards socialist and nationalist policies and highly interventionist states across sub-Saharan Africa. Many African countries were economically isolated. But since the end of the Cold War, there’s been quite an improvement, not only in economic openness but also a broader political liberalization.

However, it’s a mixed picture. There are still significant security concerns in large parts of Africa, and we also have fragile and often hostile state institutions.

What are some strengths and opportunities for Africa?

One big strength is the demographic dividend. Sub-Saharan Africa has a very young population relative to the rest of the world. Young men without jobs tend to cause trouble, but they also have huge productive potential. But you also need an enabling policy framework. You need economic opportunities. You need good education.

Internet access is allowing people to bypass traditional university systems. Before, maybe the elites in Lagos could have gone to study at King’s College in London. Now, anyone can learn the skills they need through Khan Academy or Coursera. Africa’s also located in a very favorable time zone for remote services. So, Africa is well positioned to take advantage of these opportunities.

Another opportunity is the African Continental Free Trade Agreement, which aims to reduce 90% of tariffs over the next 12 years. The rate of trade between African countries is low, roughly 10 to 15%, whereas intra-European trade is north of 60%, so something like the African Continental Free Trade Agreement has potential. However, many non-tariff barriers still exist, such as meddling officials trying to extract bribes and poor infrastructure.

What about the threats to progress on the continent? 

Governance issues remain a big problem, especially corruption. Here in South Africa, we’re dealing with endemic corruption that has resulted in rolling blackouts. That problem extends across all spheres of government in South Africa. President Ramaphosa himself had about $6 million worth of US currency hidden in his couch.

Another major threat is the lack of respect for private property. In South Africa, we have constitutional protection for private property, but there were recent moves to amend the constitution to include expropriation with nil compensation. That amendment was unsuccessful, but now a bill has been introduced in Parliament which tries to, through normal legislation, introduce expropriation without compensation.

Security of tenure is also weak. If you want to purchase property in Mozambique, for example, you have to take a 99-year lease, which is not comforting to a potential investor. Sub-Saharan African countries need to take this seriously, and countries like Botswana and Mauritius that do take it seriously will reap the benefits.

How has the pandemic been for Africa?

What was interesting about the pandemic is that, either through a lack of respect for Covid lockdown restrictions or just the impossibility of enforcing these restrictions, much of sub-Saharan Africa escaped the worst excesses of the lockdowns. People just continued to go about their business. In many respects, I think the developed world was hit harder by the Covid responses.

Sub-Saharan Africa remains the world’s poorest region. How can this region unlock its economic potential?

Economists and policymakers make economic development seem very technically complicated, but the ingredients are actually well-tried and tested. The Economic Freedom of the World Report measures five areas: the size of government, the legal system and property rights, sound money, freedom to trade internationally, and appropriate regulation. When you adjust for purchasing power, the freest quartile of nations in the Economic Freedom of the World Report have average incomes more than seven times higher than those of the least free quartile. Average incomes in the top quartile are about $48,000; in the least free quartile, they are about $6500.

In many African states, government consumption accounts for most of the country’s total consumption, and most of the middle classes in many African countries are civil servants. That has an opportunity cost; somebody working for the government could otherwise have added new value to the economy. Keeping the government small is essential.

One of Africa’s real Achilles’ heels is the lack of respect for private property rights and the rule of law. Many critics of free-market policies, particularly here in South Africa, think private property rights just protect the interests of the wealthy, but it’s the poorest people in society who need private property rights the most. Across Africa, many poor families lack any formal title to their property, and it’s very common for a local official to come and say, “You have to dismantle your shack and move your entire home because we tell you to.” At the Free Market Foundation, we have a project that assists poor homeowners with their property title applications. That is a really impactful way of driving development. You don’t need some massive World Bank loan or a foreign NGO. If you protect people’s property, they will create prosperity for themselves.

Many people in rich countries think foreign aid is the best way to combat poverty. Do you agree?

Charity can be effective, but if you contrast it to, for example, the growth of telecommunications, it’s clear that market forces are creating prosperity orders of magnitude larger than what any NGO can achieve.

One of the problems with aid is political. International aid agencies often prefer or are mandated to work with local governments. In Ethiopia, Meles Zenawi used development funding to distribute patronage in his country to buy political favor. Paul Kagame in Rwanda has effectively played the international donor community and used that favor to entrench his power. Another problem is that much of the funding for these global development projects is used for administration. In a country like Malawi or Tanzania, whenever you see a four-wheel drive motor vehicle in the city, you know it’s being driven by somebody working for an international NGO.

International organizations have a role, for example, in emergency responses to famines. But as Amartya Sen has indicated, liberal democracies with market economies seldom suffer from famines. Those systemic reforms are not as sexy as running a well-funded United Nations project, but they are more durable. GDP per capita has increased by about 30% across Africa in the last 20 years, and that is mostly from removing barriers and letting people get on with their business. People are naturally ambitious. They want to improve their families’ lives, and they want their children’s lives to be better than their own. They just need the right conditions in which to operate.

What are you the most optimistic about regarding Africa’s future? 

I’m actually bullish about Africa.

As you’ve documented so well in your work, the story of human progress is profound. But I get a sense that, in many Western countries, there’s a lack of optimism about the future. I don’t see that in Africa. There’s a sense of imminent change. Many post-liberation movements have declining electoral majorities, which could usher in much more political competition.

Africans also have that fire in their belly. In Western countries, there’s an expectation that living standards have always been a certain way and will remain that way forever. But Africans have a real hustle-and-grind mentality, and that’s going to be able to take them very far indeed. There are strong headwinds: security issues, vulnerability to extreme weather events, and energy issues. But problems breed innovation, and I think Africans have that innovative spirit to change their circumstances and to get things done.