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Real Goals to Empower the Developing World

Alternatives to the U.N.’s Agenda for Sustainable

Development

By Iain Murray

September 2015 ISSUE ANALYSIS 2015 NO. 5

Murray: Real Goals to Empower the Developing World 1

Real Goals to Empower the Developing WorldAlternatives to the U.N.’s Agenda for Sustainable Development

By Iain Murray

Executive SummaryThe United Nations is soon due to replace its ambitiousMillennium Development Goals with a new set of farmore extensive and even more ambitious SustainableDevelopment Goals. However, the U.N.’s approachsuffers from some major flaws. Instead of settingtargets, the world should adopt strategies that haveproven to deliver a healthier, greener, and moreprosperous planet—strategies that also improvethe resiliency of communities to whatever naturethrows at them.

The U.N.’s approach is flawed because it focuses onsimply announcing a slew of targets that are unlikelyto prove achievable, especially as there are tradeoffsinvolved in meeting some targets over others.

Moreover, the U.N.’s emphasis on “sustainability,”as generally defined among development bureaucratsand NGOs, imposes significant burdens on developingcountries’ freedom and ability to achieve the rapidincreases in human welfare that were the target of theoriginal Millennium goals.

The U.N. also ignores the lesson of the most successfuldeveloping economies. For instance, Hong Kong andSingapore followed a proven path to prosperity that iscentered on principles that have significantly increasedthe resiliency of their societies.

We therefore recommend five realistic goals thatdeveloping world economies should pursue. They are:

1. Secure Property Rights.Markets, the source ofwealth and prosperity, are impossible without securityin property rights. Governments should make it theirfirst priority to ensure that property rights are recognized

and respected. The Arab Spring began because smallbusinessmen were constantly having their merchandiseand tools of their trade expropriated by officials. Landtitling is one important means of securing these rights.Common property rights should also be officiallyrecognized and reformed. New technologies such asthe Blockchain can help to secure these rights.

2. Secure the Rule of Law. The rule of law reducesarbitrariness in government that can be a huge drainon an economy and human dignity. Research has foundthat improvements in the rule of law can empower thedisadvantaged and help unleash entrepreneurial spiritseven among the most previously oppressed peoples. Asecure rule of law also reduces corruption. Technologycan help deliver this goal, as has been seen ine-governance projects in India. Finally, charter citiescan help deliver a “new start” to governance.

3. Ensure Access to Affordable Energy. Affordableenergy is key to unleashing human potential, but theU.N.’s emphasis on sustainability perversely increasesenergy costs. Increased energy costs are an especiallysevere problem for the poor, who spend a larger shareof their income on necessities like energy, shelter, andfood. Higher energy costs are also associated withworse health outcomes. Thankfully, technologicalinnovation in fossil fuel extraction has recentlyreduced energy costs, while reducing emissions in thedeveloped world. Developing countries should allowand encourage use of these technologies to developtheir own energy sectors. Distributed renewable energyhas a small but limited role to play, but investments inadvanced traditional energy can deliver much greaterbenefits to developing nations.

2 Murray: Real Goals to Empower the Developing World

4. Ensure Access to Capital and Credit. Access tocapital is important to unleashing “the fortune at thebottom of the pyramid.” Credit allows those who havecapital to share its benefits with those who do not, tomutual advantage. As noted, land titling process canprovide access to capital, but there are other forms aswell. Microsavings, microinsurance, and microloansare all important and are made possible and moreaccessible by modern communication technology,which lowers transaction costs to unprecedentedly lowlevels. By some estimates, there is an economy of atleast $13 trillion locked up that just needs to be freedup to allow it to benefit its owners.

5. Allow Markets in Education. The U.N. wantsdeveloping countries to provide free universaleducation. This emphasis on price is unnecessary.Recent research has shown that low-cost private

education is available in many parts of the developingworld, and that its quality outstrips that of supposedlyfree government schools. Moreover, these schoolsare helping to achieve gender equity, and arecost-effective and financially sustainable. They areaccountable to parents, and parents generally preferthem even when cost is taken into account. Concernsabout affordability are unfounded.

Taken together, these coherent principles will allowfor a much stronger, prosperous, and more resilientplanet than the bundle of often contradictory targetsadvanced by the United Nations and other“sustainability” advocates. An agenda that empowerspeople rather than bureaucrats, building a resilient andtruly healthy society in the process, is the best way toachieve human health and flourishing.


IntroductionIn the year 2000, the United Nationsadopted a set of eight goals and 21targets for developing nations in itsMillennium Declaration, intended toprovide a policy blueprint to helpthe world’s poor secure the valuesarticulated in the declaration—freedom,equality, solidarity, tolerance, respectfor nature, and shared responsibility.1

The eight goals are as follows:

1. To eradicate extreme povertyand hunger

2. To achieve universal primaryeducation

3. To promote gender equality4. To reduce child mortality5. To improve maternal health6. To combat HIV/AIDS,malaria, and other diseases

7. To ensure environmentalsustainability

8. To develop a global partnershipfor development 2

The goals had specific subgoals, withvery specific metrics to assess theirsuccess, such as: “Reduce by threequarters, between 1990 and 2015, thematernal mortality ratio.”3

Progress toward meeting the goals hasvaried considerably among nations.However, rather than reassess theworld’s uneven progress to date, thisyear, the United Nations is set toannounce a successor to its MillenniumDevelopment Goals. This new set of

goals, the 2030 Agenda for SustainableDevelopment, will be aimed at fostering“sustainable development” across theunderdeveloped world. The agenda isambitious:

We resolve, between now and2030, to end poverty and hungereverywhere; to combat inequalitieswithin and among countries; tobuild peaceful, just and inclusivesocieties; to protect human rightsand promote gender equality andthe empowerment of women andgirls; and to ensure the lastingprotection of the planet and itsnatural resources. We resolve alsoto create conditions for sustainable,inclusive and sustained economicgrowth, shared prosperity anddecent work for all, taking intoaccount different levels ofnational development andcapacities.4

These ambitions translate into 17specific goals, each with a largenumber of sub-goals and targets:

• Goal 1. End poverty in all itsforms everywhere

• Goal 2. End hunger, achievefood security and improvednutrition, and promotesustainable agriculture

• Goal 3. Ensure healthy lives andpromote well-being for all atall ages

• Goal 4. Ensure inclusive andequitable quality education and


promote lifelong learningopportunities for all

• Goal 5. Achieve gender equalityand empower all women and girls

• Goal 6. Ensure availability andsustainable management ofwater and sanitation for all

• Goal 7. Ensure access toaffordable, reliable, sustainable,and modern energy for all

• Goal 8. Promote sustained,inclusive, and sustainableeconomic growth; full andproductive employment; anddecent work for all

• Goal 9. Build resilient infra-structure, promote inclusiveand sustainable industrializationand foster innovation

• Goal 10. Reduce inequalitywithin and among countries

• Goal 11.Make cities andhuman settlements inclusive,safe, resilient, and sustainable

• Goal 12. Ensure sustainableconsumption and productionpatterns

• Goal 13. Take urgent action tocombat climate change and itsimpacts

• Goal 14. Conserve andsustainably use the oceans,seas and marine resources forsustainable development

• Goal 15. Protect, restore andpromote sustainable use ofterrestrial ecosystems,sustainably manage forests,

combat desertification, and haltand reverse land degradationand halt biodiversity loss

• Goal 16. Promote peaceful andinclusive societies for sustainabledevelopment, provide access tojustice for all, and build effec-tive, accountable, and inclusiveinstitutions at all levels

• Goal 17. Strengthen the meansof implementation and revitalizethe global partnership forsustainable development[.]5

The meeting where the agenda will beendorsed will be addressed by PopeFrancis, who is expected to echothemes of sustainability explored inhis recent encyclical letter, Laudato Si’.The letter, subtitled in English as Carefor Our Common Home, opens with acry to honor our “Sister, Mother Earth”:

This sister now cries out to usbecause of the harm we haveinflicted on her by our irresponsibleuse and abuse of the goods withwhich God has endowed her. Wehave come to see ourselves as herlords and masters, entitled toplunder her at will. The violencepresent in our hearts, woundedby sin, is also reflected in thesymptoms of sickness evident inthe soil, in the water, in the airand in all forms of life.6


This belief that use of natural resourcesinvolves “plunder” that causes“sickness” in the Earth drives theprinciple of “sustainability” that iscentral to the U.N.’s professeddevelopment goals. Of course, the Earthis not a living being, and cannot be sickin any medical sense. Therefore, thereal question that should concern usregarding the well-intentioned U.N.goals is whether “sustainability” helpsor hinder human welfare.

Sustainability per se is a laudable goal.However, it has always been achievedthrough technological innovation andeconomic growth, not the setting ofgoals by multinational organizations.For example, the development ofsynthetic fertilizer has been key toending droughts and in helping torestore the affected areas to theirnatural state.7 Many of the policiesnow being advanced in the name of“sustainable development,” on theother hand, have generally rejectedtechnology and growth as increasingman’s impact on the environment.

TheWorld Commission on Environmentand Development—better known as theBrundtland Commission, after its head,former Norwegian Prime Minister GroHarlem Brundtland—issued a definitionof “sustainable development” in 1987that continues to be accepted by majorglobal organizations, from the U.N. tothe World Bank:

Development that meets theneeds of the present withoutcompromising the ability of futuregenerations to meet their ownneeds.8

Obviously, “plundering” the planetwould not meet this definition, if anyuse of a non-renewable resource were tobe classified as “plunder” that preventsthe use of that resource by futuregenerations. Similarly, any alteration ofthe atmosphere could have effects thatharm future generations. By this readingof “sustainable development,” theworld should adopt an approach basedon the precautionary principle.9

The precautionary principle is animperfect solution to the problem ofimperfect knowledge. It is based onthe notion that we cannot know whatwill happen in the future, so we musttake steps to avoid any potential harmbased on the knowledge we have now.However, current knowledge is alwaysimperfect, so there is no guarantee thatthe precautionary approach will notmake things worse.

While taking small steps to prevent ormitigate against uncertain risks that maynever arise can be warranted in someinstances, spending a huge amount ofresources to do so is wasteful because itreduces the resources available toaddress actual hazards. Thus, by refusingto invest in proven forms of affordableenergy for fear of what that energy

The Earth isnot a livingbeing, andcannot besick in anymedical sense.


might do to the atmosphere in 80 years’time—which we cannot know for sure—we risk reducing future generations’capacity to use affordable energyto resist other currently unknownthreats. Yet that is where the logic of“sustainable” development takes us.Such a precautionary approach wouldcondemn a lot of people to much longerperiods in poverty, hunger, and all theother terrible conditions the U.N. wishesto alleviate.

The disconnect between “sustainabledevelopment” and actual environmentalprotection has been recognized recentlyby a diverse group of environmentaladvocates, including long-time activistMark Lynas and the BreakthroughInstitute’s Ted Nordhaus and MikeShellenberger, who call themselves“ecomodernists.” Their manifesto,published in April 2015, puts it well:

Intensifying many humanactivities—particularly farming,energy extraction, forestry, andsettlement—so that they use lessland and interfere less with thenatural world is the key todecoupling human developmentfrom environmental impacts.These socioeconomic and techno-logical processes are central toeconomic modernization andenvironmental protection.Together they allow people tomitigate climate change, to sparenature, and to alleviate globalpoverty.10

There is a tradeoff between sustain-ability as it is commonly interpretedand aggregate human welfare. Thistradeoff is not just an economic cost.It impinges on the lives of individualmen and women, and prevents themfrom pursuing what may be the mostimportant goal of all, one whoseappreciation reaches back to Aristotle:human flourishing.

Resiliency: Key to HumanFlourishing

Human flourishing is the empoweringof individuals to achieve their owngoals. It is more than just the result ofmaterial prosperity. There is no onebest way to define it because it can beachieved in countless different ways.11

An athlete, a businessman, and aphilosopher will each have differentviews of what human flourishingmeans to them.12 The precautionaryapproach hinders future individuals’ability to flourish by cutting off certainavenues of development to them, basedon our current imperfect knowledge.

The moral imperative of development isto provide the most value-neutral meansof allowing mass human flourishing. Inthe context of the threats the sustainabledevelopment goals are intended toalleviate, the most prudent approach fordeveloping nations to take is to increasetheir people’s wealth, knowledge,and education. All of these goals areimportant to human flourishing, and

An athlete, abusinessman,and a philosopherwill each havedifferent viewsof what humanflourishingmeans to them.


increasing each of them provides for ahealthier and even greener society.

It is for this reason that the CompetitiveEnterprise Institute has long advancedresiliency as an important value inhuman development.13 Development thatmeets the needs and wants of people indeveloping nations, rather than ofpoliticians or activists, is inherentlyresilient. Producing a wealthier societyincreases the capability of futuregenerations to meet tomorrow’s risks,both known and unknown. This requiresinstitutions and markets rather than plansand targets. It also requires acceptingthat there are limits to human knowledgeand that the best way to address theselimits is the free exchange of localizedindividual knowledge through thecollective action of human beings inthe marketplace—including themarketplace of ideas.

The U.N. actually accepts that resiliencyis important. One of its sub-goals is: “By2030, build the resilience of the poor andthose in vulnerable situations andreduce their exposure and vulnerabilityto climate-related extreme events andother economic, social and environ-mental shocks and disasters.”14

However, as noted, resiliency canachieve far more than reducing risk.It builds a wealthier, healthier, andeven greener society.

Accordingly, while goals that aimto increase resiliency may looksuperficially similar to the goals of

the U.N.’s sustainable developmentagenda, the means to achieve thoseresults are very different. Reducingpoverty will not be achieved by settinga target to “reduce at least by half theproportion of men, women and childrenof all ages living in poverty in all itsdimensions according to nationaldefinitions.”15 Reducing poverty isachieved by people getting wealthier.In order for them to do that, certaininstitutions need to be strengthened andcertain barriers need to come down.

Where this has happened we are alreadyseeing reduced human impact on theenvironment. The trends towardreforestation and less intensive proteinsources in wealthy societies, forinstance, suggest that, according tothe ecomodernists:

[T]he total human impact on theenvironment, including land-usechange, overexploitation, andpollution, can peak and declinethis century. By understandingand promoting these emergentprocesses, humans have theopportunity to re-wild andre-green the Earth—even asdeveloping countries achievemodern living standards, andmaterial poverty ends.16

The following goals will help achievea more resilient, wealthier, healthier,and greener world, with the conditionsnecessary for mass human flourishing.

Producing awealthier societyincreases thecapabilityof futuregenerationsto meettomorrow’srisks, bothknown andunknown.


1. Secure Property Rights

Secure property rights are fundamentalto human development, and have beenkey to prosperity in developed nations.They allow for the mutually beneficialexchange of goods between parties thatis the basis of commerce and trade. Theyprovide the capital for investment,secure access to that capital, ensure thatproperty owners cannot be impoverishedarbitrarily, and prevent environmentalcollapse in a “tragedy of the commons.”

Markets cannot exist without propertyrights, which entail the right to disposeof property as you see fit.17 Yet all overthe developing world, property rightsare in a parlous state.

Every year, theWall Street Journal/Heritage Foundation Index ofEconomic Freedom shows a consistentlystrong correlation between economicliberty and human developmentmeasures.18

Property rights are an importantcomponent of this index, and areassigned a score out of 100. Of thenine developing countries ranked in thetop 50 nations, only two—Botswanaand St. Vincent and the Grenadines—score above 65 in the index’s rankingfor property rights. The top 10 nations’overall average was 87.5 for propertyrights (which is dragged down bydeveloping Mauritius’ score of 65).

Formerly developing countries thathave reached developed status in thelast half century have strong property

rights rankings, such as Hong Kongand Singapore with scores of 90 each.19

It is notable that most developingcountries that have strong propertyrights were formerly colonies of theUnited Kingdom, where propertyrights have traditionally been stronglyupheld (although British colonialauthorities could be hypocritical on this).Some, like Botswana, have managedto retain those rights, but others havelost them thanks to Marxian-inspiredpolicies that restricted private propertyfollowing decolonization.20

The similar annual Economic Freedomof the World index produced by theFraser Institute and the Cato Institutenotes of property rights: “Perhapsmore than any other area, this area isessential for the efficient allocationof resources. Countries with majordeficiencies in this area are unlikely toprosper regardless of their policies inthe other four areas.”21

The World Bank has found a strongcorrelation between secure propertyrights and personal income.22 Yet, theonly mention of property rights in theU.N.’s goals is of intellectual propertyrights.

This is perhaps the biggest mistake inthe U.N.’s approach. Property rights inmuch of the developing world are atbest illusory. Expropriation threatens atevery turn. The supposed “unemployed”people whose sacrifices started theArabSpring were in fact small businessmen

Secure propertyrights arefundamentalto humandevelopment,and havebeen key toprosperityin developednations.


who repeatedly had their profits,inventory, and tools of their trade stolenby police and government bureaucrats.23

In fact, the first such uprising, in Tunisia,was triggered by a fruit vendor,Mohamed Bouazizi, who immolatedhimself after police officers seizedsome of his merchandise.24

Secure property rights are not onlyimportant for increasing wealth, butalso for improving environmentalstewardship, because owners have agreat incentive not to see the value oftheir property reduced by environmentaldegradation. Moreover, a system thatrecognizes property rights protects anowner against degradation imposed bya neighbor in the form of pollution.Collective ownership erodes this systemof rights-based obligations.

Generally speaking, private propertyhas been interpreted as a “bundle ofrights” that includes the right to freelyexploit one’s property, exclude othersfrom it, and alienate it, so long as onedoes not cause nuisance or harm toothers. The functionality of privateproperty rights in promoting personal,general, and environmental welfare isdirectly tied to this bundle of features.It is undermined to the same extentthat any element of that “bundle” ofrights is undermined. For example, ifindividuals are barred from sellingtheir fishing rights, they will have lessof an incentive to preserve the value ofthose rights by not overexploiting theresource. If they decide to leave a

lumber business and no longer intendon harvesting their resource but cannotsell their harvesting rights, they mayhave an incentive to deplete it. Similarly,if bureaucrats can take away theproperty right at any time, the rightwill be less valuable and the attendantincentives will be diminished.

For these reasons, governments shouldset a goal of securing private propertyrights. One key measure to achieve thisis titling of real estate property.

Land Titling. In many countries, peopleare unable to prove ownership of theland they occupy, owing to inadequateland titling systems or traditional formsof property ownership where everythingbelongs to the village chief. As Peruvianeconomist Hernando de Soto explainedin his books, The Other Path andThe Mystery of Capital, land titlingreforms significantly benefit the poor,enabling “such opportunities as accessto credit, the establishment of systemsof identification, the creation of systemsfor credit and insurance information,the provision for housing andinfrastructure, the issue of shares, themortgage of property and a host ofother economic activities that drive amodern market economy.”25

De Soto estimates that up to $10 trillionof capital worldwide is locked awayunused because of inadequate titlingsystems. A recent study by the Peru-based Institute for Liberty andDemocracy (ILD), which De Soto

Secure propertyrights are notonly importantfor increasingwealth, but alsofor improvingenvironmentalstewardship.


heads, estimated Egyptian workers’real estate holdings to be worth aroundUS$360 billion, “eight times morethan all the foreign direct investmentin Egypt since Napoleon’s invasion.”26

Similarly, many local assets around theworld remain in common ownership—in reality, owned by no one. Initiativessuch as India’s privatization of forestresources seek to address this byenabling the titling of assets byindigenous peoples, who can then tapinto those resources to open up newopportunities as described above.27

Estimates by de Soto’s team suggest thatsimilar initiatives could be extended to900 million plots of land across thedeveloping world.28

Property Rights and theEnvironment. Failure to secureproperty rights generally results inwhat ecologist Garret Hardin termed“the Tragedy of the Commons,” aphenomenon that occurs when no onehas any incentive not to deplete acommon resource, in the expectationthat someone else will deplete it first.29

Common ownership leads tooverexploitation because conservationof a resource imposes costs with noattendant benefits to individuals, whileprivate ownership makes that sameresource valuable. For example, whenthe Soviet Union decided to turn thedeserts of central Asia into cotton fieldsby diverting the Amu Darya river, thepeople who lived off the Aral Sea had

no property rights to defend theirshrinking resource. The result was thedesertification of the Aral Sea—thegreatest environmental disaster ofmodern times.30 This instance ofresource plundering was entirely theproduct of central planning.

Fisheries provide a good example ofhow property rights obviate the tragedyof the commons. Individual TransferableQuota (ITQ) systems cap a country orregion’s total allowable catch (TAC),while guaranteeing fishers a share orquota, often as a percentage of the TAC.Once the initial allocation is made,fishing rights take on the features ofproperty rights. They may be exploitedto the degree allowed by the quota, andthey may be leased, sold, or transferredto other fishers. Since the shares areowned in perpetuity, fishers have astrong incentive to harvest as many aspossible in accordance with the quotawithout depleting the fish stock.

Owners of the most efficient fishingvessels have an incentive to buy quotasfrom those with older, less efficientvessels, reducing the total number ofvessels in the long run. Given thenovelty of this form of property right,owners of ITQs are likely to beparticularly sensitive to the prevailingregulatory climate. Therefore, it isimportant for government to set up anITQ market carefully and avoid taxingor interfering with these new propertyrights in order to maximize theenvironmental advantages of the system.

Failure tosecure propertyrights generallyresults in whatecologist GarretHardin termed“the Tragedy ofthe Commons.”


New Zealand’s ITQ arrangement is themost extensive in operation, and itdeveloped considerably over time.31

In 2008, researchers ChristopherCostello, Steven Gaines, and JohnLynham of the University of California,Santa Barbara, investigated the effectsof all 121 fisheries where ITQs andother “catch share” schemes existaround the world, comparing them tothe 11,000 fisheries without propertyrights and controlling for confoundingfactors such as fish species andecosystem characteristics. They foundthat the existence of catch share rightsnot only precluded fishery collapsebut, as in New Zealand, often helpedreverse prior collapse.32 The authorsfound that if catch shares had beeninstituted globally from 1970, then theincidence of fishery collapse wouldhave been reduced by two-thirds. Fishstocks would be rising rather thanfalling. The evidence is clear: ITQs andsimilar catch-share schemes should beimplemented now on a global basis

The Blockchain. There are also excitingopportunities that could arise for thepublic recording and utilization ofproperty rights through the distributedpublic ledger system known as theBlockchain, best known for its rolein the development of Bitcoin.Development of the Blockchain forproperty recording and titling wouldsignificantly reduce transaction

costs—as well as thewidespread corruption—associated withgovernment-controlledtitling systems.34

Significantly, De Soto’sILD is promotingthese initiatives.35

2. Secure the Ruleof Law

Property rights cannotbe secured without ajustice system that backsup their value andenforces rulesassociated withownership, defense, andtransfer, without beingsubject to arbitrarydecisions or changes.Such a system is knownas the “rule of law,” andprovides many otherbenefits. The conceptdates back to theLeveller philosopherJames Harrington,who suggested thatthe ideal state, theCommonwealth ofOceana, would be an“empire of laws, notof men.”36

The rule of law ismentioned several times

Common Property RightsSome economists now question whetherthe commons necessarily dissolves intotragedy. The work of the 2009 EconomicsNobel Laureates, Elinor Ostrom and OliverWilliamson, demonstrates that traditional

cultural concepts of common property rights,particularly among hunter-gatherers, canpromote the sustainable use of a resource,so long as there are means of preventingfreeloading behavior, such as social norms

within a tightly knit community.

However, as Michael DeAlessi of the ReasonFoundation points out, common privateproperty rights are far more vulnerable

than private property rights, for two reasons.First, they frequently are not recognizedby judiciaries due to their informal nature,and are thus vulnerable to expropriationby outsiders, including governments.Second, common rights are usually

nonalienable, as is the case when they arethe historic property of a tribe or clan.

This implies that communities shouldseek to recognize and title even commonproperty rights. Moreover, there can besuch a thing as a “tragedy of the

anti-commons.” Traditional methods ofdividing up property by inheritance (such as“gavelkind” succession that divides propertyequally among heirs) have regularly hadthe effect of “hyper-fracturing” property tothe extent that effective alienation and

use become difficult. The United Kingdomsolved this problem through enclosure,although in an inequitable fashion. In anyevent, the problem is not insuperable.Communities should encourage newmethods of dividing common property,such as reformed rules for inheritance.


in the U.N.’s preamble to its goals butonly once in the goals themselves:“16.3 Promote the rule of law at thenational and international levels andensure equal access to justice for all.”This is fine as far as it goes, althoughit is plausible that the goal is moreabout establishing a new transnationaljudicial system controlled by centralplanning technocrats.

Julian Morris of the Reason Foundationsums up well the importance of therule of law:

Private property rights, the freedomto contract, free speech, and thejudicial system which upholdsthese are fundamental to realsustainable development. Peoplemust be certain of the rules thatgovern their behavior, and theyshould not be subject to arbitrarylaw enforcement (characteristic ofcorrupt government). They shouldalso have a remedy at law forviolations of contracts andproperty rights.37

The rule of law, combined with thefreedom to contract, results in a systemof sanctity of contract, that has manybeneficial effects. The late Universityof Michigan professor C.K. Prahaladinterviewed Indian Shakti Ammas(“empowered mothers”) who hadbecome entrepreneurs and discoveredthat their contractual relationshipsresulted not just in mutual obligations

but in wider benefits. As he says ofone example:

She recognizes that violating thecontracts will dry up the sourceof her economic and socialsuccess. Transparent transactiongovernance is an integral part ofthe ecosystem. She is a localentrepreneur. She is a one-personcompany, but she does not operateas an extralegal entity. She isbound to the national and globalsystem and is less beholden to thelocal system of moneylenders andslum lords. … The ecosystem canprovide the tools for the poor andthe disadvantages to be connectedseamlessly with the rest of theworld in a mutually beneficial andnon-exploitative way.38

Moreover, under a contract-basedmarket backed by the rule of law,asymmetries, where one party has anadvantage over the other, are reduced.Information asymmetries are reducedby widespread knowledge of pricesignals. Producers who take advantageof this knowledge can find differentbuyers, thereby reducing asymmetriesin choice. The smaller party havingrecourse to courts and other enforce-ment systems reduces asymmetries inbargaining power. Taken together,these shifts in relative power reduceasymmetries in social status, producinga more equal society.39

Under acontract-basedmarket backed bythe rule of law,asymmetries,where oneparty has anadvantage overthe other, arereduced.


An excellent example of the result ofthis process is in the breakdown of theIndian caste system achieved after theIndian government strengthened therule of law in 1991. Dalits, the casteonce called “untouchables,” haveachieved great things. As the CatoInstitute’s Swaminathan S. AnklesariaAiyar points out in a June 2015 study:

Dalits have increasingly managedto get out of their historicaloccupations and move into newones. One district survey in UttarPradesh shows the proportion ofdalits owning brick houses upfrom 38 percent to 94 percent, theproportion running their ownbusinesses up from 6 percent to36.7 percent, and the proportionowning cell phones up from zeroto one-third. The Dalit IndianChamber of Commerce andIndustry now boasts of over 3,000member-millionaires. The formerserfs have now become bosseshiring upper-caste workers.40

Securing the rule of law reducescorruption. Corruption is, quite simply,abuse of the rule of law by bureaucrats.Attempts to establish the rule of lawhave gone awry because the methodchosen was to pass a law about everyaspect of commerce, which merelyempowers the bureaucrat whoadministers the relevant regulation.India’s infamous pre-1991 “LicenseRaj” was a case in point.41

Corruption is rightly recognized as aproblem by transnational institutions.The World Bank calculates the globalcost of bribes at about $1 trillionannually.42 The U.N. includesreducing corruption in its goals(“16.5 Substantially reduce corruptionand bribery in all their forms”), butseemingly fails to recognize theimportance of securing the rule of lawin achieving this reduction. By makingit a separate goal, the U.N. risksencouraging countries to setineffective targets on corruptionand introduce new ineffectiveanti-corruption laws that will do little,if anything, to address the problem.

A novel way to secure the rule of lawis to use technology to bypassbureaucrats entirely. The stategovernment of Andhra Pradesh inIndia, for example, has pioneered usingdigital technology to make the stategovernment directly responsive to theneeds of its citizens. While no laws orregulations have changed, citizen cannow deal with the state governmentquickly and efficiently. The old systemof land titling, for instance, took up to15 days and allowed for selectiveassessment by bureaucrats. The e-governance system takes an hour.43

Similarly, Andhra Pradesh’s e-Sevaprogram reduces time spent waiting inline to deal with a bureaucrat, andthereby reduces the incentives to bribein order to skip ahead. By allowing

Corruption is,quite simply,abuse of therule of lawby bureaucrats.


electricity bills to be paid online,either via the Internet or at e-kiosksprovided by the government, the cityof Hyderabad alone can reduce wastedtime and foregone wages to the valueof $45 million annually.44Newtechnology allows for the reductionor even elimination of the transactioncost of corruption. Citizen reactions tothe system include the following:

• “There is absolutely NOcorruption in e-Seva;”

• “We are not harassed any moreat the hands of governmentemployees;”

• “I can get back to work to earnmy hourly wages.”45

Charter Cities. In some cases, laws andbureaucracies are so entrenched thatthe best thing a government can do isto designate an area to start again fromscratch. This is the phenomenon ofcharter cities, which are being plannedin several developing nations, eitherby the governments themselves or incooperation with a variety of partners.

The basic concept behind a chartercity is to provide the certainty of ruleof law that becomes a magnet forinvestment. In Honduras, for example,the constitution now allows forcharter cities with “functional andadministrative autonomy that includesthe functions, powers, and duties” ofother cities.46 However, this does notmean that the cities are either lawlessurban jungles or tyrannous corporate

towns. One form of charter city, the“enterprise city,” defines its systemcarefully:

Enterprise Cities are establishedby governments willing to giveauthority over a zone to a public-private partnership of governmentofficials and developers. Thesepartners create a new regulatorysystem that delivers a pro-competitive business environmentfounded on open trade, merit-basedcompetition and property rightsprotection.47

The city’s charter acts as a guidingdocument that might be thought of asthe city’s fundamental constitution.Many charter cities plan to adoptAnglo-American common law systemsrather than the civil law systems theyhave inherited from other Europeancountries.

At present, there is significant localopposition to charter cities. Oneresident near a proposed Honduransite exclaimed at a town hall meeting,“We’re only fishermen and farmers.We won’t stand for the invasion ofthese model cities created for thebenefit of the rich!”48 A change ofgovernment in Georgia canceled theproposed Black Sea coast charter cityof Lazika.49 It will take many yearsfor a modern charter city to becomeestablished, but it is worth noting thatthere are two cities in the developingworld that were essentially founded

In some cases,laws andbureaucraciesare so entrenchedthat the bestthing agovernmentcan do isto designatean area tostart againfrom scratch.


under the same principles and havedone so well they now lead thedeveloped world in economic output:Hong Kong and Singapore.

3. Ensure Access toAffordable Energy

Affordable energy is fundamental towhat economist Deirdre McCloskeycalls the “Great Fact” of the explosionof human welfare.50 It remains centralto the reduction of absolute poverty.The U.N. seems to recognize this withits Goal 7: “Ensure access to affordable,reliable, sustainable and modern energyfor all.” Yet all is not rosy. The sub-goalsindicate that affordability of energy isjust one factor the U.N. considers. Mostof the others relate to using alternativeforms of energy than the mostaffordable, which derive fromfossil fuels.

7.2 By 2030, increase substantiallythe share of renewable energy inthe global energy mix7.3 By 2030, double the globalrate of improvement in energyefficiency7.a By 2030, enhance internationalcooperation to facilitate access toclean energy research andtechnology, including renewableenergy, energy efficiency, andadvanced and cleaner fossil-fuel technology, and promote in-vestment in energy infrastructureand clean energy technology

7.b By 2030, expand infrastructureand upgrade technology forsupplying modern and sustainableenergy services for all in develop-ing countries, in particular leastdeveloped countries, small islanddeveloping States, and land-locked developing countries, inaccordance with their respectiveprogrammes of support

These subgoals will likely increaseenergy costs and reduce reliability, allin the name of sustainability. This isperverse and regressive. In thedeveloped world, energy takes up amuch larger share of poor households’budgets. For instance, a household withan annual income between $10,000 and$25,000 spends well over 10 percent ofits budget on energy, according to theBureau of Labor Statistics.51 And aJanuary 2014 study for the AmericanCoalition for Clean Coal Electricityfound that “households earning $50,000or less spend more on energy than onfood, spend twice as much on energyas on health care, and spend morethan twice as much on energy ason clothing.”52

Increasing the cost of energy alsoharms people’s health. That’s becauseenergy use is so fundamental to modernlife that it can take precedence overother household expenses—includinghealth care. The National EnergyAssistance Directors’Associationfound that an increase in energy costs

In the developedworld, energytakes up amuch largershare of poorhouseholds’budgets.


led 30 percent of poor households inthe United States to reduce purchasesof food, 40 percent to go withoutmedical care, and 33 percent to not filla prescription.53

Despite this, Western governments arepursuing policies to increase energyprices. President Obama said during hisfirst election campaign that electricityrates from coal would “necessarilyskyrocket” under his policies; thismay finally come to pass under hisEPA’s proposed Clean Power Plan.In Western Europe, energy costs haveincreased due to a combination ofrenewable energy subsidies andmandates, bans or moratoria onhydraulic fracturing (“fracking”),hostility to nuclear energy, and Russia’scontrol of natural gas supplies formuch of the continent’s eastern half.

Despite the president’s policies, U.S.energy markets have shown thatinnovation beats regulation everytime.54 Even though huge swaths ofAmerican energy resources are lockedup under untouchable federal lands,energy production has boomed over thepast decade, thanks to the developmentof horizontal drilling and improvedhydraulic fracturing techniques onprivate and state lands. These techno-logical advances have led to lowerelectricity prices from natural gas.And subsurface property rights havebenefited both urban and rural

households through royalty paymentsfor energy production on their land.

Moreover, as gas became moreaffordable, it led to a reduction ingreenhouse gas emissions. Thanks toenergy innovation, America met theemissions targets set for it in theKyoto Protocol, without any need forburdensome laws and regulation—or for the Kyoto Protocol itself.55

Whatever one may think of the needfor carbon emissions reduction, energyinnovation is achieving that goal.

Reducing artificially high fuel costs isthe first step in tackling energy poverty.In America, the market is alleviatingthe burden of energy costs on poorhouseholds, even as the governmentgoes the wrong way. That shows usthe way forward for tackling the muchgreater problem in the developingworld.

The first goal should be to allow thedevelopment of new technologieswithout governments picking favorites.For instance, many developing countriesare considering bans on hydraulicfracturing, despite the lack of credibleevidence that the technology isharmful.56 North African countries andSouth Africa sit atop sizable shale gasdeposits, as do China, India, Pakistan,and several other developing nations.57

Freeing up the energy market to allowdevelopment of these resources could

Reducingartificiallyhigh fuel costsis the first stepin tacklingenergy poverty.


go a long way toward assuring accessto affordable energy.

Moreover, the American experiencewith new gas technology shows theimportance of property rights.Landowners are able to share in therevenues from gas extracted beneaththeir property thanks to Americanproperty owners enjoying subsurfacerights to resource development ontheir land. Recreation of these rightsin the developing world would ensurethat the wealth is shared by small andlarge landowners alike.

Overregulation is holding back smallmodule nuclear reactors and othernuclear technologies. As Britishparliamentarian and science writerMatt Ridley summarizes,

Better kinds of nuclear power willinclude small, disposable, limited-life nuclear batteries for poweringindividual towns for limitedperiods, and fast-breeder, pebble-bed, inherent-safe atomic reactorscapable of extracting 99 percentof uranium’s energy, instead of1 percent at present, and generatingeven smaller quantities of short-lived waste while doing so.58

South African engineers had beenleading the way on developing pebble-bed reactors, until the project waspulled in 2010 because of governmentmeddling in the project’s design.59

Top-down environmental laws and

regulations aimed at promotingsustainability make it virtuallyimpossible to get permits to buildnuclear reactors anywhere in the world,because of safety concerns aboutdecades-old technologies. Again,governments should step back frompreventing the development of thismarket. One policy to consider is toallow the development of new formsof insurance that could provide somecertainty for potential investors in thenuclear market who are currentlyscared off by the high liability risk.

Distributed renewable energy also has apart to play. In much of the developingworld, solar energy is much moreeconomical than in the developedworld, given the lack of developedenergy distribution infrastructure. Assuch, local solar projects make sense,but they do not work at night and theenergy they generate is still expensiveand low in power. The sort of batterystorage needed to maintain reliabilityof supply without the need for backupgeneration is not currently widelyavailable, and certainly not at pricesevery developing world village canafford. Moreover, developed countriessuch as Germany and Spain have foundtheir renewable energy subsidieseconomically unsustainable.60 Theywould be prohibitive for poorercountries. Therefore, claims that thedeveloping world can use distributedenergy to “leapfrog” the developedworld are overblown.61

Landownersare able toshare in therevenues fromgas extractedbeneath theirproperty thanksto Americanproperty ownersenjoyingsubsurfacerights toresourcedevelopmenton their land.


Renewable energy projects come withtheir own environmental costs, such ashabitat destruction for large solar plantsand wild bird kills for wind farms. Theecomodernists note: “The scale ofland use and other environmentalimpacts necessary to power the worldon biofuels or many other renewablesare such that we doubt they provide asound pathway to a zero-carbon,low-footprint future.”62

As the Breakthrough Institutesummarizes, while studies that find that“wind and solar are getting better andcheaper means that these technologieswill grow at the periphery of establishedenergy systems in many regions, itdoes not mean that they will replacecentralized grids in developingcountries that currently lack basicenergy infrastructure.”63 A report by theCenter for Global Development foundthat an investment of just $10 billionin natural gas could provide energy for60 million moreAfricans than the sameinvestment in renewable energy.64

Proponents of sustainable developmentoften argue that there is no disconnectbetween energy policies aimed atreducing carbon emissions and povertyalleviation. The developing worlditself has rejected that argument. AsIndian parliamentarian and ministerPrakash Javadekar told The New YorkTimes in 2014, emissions cuts are “formore developed countries. The moralprinciple of historic responsibilitycannot be washed away… India’s first

task is eradication of poverty …Twenty percent of our populationdoesn’t have access to electricity, andthat’s our top priority. We will growfaster, and our emissions will rise.”65

That is as it should be.

4. Ensure Access to Capitaland Credit

In his groundbreaking 1999 work,Development as Freedom, Nobellaureate Amartya Sen pointed out thatone of the most important aspects ofdevelopment is freedom of opportu-nity, a vital part of which is access tocapital and credit.66 However, capitaland credit appear nowhere in the draftU.N. goals.

When capital is sufficiently available,would-be entrepreneurs at the bottomof the pyramid have demonstrated awillingness to launch new venturesand invest in the future—that is, toembrace free-market capitalism to thebenefit of all concerned.

The developed world has a long historyof market experimentation in enablingcredit and access to capital. The modernfinancial system may actually be thefirst example of the sharing economyto have evolved, long before smart-phone apps. Rather than sharingcapital assets such as cars or sparebedrooms, people shared their liquidcapital—they lent money to each otherthat they did not need to use right away.

When capitalis sufficientlyavailable, would-be entrepreneursat the bottom ofthe pyramid havedemonstrateda willingnessto launch newventures andinvest inthe future.


Historically, access to capital had beenlimited to those who already possessedit in the form of assets or savings.With the dawn of the modern financialsystem, the invention of credit meantthat those who had capital couldshare it with those who did not. Loansallowed both to benefit. The classicJimmy Stewart savings-and-loan modelwas based on the idea that peoplepooling their savings and lending outto others to buy houses would increasethe capital base, making everyoneinvolved wealthier. A bank mangercould even look at a business plandrawn up by someone with nocollateral and choose to make a loanbased on the plan’s attractiveness.

As the financial system evolved, otherforms of access to capital developed.The development of informationtechnology—even in its earliestforms—enabled lenders to learn of thepotential risk posed by their creditors.Credit scores enabled unsecuredpersonal loans via credit cards, whileother information provided somepredictability as to which borrowerswith no credit history had characteristicsin common with those who repay.Interchange fees even facilitated theprovision of high-risk credit cards.Notably, Sergey Brin founded Googleby maxing out his credit cards.67

Lending entails risk to the originalproviders of capital, and access tocapital does not guarantee success.

But all else being equal, the greater theaccessible capital base, the wealthierthose who have access to it will become.

As noted, one of the most effectiveways to ensure access to capital is totap into capital already possessedthrough land titling. Similarly, the ruleof law will allow small businessmento continue to enjoy profits and thecollateral they provide without thethreat of expropriation.

Other means of extending access tocapital have developed in recentdecades. Microsavings, the saving ofvery small amounts of money on aregular basis, has been made possibleby technologies that lower transactioncosts. Banks and other credit institutionshave been able to pool even thesesmall deposits, whereas previouslytransaction costs would have madethem uneconomical. In turn, this helpsto break the cycle of dependency ongovernment handouts in many poorvillages. Once this is established,villagers are then able to arrange loansamong themselves.68

Microsavings, in turn, made micro-finance possible. Today, microfinanceinstitutions all over the developingworld provide small loans, access tosavings, and microinsurance tofamilies or small businesses.

By giving them access to investmentcapital and affordable financialinstitutions, microfinance providers

The inventionof credit meantthat those whohad capitalcould share itwith those whodid not.


help small- and medium-sizedenterprises in developing countries togrow. Often, these businesses are sosmall that they can neither afford theinterest rates on bank loans nor come upwith the capital they need on the theirown. When implemented correctly,microfinance loans empower theircustomers to invest, grow, and produce,all of which contribute to diminishingpoverty within communities.

One of the most prominent examplesof microfinance is Muhammad Yunus’sGrameen Bank, first established inBangladesh. According to a RANDCorporation study, areas whereGrameen Bank offers programs sawunemployment rates drop from31 percent to 11 percent in theirfirst year. Occupational mobilityimproved, with many people movingup from low-wage positions to moreentrepreneurial ones. There is evidenceof increased wage rates for localfarmers. Women’s participation inincome-generating activities also rosesignificantly.69

Access to capital and credit also enablenew markets to spring up where noneexisted before. Entrepreneurial activityis unleashed. Consider one of C.K.Prahalad’s case study of Nirma, asmall Indian firm that sold detergentproducts in small packages at lowprices suitable for Indian villagers’daily cash flow, and designed for ruralvillage uses, such as in rivers. The

company soon found itself with amarket share equal to that of consumergoods giant Unilever’s Indiansubsidiary. That forced Unilever toreact to Nirma’s challenge with similarproducts, thereby growing this newmarket. Note that in the process, moreenvironmentally friendly productswere invented and sold.70

As Prahalad pointed out, over 4 billionpeople lived on an annual income (in2002 dollars) of $1,500 or less, with abillion living on less than a dollar aday. Nevertheless, based on PurchasingPower Parity, this market representsan economy of $13 trillion or more,not that far off the entire developedworld. That figure has only grownsince the time Prahalad wrote.Combine that with all the capitallocked up by regulation and we cansee that there is a huge economy justawaiting the freedom to develop.

5. Allow Markets in Education

The U.N. goals place a great deal ofemphasis on education, as well theyshould, but immediately throw amonkey wrench into the most effectiveway to expand education: “By 2030,ensure that all girls and boys completefree, equitable and quality primary andsecondary education leading to relevantand effective learning outcomes.”[Emphasis added]

Access to capitaland credit enablenew marketsto spring upwhere noneexisted before.


The U.N.’s insistence on tuition-freeeducation ignores significant recentresearch that indicates that inexpensive,high quality, market-based educationis becoming more and more availableto the world’s poor, and that itsperformance beats government-provided “free” education almosteverywhere.

In his book The Beautiful Tree,Newcastle University professor JamesTooley documents how he discoveredlow-cost schooling in the slums ofHyderabad in India. His subsequentresearch in India, Ghana, Nigeria,Kenya, and China revealed that themajority of children in the poorestareas of India and several Africancountries actually attend low-costprivate schools. The poorest of thepoor are generally given scholarships.Moreover, His research reveals thateducation has become available to thepoorest children on the planet inspite of, not because of, governmentintervention.71

Tooley’s research comes to six mainconclusions:

Private schools are better qualitythan government schools. Tooley’stests of over 24,000 children revealedthat after controlling for confoundingvariables, the children at these low-costprivate schools significantly outperformthose at government schools. A reviewof other literature concluded, “private

schools are of higher quality, in termsof educational outcomes and teachercommitment, than governmentschools. It does not mean to say thatthey already satisfy internationalstandards, or that improvements donot need to be made.”72

Private schools meet the demands ofequity. This low-cost private educationis proving liberating for girls. Tooley’sreview of all the available evidencefinds that despite the common objectionthat low-cost private schools have notdelivered absolute gender paritybetween girls and boys, they are clearlyimproving education for girls.73 Giventhe numerous cultural barriers to theeducation of girls in many developingcountries—not to mention the generallack of support for girls after theybegin menstruating—attaining fullgender parity still has a long way togo, but it is important to recognize thatprivate education is providing moresupport for girls than governmenteducation does, and there is reasonto believe the situation will improvefurther.

Private schools are more cost-effective than government schoolsand are financially sustainable.Low-cost private schools deliver higherquality education at lower cost thangovernment schools. They are morecost-effective by definition. The lengthof time they remain open provides avery clear proxy for sustainability.


Tooley and his colleague DavidLongfield add: “Even strongercircumstantial evidence comes fromthe vast number of private schools: somany educational entrepreneurs wouldnot be entering these markets if theydid not believe the schools to befinancially sustainable.”74

Private schools are affordable tothe poor, sometimes nearly asaffordable as government schools.Private schools are by definition moreexpensive than “free” governmentschools, but public schools themselvescome with costs, such as, for example,the cost of a school uniform. Tooleyand Longfield’s review of the evidencecomes to a strong conclusion aboutaffordability: “Some private schoolsare affordable to significant minoritiesof the poorest and most disadvantagedgroups in society: findings showanything from 20 per cent to nearly40 per cent of these groups accessingprivate schools. Studies that findprivate schools unaffordable by thevery poorest sometimes suggest thatpublic schools are also unaffordable.”75

Private schools are the preferredoption for poor parents. Data fromSussex University researcher JoannaHärmä back up this conclusion. Hersurveys found that the “vast majorityof parents indicating a preference forprivate schools over poor qualitygovernment alternatives,” a “nearuniversal preference for private

schools,” and “94.4 percent of sampleparents’ preferring private over gov-ernment school.” In addition, “the ma-jority of families (84 percent) viewgovernment schools negatively andLFPs positively (77 percent).”76

Private schools are accountable.Tooley and Longfield’s review ofthe evidence found that competitivediscipline ensured accountability to thewants needs of the parents and theirchildren: “By paying fees, parentskeep private schools accountable tothem. They have the right to ‘exit’from private schools; whether or notthey use this, private schools are awarethat they might so are responsive to theneeds of poor parents and children.”77

The market is providing what thegovernment has failed to provide,because the government is not subjectto the market disciplines outlined inthe previous sections. One example isgovernment teacher absenteeism,which is the educational equivalentof the bureaucrat’s corruption. Tooleyrelates the tale of private andgovernment schools in Nigeria:

We made a film for the BBC inLagos, Nigeria. We had beenfilming in the private schools inthe slums, and there was prettyenergetic teaching going on. I'mnot saying it was perfect, there's alot that could be improved, butthere's good stuff going on inthese schools. And then we got

The marketis providingwhat thegovernmenthas failedto provide.


permission to go to the governmentschool, on the outskirts of the slum.The very first classroom and wentinto, the teacher was fast asleep athis desk. And the children wereteaching themselves.78

Combined with the other recommen-dations in this study, allowing marketsin education will provide another stepin the virtuous cycle that will leadto a much more resilient world. Forinstance, access to reliable electricityat night will enable boys and girls todo their homework after sundown.

Conclusion

A resilient world is one where humansare allowed to flourish. Markets aremore likely to foster the conditionsfavorable to human flourishing thanthe prognostications of planners.Property rights are fundamental to thecreation of markets. The rule of lawprotects people from the depredationsof what Matt Ridley calls “chiefs,priests, and thieves.”79 In fact,Laudato Si’ quotes Paraguyan bishopson the importance of secure property

rights:80 “Every campesino [peasantfarmer] has a natural right to possess areasonable allotment of land where hecan establish his home, work forsubsistence of his family and a securelife. This right must be guaranteed sothat its exercise is not illusory butreal.”81

Access to energy and capital allowsfor innovation and wealth creation.Finally, markets in education provideincreased intellectual capital. Put to-gether, this is a recipe for a resilientworld that will be better able torespond to risks and uncertainties,and in particular to environmental risk,than any agenda for “sustainability.”

In ancient Rome, the statesman Cicerosaid, “Salus populi suprema lex esto.”This is often translated as “the safetyof the people must be the highest law,”but salus more fundamentally means“health.” Cicero, a student of Platoand Aristotle, understood that humanhealth and flourishing were worthygoals for society to pursue. An agendathat empowers people rather thanbureaucrats, building a resilient and inthat sense truly healthy society, is thebest way to achieve them.

Access to energyand capitalallows forinnovation andwealth creation.


NOTES1 United Nations, Millennium Declaration, adopted at the Eighth Plenary Session of the General Assembly, September 8, 2000,

http://www.un.org/millennium/declaration/ares552e.htm.2 Ibid.3 Ibid.4 United Nations, “Transforming our world: the 2030 Agenda for Sustainable Development,” August 2015,

https://sustainabledevelopment.un.org/post2015/transformingourworld.5 Ibid.6 Encyclical Letter Laudato Si’ of the Holy Father Francis on Care for Our Common Home, May 24 2015,

http://w2.vatican.va/content/francesco/en/encyclicals/documents/papa-francesco_20150524_enciclica-laudato-si.html.7 Linus Blomqvist, Ted Nordhaus, and Michael Shellenberger, Nature Unbound: Decoupling for Conservation, Breaktrough

Institute, September 2015, http://thebreakthrough.org/images/pdfs/Nature_Unbound.pdf.8 World Commission on Environment and Development, Our Common Future (the Brundtland Commission report),

(Oxford, UK: Oxford University Press, 1987). Cited at World Bank Web page “What is Sustainable Development?”http://www.worldbank.org/depweb/english/sd.html.

9 For more discussion of the precautionary principle, see Gregory Conko, “Safety, risk and the precautionary principle: rethinkingprecautionary approaches to the regulation of transgenic plants,” Transgenic Research, Vol. 12, No. 6, December 2003, pp. 639-647.

10 The Ecomodernist Manifesto, April 2015, p.711 For a critique of the idea that happiness is itself a goal, see Iain Murray and Blake Taylor, “What is the Happiness Lobby,” OnPoint

No. 183, Competitive Enterprise Institute, August 29, 2013, https://cei.org/onpoint/what-happiness-lobby.12 Douglas Rasmussen and Douglas Den Uyl, Norms of Liberty (State College, Penn. “Penn State Press, 2005), p.148.13 Jonathan Adler, “Greenhouse Policy without Regrets: A Free Market Approach to the Uncertain Risks of Climate Change,”

Competitive Enterprise Institute, July 2000.https://cei.org/studies-issue-analysis/greenhouse-policy-without-regrets-free-market-approach-uncertain-risks-climat.

14 United Nations, op. cit., paragraph 59, goal 1.515 Ibid, goal 1.2.16 The Ecomodernist Manifesto, p.1517 There has been much written about the fundamental nature of property rights. See Douglas Rasmussen and Douglas Den Uyl,

chapter 5, “The Natural Right to Private Property” in Norms of Liberty; Richard Pipes, Property and Freedom, passim, Alfred A.Knopf, 1999.; Julian Morris (ed.), Sustainable Development: Promoting Progress or Perpetuating Poverty? Profile Books, 2002.

18 Terry Miller and Anthony B. Kim, 2015 Index of Economic Freedom, Heritage Books 2015, p. 25, Chart 6,http://www.heritage.org/index/download.

19 Miller and Kim, op. cit., p. 238 and p. 392, respectively.20 Ato Kwamena Onoma, “The Politics of Property Rights Institutions in Africa” (Cambridge, UK: Cambridge University Press,

August 2015), for an examination of the differences in the evolution of property rights after British rule between Botswana,Ghana, Kenya, and Zimbabwe.

21 Cato Institute/Fraser Institute, Economic Freedom of the World 2014, p.5.22 World Bank,World Development Report 2006: Equity and Development, World Bank Group 2006,

http://siteresources.worldbank.org/INTWDR2006/Resources/477383-1127230817535/082136412X.pdf.23 Iain Murray, “Egypt’s Missing Precondition,” American Spectator, July 12 1013.

http://spectator.org/articles/55246/egypts-missing-precondition24 Marc Fisher, “In Tunisia, act of one fruit vendor sparks wave of revolution throughArab world,”Washington Post, March 26, 2011,

https://www.washingtonpost.com/world/in-tunisia-act-of-one-fruit-vendor-sparks-wave-of-revolution-through-arab-world/2011/03/16/AFjfsueB_story.html.

25 Hernando de Soto, The Other Path: The Invisible Revolution in the Third World (NewYork: HarperCollins, 1989). The Mystery ofCapital: Why Capitalism Triumphs in the West and Fails Everywhere Else (NewYork: Basic Books, 2000). Summary from FragileStates: http://www.fragilestates.org/about/articles-and-publications/topics/causes-and-characteristics/the-other-path-the-invisible-revolution-in-the-third-world/.

26 De Soto, “Hernando de Soto dissects Thomas Piketty’s apocalyptic political thesis,”Miami Herald, August 1, 2015,http://www.miamiherald.com/opinion/issues-ideas/article29774506.html.

27 Ken Schoolland, “India Property Rights Project: Empowering Hundreds of Thousands of Farmers,” International Societyfor Individual Liberty, February 9 2014.http://isil.org/india-property-rights-project-empowering-hundreds-of-thousands-of-farmers/.

28 Ibid.


29 Garrett Hardin, “The Tragedy of the Commons,” Science, Vol. 162, No. 3859 (December 1968), pp. 1243-1248. However, H.Scott Gordon of Carleton College, in Ottawa, observed the phenomenon in fishing in the 1950s. Gordon, H. Scott,“The Economic Theory of a Common Property Resource: The Fishery,” Journal of Political Economy, Vol. 62, No. 2,April 1954, pp. 124-142, http://www.econ.ucsb.edu/~tedb/Courses/Ec100C/Readings/ScottGordonFisheries.pdf.

30 Charles N. Steele, “The Soviet experiment: lessons for development,” in Julian Morris (ed.) Sustainable Development: Promotingprogress or perpetuating poverty? (London: Profile Books 2002), p. 93.

31 For more detail, see Iain Murray and Roger Abbott, “Give a Man a Fish,” OnPoint No. 178, Competitive Enterprise Institute,May 17 2012, https://cei.org/onpoint/give-man-fish.

32 Christopher Costello, Steven D. Gaines., and John Lynham, J., “Can Catch Share Prevent Fisheries Collapse?” Science, Vol. 321,No. 5896, September 19, 2008, pp. 1678-1681, http://www.sciencemag.org/content/321/5896/1678.abstract.

33 Iain Murray and Roger Abbott, “Nobel Lessons,”Washington Examiner, October 22, 2009,http://www.washingtonexaminer.com/nobel-lessons/article/9415.

34 Michael J. Casey, “BitBeat: Plans for Bitcoin from Necker Island,”Wall Street Journal, June 2, 2015,http://blogs.wsj.com/moneybeat/2015/06/02/bitbeat-grand-plans-for-bitcoin-from-necker-island/.

35 “The Blockchain Summit on Branson’s Island and its relevance for mining and petroleum conflicts worldwide,”Institute for Liberty and Democracy website, undated (summit was held in May 2015),http://www.ild.org.pe/our-work/ild-projects/blockchain-ild.

36 James Harrington, “The Commonwealth of Oceana,” Chapter II, 1656 in The Oceana and Other Works of James Harrington,with an Account of His Life by John Toland (London: Becket and Cadell, 1771), http://oll.libertyfund.org/titles/916.

37 Julian Morris, “What is Sustainable Development?” The Insider No. 298, Heritage Foundation, August 2002,http://www.insideronline.org/archives/2002/aug02/feature.pdf.

38 C.K. Prahalad, The Fortune at the Bottom of the Pyramid, Wharton School Publishing 2005, p.69.39 Prahalad, pp. 70-72.40 Swaminathan S. Anklesaria Aiyar, “Capitalism’s Assault on the Indian Caste System: How Economic Liberalization

Spawned Low-caste Dalit Millionaires,” Policy Analysis No. 776, Cato Institute, July 2015,http://www.cato.org/publications/policy-analysis/capitalisms-assault-on-the-indian-caste-system.

41 This is hardly a new observation. “Corruptissima re publica plurimae leges,” Tacitus, Annals III.27.42 World Bank, “The Costs of Corruption,” April 2004.

http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20190187~menuPK:34457~pagePK:34370~piPK:34424~theSitePK:4607,00.html.

43 Prahalad, p. 86.44 Ibid, p. 8945 Ibid, p. 88.46 Maya Kroth, “Under New Management,” Foreign Policy, September 2014,

http://foreignpolicy.com/2014/09/01/under-new-management/.47 Enterprise Cities website, accessed August 18 2015, http://www.enterprisecities.com/#what.48 Kroth.49 Clément Girardot, “The Rise and Fall of Lazika,” The Tuqay, March 25 2013.

http://thetuqay.com/index.php/2013/03/25/the-rise-and-fall-of-lazika/.50 Max Borders, “Max U., the Virtues and Imprudent Communitarians,” The Freeman, April 3, 2013,

http://fee.org/freeman/deirdre-mccloskey-max-u-the-virtues-and-imprudent-communitarians.51 Bureau of Labor Statistics, Consumer Expenditure Survey, Residential Energy Consumption Survey.

http://www.bls.gov/cex/cecomparison.htm#RECS.52 Management Information Services Inc., “The Social Costs of Carbon? No, the Social Benefits of Carbon,” American Coalition

for Clean Coal Electricity, January 2014. http://www.americaspower.org/sites/default/files/Social-Benefits-of-Carbon.pdf53 National Energy Assistance Directors’Association, “2008 National Energy Assistance Survey,” April 2009, Chapter IV.

http://neada.org/wp-content/uploads/2013/05/NEADA-2008-Survey-Report.pdf54 Jeffrey A. Tucker, “All Hail the Tumbling Price of Gas,” The Freeman, January 13 2013.

https://fee.org/freeman/all-hail-the-tumbling-price-of-gas55 Antony Watts, “USAmeets Kyoto protocol goal – without ever embracing it,” Watts Up With That, April 5 2013,.

http://wattsupwiththat.com/2013/04/05/usa-meets-kyoto-protocol-without-ever-embracing-it/.56 Seamus McGraw, “Is Fracking Safe? The 10 Most Controversial Claims About Natural Gas Drilling,” Popular Mechanics,

January 2015 http://www.popularmechanics.com/science/energy/g161/top-10-myths-about-natural-gas-drilling-6386593/.57 U.S. Energy Information Administration, “Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137

Shale Formations in 41 Countries Outside the United States,” June 10 2013, http://www.eia.gov/analysis/studies/worldshalegas/.


58 Matt Ridley, The Rational Optimist (New York: HarperCollins, 2010), p. 345.59 Linda Nording, “Pebble Bed Nuclear Reactor gets Pulled,” Nature, No. 463, February 23, 2010, pp. 1008-1009,

http://www.nature.com/news/2010/100223/full/4631008b.html.60 Iain Murray, “American should learn from Europe on wind power,” USA Today, June 13, 2013,

http://www.usatoday.com/story/opinion/2013/06/13/america-wind-power-column/2397447/.61 This is to say nothing of the environmental costs that renewable energy imposes. Solar power plants take up large areas

ofwildlife habitat. Wind turbines kill birds and bats. Both require rare earth minerals.62 The Ecomodernist Manifesto, p. 2363 Alex Trembath and Max Luke, “Solar Panels are Not Cell Phones,” The Breakthrough, June 16, 2014,

http://thebreakthrough.org/index.php/programs/energy-and-climate/solar-panels-are-not-cell-phones.64 Todd Moss and Benjamin Leo, “Maximizing Access to Energy: Estimates of Access and Generation for the Overseas Private

Investment Corporation’s Portfolio,” Center for Global Development, January 2014,http://www.cgdev.org/publication/maximizing-access-energy-estimates-access-and-generation-overseas-private-investment

65 Coral Davenport, “Emissions from India Will Increase, Official Says,” New York Times, September 24, 2014,http://www.nytimes.com/2014/09/25/world/asia/25climate.html.

66 Amartya Sen, Development as Freedom (New York: Anchor Books, 1999), p. 39 and Chapter 8.67 Vincent Ryan Ruggiero, “Becoming a Critical Thinker,” Cengage Learning, Inc. 2014,

https://books.google.com/books?id=vdYbCgAAQBAJ&pg=PA54&lpg=PA54&dq=sergey+brin+google+credit+cards&source=bl&ots=MXAzEUwoVg&sig=5QoAMrRacm8gFgY6e23qJ9j9D-8&hl=en&sa=X&ved=0CDMQ6AEwBWoVChMIvdb3wLHuxwIVh9imCh2hSwIt#v=onepage&q=sergey%20brin%20google%20credit%20cards&f=false.

68 Prahalad, pp. 72-73.69 Rahman, Mizanur and Julie DaVanzo, Assessing the Impact of the Grameen Bank on Women’s Status and Fertility in Bangladesh,

Santa Monica, CA: RAND Corporation, 1993. http://www.rand.org/pubs/drafts/DRU485.70 Prahalad, pp. 52-571 James Tooley, The Beautiful Tree: A Personal Journey Into How the World's Poorest People Are Educating Themselves,

(Washington: Cato Institute, 2009).72 James Tooley and David Longfield, “The Role and Impact of Private Schools in Developing Countries: A Response to the

DFID-Commissioned ‘Rigorous Literature Review’,” Pearson, March 2015,https://research.pearson.com/content/plc/prkc/uk/open-ideas/en/articles/role-and-impact-of-private-schools/_jcr_content/par/articledownloadcompo/file.res/150330_Tooley_Longfield.pdf.

73 Ibid.74 Ibid.75 Ibid.76 Joanna Härmä, “Lagos Private School Census 2010–11 Report: Report Number LG 501,” Education Sector Support Programme

in Nigeria (ESSPIN), June 2011.77 Tooley and Longfield.78 Eric Schulzke, “The poorest of the poor in many Third World countries send their kids to private schools, British

researcher claims,” Deseret News, October 20, 2014,http://national.deseretnews.com/article/2569/The-poorest-of-the-poor-in-many-Third-World-countries-send-their-kids-to-private-schools-British.html#9ORJS53pT8M2mI0I.99.

79 Ridley, p. 358.80 With some qualifications based on the concept of the “universal destination” of property under “God’s plan” for the world.81 Pope Francis, op. cit., paragraph 93.


About the Author

Iain Murray is the Competitive Enterprise Institute’s Vice President of Strategy. For the past decade with theInstitute, he has concentrated on financial regulation, employment and immigration regulation, and free marketenvironmentalism.Murray has published several acclaimed books, including Stealing You Blind: How Government Fat Cats AreGetting Rich Off of You and The Really Inconvenient Truths: Seven Environmental Catastrophes Liberals Won’tTell You About—Because They Helped Cause Them. His op-eds have appeared in National Review, The ProvidenceJournal, and Fox News. He has appeared on Fox News, CNN Headline News, the BBC and Al-Jazeera, amongother broadcast networks.In addition to his work at CEI, Murray is a visiting fellow at the Adam Smith Institute and a board member ofthe Cherish Freedom Trust and American Friends of the Taxpayers Alliance and an advisory board member ofEconomists for Britain and the Young Britons Foundation.Prior to coming to CEI in 2003, Murray was the Director of Research for the Statistical Assessment Service andan Executive Officer at HM Department of Transport. He received his MBA from the University of London andhis MA from the University of Oxford.

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THE HIGH COST OF BIG LABOR

The Unintended Consequences of

Collective Bargaining

LOWELL GALLAWAY & JONATHAN ROBE

THE U

NIN

TEND

ED C

ON

SEQU

ENC

ES OF C

OLLEC

TIVE BARG

AIN

ING

GA

LLAWAY/

ROBE

CEI

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