The events in North Africa have roiled the stock markets, which recoil from uncertainty and therefore feel threatened by change, particularly sudden and dramatic change. “A society that would trade a little liberty for a little order will lose both, and deserve neither” said Thomas Jefferson at the time of the American Revolution. In our view, there are good reasons to feel positive about the revolutionary movements that are sweeping Egypt, Libya, Tunisia and Bahrain, and we hope that the current loss of order will result in a gain of liberty.
It goes without saying that all of us should rejoice at the toppling of cruel and oppressive dictators who have subjected their enslaved populations to poverty and degradation for decades. “No man is an island” said John Donne four hundred years ago; “any man’s death diminishes me because I am involved in mankind”. The world will be a better place without men like Mubarek and Gaddafi running and ruining countries, and we should be supportive of our fellow humans who are risking so much in the struggle for a better life.
That is the second reason to be sanguine about the regime changes. Any movement away from totalitarian rule and towards democracy is likely to result, over time, in higher economic growth and better living standards for citizens of the countries involved. We know this by looking at pairs of similar countries which have been ruled differently. No more dramatic example can be found than that of North Korea and South Korea. Sixty years ago, after the Korean War, both countries were in ruins with shattered cities and traumatized populations. The south embraced capitalism and modernism. The north remained a Communist police state run by a succession of hereditary dictators. The outcomes for the citizens could hardly be more different. News stories this week report that North Korea has once again run out of food, leaving rural residents to survive on grass, tree bark and whatever can be scrounged. Another generation of North Korean children will be subject to starvation and stunted physical and mental development. Meanwhile, South Korea has a Gross Domestic Product of $31,000 per person, putting it ahead of Spain and Italy, and one rung behind Japan. It exports cars and electronics to the west, while the north wastes its scarce resources on weapons with which to threaten its more successful neighbor.
We in the developed world have ample reason to hope for fewer North Koreas and more South Koreas. Rich countries are less war-like; many have noted that there are almost never wars between democratic states (India and Pakistan being the notable examples if one regards Pakistan as a democracy). Rich countries have lower birth rates, less pollution and higher standards of human rights. Finally, rich countries are customers for our products and good trading partners.
No one can guess how the current popular insurrections in North Africa will play out, but if the current disorder results in a growth of freedom, it is a reasonable price to pay.
