Understanding the Slide in Economic and Personal Freedom

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Understanding the Slide in Economic and Personal Freedom

After the bricks from the Berlin Wall came crashing down, it seemed that democracies would rise from the rubble around the globe. In the former countries of the Soviet Union, and throughout the world, leaders talked about reforming their economies and political systems.

But those reforms have collapsed for a reason that escapes most observers: There is a direct link between a country’s economic system and its social system. More specifically, a nation can’t have a world-class economy without giving its citizens the freedoms that we take for granted in the U.S. — including a free-market system.

The U.S. won the Cold War with the Soviet Union because its superior economy was based on democracy, free trade, and the free market. It was impossible for the Soviet government to compete with America because the Communist party’s bureaucrats kept a stranglehold on the economy and the means of production. Without the freedoms to start businesses or question authority, the Soviets lagged far behind the U.S. in crucial innovations, whether in inventing new weaponry or designing efficient factory processes.

Understanding that, in 1985, Mikhail Gorbachev introduced the concepts of glasnost and perestroika — openness and restructuring — that led to the collapse of the Berlin Wall, the disintegration of the Soviet Union, and a halt to the Cold War. As a result, democracy spread throughout eastern Europe and Russia. At the same time, Deng Xiaoping began to open China’s economy to the world.

Throughout the globe, nations began to embrace privatization, foreign investment, and deregulation. And with the technological advances brought by personal computers, high-speed communications, and the Internet, it seemed realistic to look forward to an era of unprecedented global prosperity.

Peter Leyden and Peter Schwartz imagined just such a scenario in an influential Wired magazine article called “The Long Boom”1 in 1997. They asserted that glasnost and digital technologies would bring about what they called “The Long Boom” — a quarter-century of progress in which all of the world’s countries would form a single integrated economy that brought wealth and personal freedom to every person on the planet.

Why hasn’t it happened? Unfortunately, oppressive social systems like those in the Middle East, in Russia, and now in Venezuela have survived largely because of the windfall their economies have reaped. The surging price of oil creates economic advantages for oil-producing countries, regardless of their social systems...

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