The World Is Dying, So Tax the Rich?
The Poor Need Secure Property Rights and Markets, Not Income Redistribution
JANUARY 01, 2003 by JAMES R. OTTESON
In a September 2, 2002, op-ed in the Washington Post, U.N. Secretary General Kofi Annan sets out what he believes should be the world’s agenda for the next century. He says we face “the twin challenges of poverty and pollution,” and that if we are to end the “wanton acts of destruction and the blithe self-delusion that keeps too many from seeing the perilous state of the Earth and its people,” we must organize a worldwide effort. “Action,” Annan gravely intones, “starts with government.”
It is hard to imagine how a single article could go wrong in more places and in more ways.
Here are the claims with which Annan opens: “We have filled the atmosphere with emissions that now threaten havoc in our lifetime”; “We have felled forests, depleted fisheries and poisoned soil and water alike”; and while some countries have grown rich, “too many people—in fact, the majority of humankind—have been left behind in squalor and despair.”
Let us take these claims in turn. First, is it true that we have brought our atmosphere to this perilous state? Well, no. Although systematic evidence does not go back for more than about a century, all measurements of average concentrations of dangerous particulate matter shows them decreasing for the last several decades, despite growing populations and economies. According to a 1992 World Bank study, “Air quality in OECD countries is vastly improved.”1 That same document cites an OECD study showing that since 1970 lead concentrations have dropped by almost 100 percent, suspended particulate matter by 60 percent, and sulfur dioxide by 38 percent.2
How about the second claim? Is it true that we have depleted or poisoned our resources? Again, no. It is of course true that some forests have been felled and that some fisheries are being depleted, but on neither count are we anywhere near disaster. Global forestation has dropped about 20 percent within historical times, but remained relatively constant during the latter half of the twentieth century, even increasing marginally.3 Forestation in North America has actually increased since the day Columbus arrived.4 Amazonian rainforest, the loss of which is much lamented, still retains about 87 percent of what it was when man first arrived there; the rate of its loss is declining as well, currently standing at only about one-half of 1 percent per year.5 (Incidentally, the claim that the rainforests provide us with all our oxygen is quite false: they use up about as much oxygen as they produce.6)
The world’s total fish catch has increased steadily in the last 50 years, but the 90 million tons or so of fish mass now annually taken out of the oceans is estimated to be about 10 million tons less than the total sustainable amount. Thus the oceans are in good shape.7 Moreover, like our atmospheric quality, both soil and water quality are, by virtually any measurement, getting better worldwide.8 That is not to say that there are not problems, or that things could not be improved—only that strong and credible evidence suggests that Julian Simon was right when he said that things are getting better and better.
But what about the places in the world where there are local problems with water, forests, fisheries, and so on? This brings us to the other major error in Annan’s article. He notices that most of these problems are in developing, not developed countries, but he fails to realize what is the most important difference between them: property rights, markets, and relatively less government regulation. If the evidence suggests anything, it is that the remedies for poverty Annan proposes—government regulation of industry, markets, and the environment—are precisely the things that have slowed and even stunted progress in developing countries. These cures are worse than the disease. Economic freedom correlates positively with political stability, access to health care, access to clean water, food production, and investment in research and development9—indeed, even cleaner environments.10
The recent case of Ireland is illustrative. It has been one of the economic backwaters of Europe for generations. For centuries more people left Ireland than came to it. Suddenly, however, things have turned around: the immigration patterns have reversed, investment dollars are rolling in, and the economy has been growing at a robust 9 percent—far outstripping the anemic growth of other countries in Europe.11 This has raised the ire of the European Union, which has reprimanded Ireland for the “reckless” policies that are siphoning off business, investment money, and talented people from the rest of Europe.
What has caused this sudden and stark about-face? Has it been the economic intervention, the managed markets, the globally organized world governments that the U.N. Secretary General recommends? No. Ireland lowered its taxes.
It cut the capital-gains tax from 40 to 20 percent and its top marginal personal income-tax rate from 48 to 42 percent, and it reduced its corporate tax rate to 12.5 percent, one of the lowest rates in the developed world.12 In so doing, it signaled to investors and entrepreneurs around the world that it is a place of opportunity. Where there is opportunity, entrepreneurs will come—and wealth will follow them.
Kofi Annan says he is concerned about the poor nations, which he believes can only be rescued by taxing the wealthy. But the mounting evidence indicates that what the poor need is secure property rights and markets—and then they will take care of themselves. As hard as it is for a lifetime politician like Annan to contemplate, he must let them go.
—JAMES R. OTTESON
Department of Philosophy
University of Alabama
- See Bjørn Lomborg, The Skeptical Environmentalist (Cambridge: Cambridge University Press, 2002), p. 175.
- World Bank, World Bank Development Report 1992: Development and the Environment (Oxford: Oxford University Press, 1992), p. 40.
- The increase has been from 30.04 percent global forest cover in 1950 to 30.89 percent in 1994. See Food and Agriculture Organization of the United Nations, The Global Forest Resources Assessment 2000: Summary Report, available at ftp://ftp.fao.org/unfao/bodies/cofo/cofo15/x9835e.pdf.
- Stephen Moore and Julian Simon, It’s Getting Better All the Time: 100 Greatest Trends of the Last 100 Years (Washington, D.C.: Cato Institute, 2000), p. 204.
- See Lomborg, pp. 114–17.
- See Wallace S. Broecker, “Man’s Oxygen Reserves,” Science 168 (3, 939 ), pp. 1,582–88.
- See John P. Wise, “Trends in Food from the Sea,” The State of Humanity, ed. Julian L. Simon (Oxford: Blackwell, 1995), pp. 411–15.
- See The State of Humanity, ed. Julian L. Simon (Oxford: Blackwell, 1995), chaps. 40, 43, and 45, and Lomborg, chapter 19.
- See James Gwartney and Robert Lawson, Economic Freedom of the World: 2002 Annual Report, at http://freetheworld.com/. chapter 1.
- See Mikhail S. Bernstam, “Comparative Trends in Resource Use and Pollution in Market and Socialist Economies,” The State of Humanity, pp. 503–22.
- See Ben Powell, “The Celtic Tiger,” Techcentralstation-Europe, September 10, 2002, at http://www.techcentralstation.be/2051/wrapper.jsp?PID=2051-100&CID=2051-091002A.
- See Brian M. Carney, “The Secrets and Perils of Ireland’s Success,” Wall Street Journal Online, May 30, 2001.