Venture capitalist Bill Frezza has published an excellent essay today entitled "Egypt needs free enterprise more than democracy." In it, he refers to and expands on the insights published by influential economist Hernando de Soto last week in that author's Wall Street Journal editorial entitled "Egypt's economic apartheid," which catalogs the lack of property rights in Egypt and the numerous obstacles to starting any kind of business there.
In his article, Mr. Frezza argues: "The deepest malady afflicting the Egyptian people, and most other underdeveloped countries for that matter, is not lack of the vote. It's the inability to open a bakery without spending two years hacking and bribing through a bureaucracy designed to stomp on independent businesses."
Agreeing with Mr. Frezza, which we do, does not mean that one does not think democracy and a vote are important human rights, which we do as well. The important point that he is making is that without economic freedom, the trappings of political freedom (including the vote) are meaningless. In other words, the foundation of freedom is ultimately economic, rather than political, and that is a very crucial point (and one that many who do enjoy freedom sadly do not understand).
We have argued this point last year, in this post entitled "Jefferson on economic freedom," in which we quoted Thomas Jefferson on the subject, as well as George Gilder, who made the argument this way:
"Elections -- counting heads rather than breaking them -- are a prime tool of democracy, but hardly its essence. [. . .] Elections every day would not make a democracy of a society in which the decisive political forces are teenage gangs with guns and terrorist courtiers doling out foreign aid to an intimidated populace. No tenable theory of democracy allows the majority to destroy or expropriate the minority. Without a functioning and legally protected capitalist system, democracies swiftly sink into ochlocracies. Without the independent private sources of power imparted by free businesses, unbiased courts, and other institutions of economic order, any democracy becomes a despotism ruled by any tribe of thug politicians that manages to gain control" (the Israel Test, 224-5).
We're in good company when we make this argument. Thomas Jefferson was heavily influenced by philosopher John Locke (1632 - 1704), who made the exact same argument. Locke believed that property rights are a natural human right (along with life and liberty), and went so far as to say that "government has no other end, but the preservation of property."
In his Second Treatise on Government, Locke argued that if the power of the government (even if democratically elected) is used to seize people's property or harass their persons, it is nevertheless a tyranny, while a monarchy that secures life, liberty and property is far more free. He wrote:
"'Tis a mistake to think this fault is proper only to monarchies; other forms of government are liable to it, as well as that. For wherever the power that is put in any hands for the government of the people, and the preservation of their properties, is applied to other ends, and made use of to impoverish, harass, or subdue them to the arbitrary and irregular commands of those that have it: there presently becomes tyranny, whether those that thus use it are one or many" (paragraph 201).
These principles are very important to understand, especially in light of the current events in the Middle East.
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