Poor PlanningHow to achieve the miracle of poverty
By Ronald Bailey
"Poverty, not economic growth, is the real miracle today," explains Leon Louw, executive director of the Free Market Foundation of Southern Africa. I met Louw while covering the United Nations' World Summit on Sustainable Development in Johannesburg. Louw's insight is that in the modern world governments have to work hard to make and keep people poor.
In his wonderful book The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, the Peruvian economist Hernando De Soto notes: "The cities of the Third World and the former communist countries are teeming with entrepreneurs. You cannot walk through a Middle Eastern market, hike up to a Latin American village, or climb into a taxicab in Moscow without someone trying to make a deal with you. The inhabitants of these countries possess talent, enthusiasm, and an astonishing ability to wring profit out of practically nothing." It's possible to keep such people down only if governments dedicate themselves to the pursuit of really bad policies for decades at a time.
Most notorious, of course, was the grinding poverty sustained for seven decades in the communist bloc. The phrase rich communist country has always been an oxymoron. We still have illustrations of communism's brilliance at sustaining poverty in Cuba and North Korea. Today, even though Cuba has opened a bunch of swank hard currency beach resorts, its GDP per capita is still only $1,700 at purchasing power parity. Per capita GDP in North Korea, which is asking again this year for food aid, is only $1,000.
But policies don't have to be as bad as totalitarian communism to make people poor. Consider the case of Argentina. In the 1920s Argentina's was one of the largest economies in the world, with an average income about the same as France's. Rich as an Argentine was a catch phrase often used in Paris cafés to describe an especially wealthy person.
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http://www.reason.com/rb/rb091802.shtml 
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