OTHERS SAY: Why are some nations more prosperous than others? | The Arkansas Democrat-Gazette

For years, free-market think tanks such as the Cato Institute and the Fraser Institute have emphasized the link between economic freedom and prosperity. This month, the Royal Swedish Academy of Sciences awarded the Nobel Prize in Economics to three men whose work confirmed the link.

The award went to Daron Acemoglu and Simon Johnson, both of the Massachusetts Institute of Technology, and James Robinson of the University of Chicago. The men were recognized for research into “how institutions are formed and how they affect prosperity.”

Without going into too much detail about the intricacies of their work, their research makes it clear that there are reasons why some nations are richer than others. Nations with more “inclusive” institutions—market-oriented democracies that respect property rights and the rule of law—have the best chance of creating long-term prosperity.

The trio tested their thesis in a 2004 paper that found, “Economic institutions that foster economic growth emerge when political institutions allocate power to groups with interests in the enforcement of broad-based property rights, when they create effective constraints on power holders and when there are relatively few rents to be captured by power holders.”

This sounds surprisingly simple. But during a time when many young Americans have embraced the siren song of collectivism and socialism over capitalism, it’s a finding that deserves to be shouted from the hills. Inequality between nations is not a matter of chance. North Korea is not a basket case by chance. Venezuela has not fallen into poverty because of the climate. Ideas and economic systems matter.

It is no accident that the US Constitution, which creates “effective restraints on the holders of power” and recognizes the value of property rights, an independent judiciary, and personal liberty, provided the railings for the most prosperous nation on Earth.

The work of these Nobel laureates offers a way forward for impoverished nations, if they choose to do so. Let’s hope progressive Democrats pay attention, too.