Why Not Much Wealth Is Created There
25 March 2007
The Editor, New York Times Magazine
229 West 43rd St.
New York, NY 10036
To the Editor:
Tina Rosenberg recounts many reasons why people in poor countries invest heavily in the United States ("Reverse Foreign Aid," March 25). She misses, however, the most fundamental one: compared to poor countries, property rights in the U.S. are secure, regulation is less burdensome, and the currency is stable.
Poor countries are poor for a reason - namely, their institutions discourage substantial capital investments. So Ms. Rosenberg is mistaken to suggest that there's something perverse and unfair about persons in poor countries investing in America. A more-appropriate description is that America's relatively free-market economy provides welcome opportunities for foreign investors. The investments that flow to America are not "subsidies"; they are returns on relatively sound economic policies.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
The Editor, New York Times Magazine
229 West 43rd St.
New York, NY 10036
To the Editor:
Tina Rosenberg recounts many reasons why people in poor countries invest heavily in the United States ("Reverse Foreign Aid," March 25). She misses, however, the most fundamental one: compared to poor countries, property rights in the U.S. are secure, regulation is less burdensome, and the currency is stable.
Poor countries are poor for a reason - namely, their institutions discourage substantial capital investments. So Ms. Rosenberg is mistaken to suggest that there's something perverse and unfair about persons in poor countries investing in America. A more-appropriate description is that America's relatively free-market economy provides welcome opportunities for foreign investors. The investments that flow to America are not "subsidies"; they are returns on relatively sound economic policies.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Saturday November 10, 2007 at 5:12pm