I recently calculated that the 122 nations ranked by Fraser Index averaged a rate of growth of 1.7% from 2000-2005.  The twenty nations that had the highest gains in economic freedom from 1995-2005 averaged a rate of growth of 4.2%.  If the entire global economy had grown at a rate of 4.2% instead of 1.7% between 2000 and 2005, the world would have an extra $10 trillion in wealth, equal to more than five times the annual income of Africa and almost equal to the $13 trillion U.S. annual economy.

The nations with the top ten gains in economic freedom averaged growth rates of 6.1%.  At this rate of economic growth, by 2006 the world would have had nearly $20 trillion in additional wealth.

Those nations with the largest gains in economic freedom are likely to experience faster rates of economic growth, and the poor will usually benefit.  For example India, the 19th largest gainer in economic freedoms 1995-2005, experienced an average rate of growth of 5.38% in 2000 - 2005.  The McKinsey Quarterly reports that in 1985 93% of the Indian population lived on less than a dollar per day.  By 2005 that had been almost cut in half, down to 54% of the population.  They estimate that 431 million Indians were brought out of severe poverty by means of the economic growth that took place from 1985-2005.  They estimate that if India could achieve an average annual growth rate of 7.1% for the next 20 years, another 465 million would be brought out of extreme poverty.  There are no charities that can bring so many people out of poverty so quickly. 

Each year, tens of millions of Indians are buying their first wristwatch, transistor radio, blender, or bicycle, and feeling a sense of gratitude and satisfaction from these modest gains that most of us will never know.  Read Gurcharan Das' India Unbound for a beautiful description of this transition from an Indian who loves the spiritual India but also knows that her people need material goods to thrive.

A California appeals court ruling clamping down on homeschooling by parents without teaching credentials sent shock waves across the state this week, leaving an estimated 166,000 children as possible truants and their parents at risk of prosecution.

The homeschooling movement never saw the case coming.

"At first, there was a sense of, 'No way,' " said homeschool parent Loren Mavromati, a resident of Redondo Beach (Los Angeles County) who is active with a homeschool association. "Then there was a little bit of fear. I think it has moved now into indignation."

The ruling arose from a child welfare dispute between the Los Angeles County Department of Children and Family Services and Philip and Mary Long of Lynwood, who have been homeschooling their eight children. Mary Long is their teacher, but holds no teaching credential.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/07/MNJDVF0F1.DTL

In Germany homeschoolers are routinely imprisoned.

See here as well.

 

 

“The Master in the art of living makes little distinction between his work and his play, his labor and his leisure, his mind and his body, his education and his recreation, his love and his religion. He hardly knows which is which. He simply pursues his vision of excellence in whatever he does, leaving others to decide whether he is working or playing. To him he is always doing both.”

Zen Buddhist Text

The quotation above is an excellent statement of one of my ideals as an educator. In addition to mastering the art of living as described above, I would want my students to be complete autodidacts: Capable of learning anything on their own by the time they are 18. They should be polite and respectful, independent and creative.

I believe that most young human beings can be educated in such a way that most young people, even those from the poorest families, could develop abilities that are superior to those of our most capable adults today. As an educator with 15 years experience in innovative education, I am certain that our existing efforts at education are analogous to medicine circa 1500: Primitive.

How could such gains be possible?

To begin with, when I hire teachers, I look for three things: Do they love young people? Can they set boundaries with young people? Are they truly masters in their area of expertise?

If I were allowed to select students, there would be one criterion: Is this person ready to commit him or herself whole-heartedly, heart and soul, to excellence in the chosen course of study?

Then, in a large, diverse market of seekers of excellence, an innovative dynamic among truly committed expert and novice learners would develop, capital would rush in to support research and development, and new ways of learning would be developed that are strictly unimaginable today. As the learning process began offering real results, more people would commit their lives to excellence in the various learning paths being offered.

Note immediately that, despite massive spending on education and participation in education that the description of teachers and students stated above describes less than .0001% of our existing teacher - student interactions. One would have to conduct a very careful search to discover any such interactions in today's world. Perhaps a music student here and a martial arts student there have relationships with teachers similar to that described above. Such simple and obvious pre-requisites to excellence in education are almost non-existent in today's world.

Suppose that a ruler once read a beautiful love story, in which two hearts' longing for each other was at last blissfully relieved when they found each other, consummated their love, and lived happily ever after.

Then suppose, having read this love story, and thus concluding that love was a good thing, this ruler forced everyone in his land to marry immediately. In order to ensure that marriages happened, police would enforce the law. Experts in marriage, who had received licenses from universities in their expertise, trained each participant using a state-approved textbook on marital happiness. Then people were forced together and required to use the "research-driven" techniques for "marital happiness." Worse yet, the "marital happiness" manuals continually emphasized the importance of "love." Individuals were trained in "love" and certified in "love" based on the scores they received on tests. The tests, of course, were based on "research."

People would come to loathe love and marriage. Young people, forced into their "marital happiness" courses, would hate the courses and rebel. While there would be earnest professors doing their best to write good books on "marital happiness," many people would realize that the whole system was a joke. Or, in terms of last Friday's post, it was all crap.

This is precisely where our education system is. Education should be based on love and a commitment to excellence, a longing for the true, the good, and the beautiful. Education should not be a forced marriage supervised by government-licensed experts.

Former communist nations are going through a long, painful process of re-creating the most basic human virtues and civic institutions. If we dismantled our education system, we would have to go through a similar long, painful process of re-creating healthy educational relationships. But it is important to realize that we cannot get to a better place by continuing in our present direction.

No Child Left Behind is a Kafka-esque extension of the insanity of our existing education system. The nightmare would be that, after it fails, the response is to increase control more, with more specified curriculum and more tests and more dishonesty about what is really happening to the hearts and souls of our young.

I await a time when the Berlin wall of government-controlled schooling is finally shattered, and we can begin to share the art of living with millions of young people in honest, straightforward, real relationships.

A new era of human happiness will begin at that point in time.

Dear FLOW Members,

Two Buddhist monks came across a river where a beautiful woman was trying to cross the deep rapids.  The older one picked her up and carried her across the water, gently setting her down on the other side.  That evening when they reached their lodgings, the younger monk chastised his companion, noting that he had violated his vows by touching a woman.  The first monk replied "I set her down on the other side.  You are still carrying her."

Buddhist practice aims at cultivating an inner clarity that is free from impulsiveness and desire.  There are similar strands of thought in the western philosophical tradition; the Platonic Socrates, and later his Stoic followers, similarly sought a life free from a "slavery to the passions."  The Enlightened Buddha in the East, or the Philosopher in the West, both dedicated themselves to a personal discipline of the psyche in which their minds were free from the motivations that come from the neediness of the ego.  One need not believe that the ego is necessarily to be extinguished to agree that the ego ought nonetheless be subject to a discipline that recognizes that our intentionality may have higher goals than the needs of the ego.

Most people associate "unbridled capitalism" with "unbridled egotism" and believe that it is a social system that is driven by greed and vanity, from the capitalist who pursues monetary wealth beyond all measure to the consumer who constantly puts herself in debt to buy the next object she doesn't really need.  Indeed, there are those who believe that capitalism as a system depends on the multiplication of needs, and that if we all developed Buddhist or Stoic wisdom and discipline that it would all come crashing down.

But this understanding of what I will call "the free enterprise system" is as misguided as if we came to believe that the only books were those that encouraged us to covet and hate, ignoring the enormous diversity of written materials.  The free enterprise system is a powerful tool, much as the written word is a powerful tool, and it can be deployed in endlessly diverse ways.  Now that the 20th century bigotries against markets are becoming a thing of the past we are obliged to pick up this tool afresh and discover new and beautiful ways to use it.  Those of us who are still hostile to acts of voluntary exchange have not yet let go of 20th century animosities.

For those of us who are committed to a personal discipline of the ego, and who believe that we will be happier and better people if we train our desire, it can be frustrating to see so many people engaged in such acts of personal indulgence and vanity, many of which will not bring them greater happiness.  Our frustration is apt to grow when we are acutely aware of the enormous human needs of the world's poor, and see such waste of talent and resources as takes place constantly.  When one adds an understanding that there are limited material resources on earth, some find the frustration overwhelming and give themselves over to a life of anger and resentment.

But surely such anger and resentment is not a mark of wisdom.  Once one has set aside such unbridled impulses, how can one then act out of compassion and justice to make a better world?

For me, there are three priorities:

1.  The creation and development of communities of practice in which we may learn to become our best selves day in, day out, for a lifetime.

2.  The implementation of property rights solutions to tragedy of the commons problems so that we no longer need to worry about the problem of environmental sustainability.

3.  Increase economic freedom around the world to the point at which we have seven or eight billion people, all prosperous and freely engaged in fulfilling, peaceful, constructive work.

These are goals that the world's wisdom traditions would largely endorse if they were equipped with adequate intellectual tools.  Unfortunately all too few are exposed to the intellectual tools needed to deploy the free enterprise system to make a better world.  Thus my ongoing attempt to share some beautiful and powerful intellectual tools more broadly so that we may all work together on creating a better world.

There are adults who are spontaneously creating small communities of practice, in their workplaces and in their personal lives, to help them become their best selves.  As adults, we tend to be set in our habits and busy with adult responsibilities, and thus the process of becoming our best selves is a slower and less effective process with adults than it would be with young people.  This is why I spent fifteen years creating schools that served as communities of practice, and why I continue to support anyone who attempts to do the same in K-12 education.  The unfortunate truth is that it is not possible to create lasting communities of practice in government-managed institutions.

Peter Barnes, in Capitalism 3.0, has provided a brilliant first draft of an integrated set of property rights solutions to environmental problems.  If we are able to implement something like Capitalism 3.0 in the coming decades, we will be able to enjoy a world of ever-increasing standard of living without worrying about environmental sustainability.

Through our Peace through Commerce and Empowering Women Entrepreneurs programs I am most focused on communicating the impact of increasing economic freedom.  For some time now I've been focused on creating a prediction market game on economic freedom indices.  In November of 2006 I met with my thesis advisor and economics Nobel laureate Gary Becker to discuss this idea with him, and he agreed that

"The idea of a prediction market in economic freedom indices is interesting and worthy  of exploration.  If such an idea could be made practicable, such a market could have a very positive impact in increasing awareness of economic freedom and thereby improving prospects for long-term growth."

At the time I was thinking more of a commercial market than a game version, and spoke with Leo Melamed, the head of the Chicago Board of Trade.  Leo was intrigued by the idea, but impressed upon me the challenges of creating a successful commercial predictions product (and he has introduced more of them than anyone).

I've thus turned more in the direction of game development, in association with a school-based curriculum, as a more realistic approach to introducing the idea of predicting economic freedom ratings.  While it may at first sound like an odd theme for a game, when I worked in schools I introduced students to stock market games and found that they loved the excitement of trying to out guess the market, and that eventually they became motivated to do research in an attempt to do even better.  In a very different context, a few months ago I discovered realius.com, a real estate prediction market that is based on the idea of fantasy football.  With no cash prizes, Realius has developed an active market among real estate professionals competing to see who can best predict the price at which a given property will sell.  Chuck Teller, the founder, points out that if Realius had been in existence a few years ago it might have prevented the mortgage crisis.

The stakes involved in an economic freedom prediction game are even higher.  Last fall I co-wrote a paper in which I challenged Jeffrey Sachs to a wager:  Let's compare the twenty nations with the highest gains in economic freedom against the twenty nations that receive foreign aid to determine which ones experience the most economic growth in the next twenty years.  After writing that paper, I decided to check the twenty nations with the largest gains in economic freedom in the past ten years, 1995-2005.  Of the 122 nations for which measures are available, the top twenty gainers in economic freedom average rate of growth 2000 - 2005 is 4.2%; this set of nations as a whole averaged growth of 1.7%.

Ah, but statistics are boring.  And yet it turns out that if the entire world had grown at 4.2% instead of 1.7%, by 2006 we would have had an extra $10 trillion in wealth - this is more than five times as much wealth as is generated each year in Africa, and nearly as much as is generated each year in the U.S.  Basically if we increased economic freedom around the world, we could add a U.S. economy to the world every five years.  Moreover poor nations benefit more from a given improvement in economic freedom than do rich nations.

Let's take the case of Malawi, at $750 annual GDP per capita one of the poorest nations on earth.  For 2000-2005, Malawi has grown at a rate of .44% per year.  In 45 years time at this rate of growth, Malawi's GDP per capita would be $914.  At 4.2% annual growth, in 45 years time Malawi's GDP per capita would be $4776.  This is much better.  But the nations with top ten gains in economic freedom (without losing ground in their legal structure) averaged a rate of growth of 6.1%; this rate of growth would result in 45 years in Malawi reaching $10,844, almost where Mexico is today.  Of course China has been growing at or near 10% for some time now; if Malawi could do that for 45 years, they would have a GDP per capita of $54668.  And, lest this seem like the top of possibility, Dubai has averaged rates of growth of 17% for more than fifteen years.  If Malawi could average 17% for 45 years, it would have a GDP per capita of $17,329 in 20 years, $83298 in 30 years, and $877,859 in 45 years.

This may seem absurd, and yet everything about our wealth in the developed world would seem fantastic to anyone living in 1800 or 1900.  Fred Turner, in his wonderful article "Make Everybody Rich," estimates that by 2100 the average family of four around the world will be earning $320,000 annually, with of course much of the population being millionaires and some "poor" families only receiving $100,000 per year in income.

The real task is not to react against these marvelous possibilities; it is to steer them so that they happen more quickly, with less environmental damage, and a deeper fulfillment of human potential, happiness, and well-being.  The numbers are merely numbers; they can represent great ugliness or great beauty.  Ultimately the wealth that will be created, be it ugly wealth or beautiful wealth, will depend on the legal structures within which the billions of acts of creation take place.  At present far too many people are still stuck in a primitive 20th century opposition, either for markets or against them, either for economic freedom or against it, either for economic growth or against it.  The next stage is to transcend the opposition and recognize that the creativity, innovation, and entrepreneurship of seven or eight billion people can be directed in any number of different directions, towards great violence and destruction or towards ever deeper humanity and adventures of the spirit.

Do not cling to the violation of your vows.  Let go of your attachment to the old conflicts, and move forward into our next adventure of the spirit.

Towards peace and prosperity for all,



Michael Strong
CEO & Chief Visionary Officer
FLOW, Inc.