On July 15 2013, Bono, the Irish rock star, lead singer for U2, and international human-rights activist, was made Commander of the Order of Arts and Letters of the French Republic. Perhaps he could take the opportunity to teach the French Parliament a lesson in sound economics. The Parliament is discussing yet another socialist law, this one to bar profitable companies from closing factories.
Bono? Isn’t he the well-known advocate of government solutions to economic development problem?
He used to be.
Late last year, at Georgetown University’s Global Social Enterprise Initiative event, Bono turned around and proclaimed that the way to stimulate economic development in the poor countries of the world is “commerce and entrepreneurial capitalism.” This was a pleasantly astounding change!
If commerce and entrepreneurship are good for the impoverished people of Africa, it’s also good for the people of France and other people too. Government measures crowd out needed entrepreneurship and so inhibit growth and freedom. Banning factory closings may sound benevolent, but business needs flexibility to serve consumers. Barriers to closing factories inevitably function as barriers to opening them. Whom does that help?
Bono’s insight makes him unique. It’s unusual for rock stars to endorse free markets. They prefer to appear to be utopians and anti-materialistic. But on close examination, this is very odd indeed. After all, where would these musicians be without entrepreneurial capitalism? The growth in per capita wealth in the West, thanks to relatively free markets, has made it possible for more people to pursue the arts and to patronize them than is possible when living standards are low.
Moreover, modern musical equipment–from electric guitars to microphones, from amplifiers to lights–is the product of thousands of hardworking entrepreneurs taking risks in the competitive marketplace. Think of Leo Fender, one of the inventors of the electric guitar. His famous “Stratocaster” guitar is at the center of the legendary sound of U2 and of many other bands and artists, such as Jimi Hendrix, Dire Straits, Eric Clapton, and Pink Floyd. Where would they be if government centrally planned the economy? Would bureaucrats have permitted Fender to create his guitars?
Without entrepreneurial capitalism and its global business scope, rock stars could not have become millionaires or billionaires. How, then, would they have exercised their charity and financed their fight against hunger and misery? Their fortunes are the result of countless mutually beneficial exchanges between producers and buyers of music–that is, of cooperative market activity.
Finally and most important, the freedom of entrepreneurial capitalism–the patient process of inspiration, innovation, creativity, and collaboration–is the essence of art itself! Thus the traditional anti-free-market position of artists is staggeringly inconsistent, as Bono now seems to realize.
Markets may be fine for western rock stars, you say, but how can the poor of Africa survive without government efforts? Bono summed it up well: “In dealing with poverty here and around the world, welfare and foreign aid are a Band-Aid. Free enterprise is a cure.”
What Bono now favors is in no way strange to Africa. On the contrary, free enterprise is the traditional practice, as evidenced by the millions of tiny shops that line the roads of the continent. But ruling elites are more comfortable with government intervention, in the good old French or Soviet tradition of dirigisme. The crucial link between a sound business climate and economic growth escapes most politicians, who are often preoccupied with playing favorites while stifling other people’s productive activities. In other words, African entrepreneurial capitalism is replaced by crony capitalism, with its political pull, monopolies, protection from competition, and corruption. Tragically, this is often encouraged by “friendly” great powers seeking to curry favor with local potentates for a particular concession or market for their big businesses.
Because of his past activities and great renown, Bono is in a unique position to teach the world that international aid harms rather than helps the poor because it creates perverse political incentives and impedes enterprise. William Easterly’s White Man’s Burden, and Dambisa Moyo’s Dead Aid provide detailed explanations of the failure of government-to-government transfers.
More generally, Bono can teach the world that free enterprise is good for everyone, not just underdeveloped nations.
Emmanuel Martin. July 19, 2013.