It is difficult to know what the fallout of the COVID-19 crisis is going to be, especially since the toll in human life is, at this point, unknowable. The response has generally been to quarantine people at home and bring their daily lives, including work, to a dead stop. To mitigate the economic pain this will cause, the US government has passed a relief bill with a price tag of war-like proportions. However, ceasing economic activity has dire consequences.
Economic Activity Fights Poverty
Economic activity is what allows us all to live: to take our families on vacation, to buy a house, to save for retirement, to eat. It has nothing really to do with money in the sense that the government can’t just give us all a million dollars and make us rich. It has everything to do with the production itself. A rich nation like the US can weather the storm of taking a month or two off work. It will have serious consequences—but it can be done. It will decrease wealth and increase poverty. A poor nation that takes a month off work means people go without shoes, schooling for their children, clean water, and enough food to eat. It means more people will die from poverty.
Poverty is the great enemy with which mankind has had to contend since the beginning. Most people throughout history have lived in poverty and endured so that we, especially in the post-industrial west, could enjoy a life free from real poverty. Some of the world still contends with real poverty, and for the first time in generations, it is about to get worse. The US is the great economic engine of the world. Our productivity lifts millions out of poverty, and right now the world is watching.
For better or worse our immediate course is already set. We are taking a month or two off and borrowing the money to do it. What we need to be talking about is what to do next. We need to be serious about this. Our children need us to be serious about this. The world needs us to be serious about this. So, we must be completely honest and acknowledge that, without a doubt, only the creative forces of entrepreneurial capitalism can rescue the world. This is going to require two things: the expansion of Special Economic Zones, and a New Entrepreneurial Mindset.
Special Economic Zones
Special Economic Zones (SEZ), which eliminate burdensome taxes and over-regulation, are a testament to the cooperative creativity and power of human-centered markets and are an indictment of the failures of central planners. For example, the free trade zones in Dubai play a significant role in the continued development and prosperity of the region. One such zone, the Dubai International Financial Center, generates four percent of Dubai’s total GDP. It is home to more than 2,200 businesses and 24,000 workers. It added more than 250 new companies in 2019 alone.
Special Economic Zones are utilized also in China and many other countries around the world to foster innovation, prosperity, and employment. Shenzhen began its transformation into a Special Economic Zone in 1980 and today has a GDP of more than $360 billion and an annualized growth rate of more than seven percent. No wonder it has grown to be home to more than 12 million people. The Prosperity Zone Economic Projection Report published by the Institute for Competitive Government noted that in 2019 worldwide SEZ growth averaged 14.7 percent. This was 11.56 percent greater than the growth averaged by the rest of the world. Let that sink in.
Since Special Economic Zones all over the world have worked so well to create opportunity, jobs, and wealth, it makes any rational human being wonder why we would want to quarantine such creative energy and keep it removed from the majority of the people. Should not all people have access to this kind of opportunity? The solution here is to make every square foot of every nation on Earth an SEZ. Prosperity and opportunity should not be contained but set free for all to experience and enjoy. All governments should race to implement the very best examples as soon as possible. Of course, not all will. In comparison to those who do, those who do not will be left behind in an economic Dark Age.
The New Entrepreneurial Mindset is something that no legislative body can by dictum create. This new mindset for the people of every nation must be one of liberation, creativity, and self-empowerment. It is born of the intense desire for every person to create a better future. It is that can-do attitude that built the transcontinental railroad, invented the lightbulb, gave us jazz and rock and roll, put a man on the moon, and will overcome a virus.
It is that “embrace the future without asking permission” attitude that conceived Bitcoin, will create space tourism, give us artificial intelligence, put a man on Mars, write the greatest novel of the 21st Century, and bring about an end to poverty. All people dream of a better future in which their dreams can be fulfilled. Rightly these dreams see each person an artist and each life a blank canvass. The result is infinitely diverse. Of course, it really isn’t new. It is a rediscovery in ourselves of the indomitable human spirit.
This mindset is a natural and healthy view of the self and the world. It focuses on creating the future, not bemoaning the past. It is self-empowerment, not finger pointing. It is hope, not envy. It fosters a spirit of voluntary cooperation but tells no one that they must serve the dreams of another. It is the spirit of respect for our neighbor and its opposition is toxic to humanity.
It is opposed by those who resort to violence and coercion to obtain their dreams. It is opposed by those whose ultimate expression of self is to rule over others. It is opposed by those who believe that a better future for themselves can only be achieved by taking it from somebody who has more than they do. It is opposed by a lack of hope in the future.
This brings us full circle and coordinates the two ideas of creative entrepreneurialism and turning the Earth into one giant Special Economic Zone. What makes the SEZs so effective is their near lack of taxation and regulation. The less the better. Half-way SEZs will have half-way results. The best and brightest people with the best ideas will flock to the areas of greatest freedom. It has always been so.
To achieve this, we must first cast off our mental shackles of dependency and kindle the hope that a better future is possible. Then we can find the courage we need to demand the opportunities that only freedom can afford.
Editor's note: FEE is a sponsor of a special virtual summit: "Special Jurisdictions in a Post-COVID World" on May 1st and 2nd, 2020, hosted by the Startup Societies Foundation. Click here for information and to register.