Investor’s Business Daily posted an article today citing the results of a recent National Bureau of Economic Research study by MIT economist Daron Acemoglu and University of Chicago economist James A. Robinson.

The study reports:

It’s long been a truism that democracy brings benefits and flexibility to an economy that help boost growth. But some theoretical work “suggests that not all the mechanisms unleashed by moving political institutions from autocratic to democratic are positive for economic growth.” The economists built a model that controlled for possible unexpected influences — such as recessions and negative economic shocks, which often take place before a nation turns democratic. It’s tricky.

After doing the necessary number fiddling, what they found was pretty remarkable: “Our central estimates suggest that a country that switches from autocracy to democracy achieves about 20% higher GDP per capita over roughly 30 years.” That’s a huge difference.

The article mentions that after the fall of the Berlin wall, there was a movement around the world toward democracy. Unfortunately, some of the countries that attempted to become democracies have slipped back to their totalitarian ways. Russia, Venezuela, China and Argentina have all encountered major financial crisis since moving away from democracy. The statistics indicate that one of the most basic solutions to those financial problems would be a move toward democracy. The other kingpin of national prosperity is private property rights (rightwinggranny). That is an area where Americans need to be paying attention to what their government is doing. Less private property rights means less prosperity for the citizens of a country. Freedom breeds prosperity. We need to make sure we guard our freedoms.