Once a Communist Backwater, Georgia Discovered the Benefits of Free Markets. Now It Risks Abandoning Them.
Georgia (the ex-Soviet Republic, not the U.S. state) is now a remarkable success story.
Its economy is growing at 5 percent per year, and the country ranks ahead of the United States in economic freedom.
Yet, 20 years ago, Georgia was even more miserably poor than the rest of the former Soviet Union.
So, what can America and the rest of the world learn from Georgia’s progress?
A lot, says my executive producer Maxim Lott. He’s spent the past several months in Georgia and made a StosselTV video about it.
All former Soviet states are poor because the communists had grabbed everyone’s private property and put it under government control.
They thought they were smart enough to run the economy. They did things like order Georgians to produce tea. Soon, 95 percent of tea in the Soviet Union came from Georgia.
But Georgia is not the best place to grow tea.
After the Soviet Union collapsed, “People started to taste Indian tea and realized that tea is actually better,” says Georgian politician Zurab Japaridze. “Nobody wanted Georgian tea.”
That industry, and most others, vanished when Soviet support ended. “Three-fourths of the Georgian economy disappeared,” he says.
Central planners are never smart enough to run something as complex as an economy.
Fortunately, in Georgia, an eccentric libertarian, Kakha Bendukidze, became economy minister in 2004. He made “everything private, as much as possible.”
Georgia scrapped 90 percent of licensing and permit requirements. That reduced corruption.
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