Why Do We Need Human Rights? (18): The Economic Case Against Human Rights

Some more comments following two previous posts on the topic (see <a href="http://here and here).

Do human rights promote or depress economic growth and prosperity? (I’ll focus on non-political rights for the moment because political rights – i.e. democracy – have very specific effects on the economy). The economic case against human rights could go something like this. Economic growth would be enhanced by different policies and actions that imply violations of human rights. E.g.

  • Killing criminals instead of incarcerating them would make substantial resources available for more productive investments.
  • The same is true for the resource that go into running legal and criminal judiciary systems that correspond to human rights requirements (e.g. high burden of proof, appeals systems, legal representation etc.).
  • Human rights, and specifically those regulating the judiciary, make it more likely that suspects who have indeed committed a crime are set free, which imposes an economic cost on society.
  • Killing the poor, the sick and the elderly rather than helping them would likewise liberate resources for more productive use.
  • Less extremely, assisting the poor, the sick and the elderly means creating a large government and a heavy tax and regulatory burden. These are detrimental to entrepreneurship and business because they are disincentives for wealth creators. When wealth creators are burdened, prosperity suffers.
  • Social and economic human rights such as a right to strike, to a decent wage, limited working hours etc. undermine productivity and hence prosperity.
  • Etc.

Let’s assume, for the sake of argument, that all these effects are real and not compensated by

  • positive economic effects of respect for human rights
  • other, negative economic effects of violations of human rights, or
  • long term disadvantages following the possible short term advantages of rights violations (the fear, distrust and uncertainty resulting from some if not all of the claimed economic advantages of the rights violations that I just cited would likely harm long term prosperity).

Then you still don’t have a watertight case against human rights because people may still be willing to pay the economic price for respect for human rights. They may prefer to have their rights respected even if that has economic costs.

But, of course, that assumption doesn’t hold. The possible economic benefits of rights violations are easily offset by their costs and by the benefits of respect for human rights. Ultimately, the question of the effect of respect for human rights on the economy is an empirically verifiable hypothesis: we have data on economic performance, and – to some extent – on rights performance. It’s just a matter of linking the two. There’s an interesting paper here trying to do just that. The conclusion:

Our results show that high degrees of human rights are conducive to economic growth and welfare in a significant manner.

Through which channels is this effect supposed to operate? There are a few candidates:

  • Physical security is a necessary precondition for the productive use of one’s resources and property.
  • Property rights and the rule of law – both are human rights – are necessary for the effective operation of free markets, and free markets promote growth. Neither the rule of law nor property rights are safe in authoritarian regimes: why would a government that imposes physical harm respect property rights?
  • Countries don’t attract Foreign Direct Investments (FDI) when they have a poor human rights record, rampant insecurity, ineffective rule of law and protection of property rights, poor labor conditions and the worker unrest that it implies etc. Stability, predictability, peace and calm lead to investment. Investment in rights abusing countries can also harm companies domestically when consumers revolt against the foreign conduct of their national companies.
  • Education is a human right, and investments – especially FDI – usually follow the trail of education. Education is typically considered growth enhancing.

The discussion should separate between growth and levels of prosperity. There is an obvious correlation between respect for rights and levels of prosperity: the most prosperous countries in the world are also those where respect for rights has achieved a higher level. The case that growth rather than level of prosperity is also correlated with respect for human rights seems a lot harder to make, given the high growth levels of countries such as China. The argument could be that respect for rights promotes but is not a necessary condition for growth. Or it could be that authoritarian countries with high growth rates would have had still higher rates had they respected rights to a higher degree. Such a counterfactual is of course very hard to measure.

So, it’s not just that richer countries can start to afford human rights (to some extent that’s true, because rights cost money); it’s also the case that respect for human rights leads to higher wealth. There’s a two-way causation at work here.