The Correct Way to Rebuild Ukraine

Even though foreign aid is not an effective way of promoting prosperity, Ukraine’s government almost surely will be showered with money when the war is over.

To make these handouts helpful rather than harmful, aid should be conditional.

These remarks are from the Q&A section of a panel discussion in London, hosted last month by the Ayn Rand Centre, as part of the Free Market Road Show.

I was giving a spur-of-the-moment response to a question, so I want to take this opportunity to augment my answer with some hard data.

Let’s assume that American politicians do the right thing (yes, I realize that’s unrealistic) and they tell Ukraine’s politicians after the war that they can have billions of dollars to rebuild their economy, but only if they get rid of the statist policies that have been holding back the nation’s development ever since the collapse of the Soviet Empire.

As I noted in the video, this doesn’t have to be complicated. Ukraine can simply copy some of the better laws that exist in other nations.

And to make it very simple, we can even tell them they can choose from the policies of nations that are part of the European Union, which is an entity that Ukraine almost surely will want to join.

If we insist on that requirement, Ukraine instantly would become the world’s 3rd-freest country.

All of this is based on data from the Fraser Institute’s Economic Freedom of the World (by the way, apologies for mistakenly stating in the video that Ukraine was ranked #122).

P.S. Some policies are easier to copy than others. Simply copying Danish laws on property rights, for instance, would not automatically create the Danish political culture that makes corruption so rare. That being said, shrinking the size and scope of Ukraine’s government will dramatically reduce opportunities for corruption.

P.P.S. Regular readers won’t be surprised to see that Denmark leads in two of the five categories.

P.P.P.S. When Putin is finally forced from power, everything I wrote above also will apply to Russia.