Extras: Kerianne Lawson on Equal Economic Freedoms

January 5, 2024

January 5, 2024

Economics is everywhere. Can you build a fence around your house? Can you afford to live where better jobs are? Can you have as many children as you want? Lavery highlights Kerianne Lawson's Great Antidote episode and how solidifying property rights can increase freedom and prosperity.

Kerianne Lawson joins Juliette Sellgren on this episode of The Great Antidote to discuss the success of the Khaya Lam project in expanding property rights, the state of worldwide disparities in economic freedom between men and women, and how economics is everywhere. Kerianne Lawson is a faculty scholar at the Challey Institute for Global Innovation and Growth and an assistant professor of economics at North Dakota State University.

You can listen to the episode here: Kerianne Lawson on Equal Economic Freedoms

The main theme Lawson and Sellgren emphasize is the importance of access to economic freedom. Economic freedom isn’t just cutting government regulations; it’s also supporting civil society institutions like the Khaya Lam project in South Africa. Lawson explains that all South African citizens have a legal right to housing and due to this, many, mostly non-white people live in townships built by the government. But because they don’t legally own their houses, they can’t pass down their property to others or legally make structural changes. The Khaya Lam Project transfers home titles to the families living in these public housing units, alleviating this remnant of apartheid through the expansion of property rights. Here’s Lawson:

The government has not been very transparent in how people can actually get these home titles transferred into their name. It's a legal process that costs quite a bit of money for the average South African. Given the general distrust of banks and governments in South Africa people don't really go through this process voluntarily. So, that's where Khaya Lam steps in and says, ‘we'll handle all the paperwork, we'll handle all the lawyers and the banks and the fees,’ and they transfer titles to individuals so these people who have been living in these homes for 30, 40, 50 years and are finally owners of these homes who can make changes to the home for the first time legally and use it as an asset for homes.

The harmful legacy of apartheid is still clear in South Africa’s economic inequality. One of these holdovers from apartheid is segregated housing. Public housing units tend to be quite far away from the main economic hubs of South Africa which makes access to high-paying jobs difficult, and crime more prevalent. The Khaya Lam project is helping “the more sticky aspects of apartheid start to change.” Families can now sell their homes and can move to safer and more economically prosperous areas. Occupants can additionally make modifications to their homes to make them more safe. These measures have all contributed to a decrease in crime, showing what property rights can do for a community.

I find that this reduces crime. So, there are a lot of different mechanisms that might explain this. One of the things is moving. People might be moving from high crime areas to low crime areas. We also might see people being able to secure their homes for the first time. If you can legally make any changes to your home because you’re now an owner you could maybe add a wall, a security system or fences, bars on the windows or plenty of other things that help prevent property crime. Specifically, I find that after these municipalities increase home ownership there is a decline in crime and that can come from just people being able to secure their homes more safely.

The United States has a comparable history of systemic racial discrimination to South Africa, and consequently a significant level of racially segregated housing due to this history, which includes redlining and urban renewal. Native Americans are specifically affected by the issues that come with a lack of property rights and segregated housing, such as high crime and economic immobility. Lawson acknowledges this and believes the idea of the Khaya Lam project can easily be applied to Native American reservations.

Remembering the importance of property rights, there's a lot of good research done in the US about home ownership and crime, but there's also a lot that's being done now about the importance of home ownership in Native American reservations. Being in North Dakota, this is very much relevant to our region. There's a lot that can be extracted from a South African institutional setting when we think about where people are placed in an area where they aren't afforded property rights.

The repression of women’s economic freedom, like apartheid, is not a problem of the past. Women around the world still face significant barriers to economic freedom and equal economic equality with men in law and in fact. Even though economic freedom for women is increasing, the gender disparity is still quite large. One of the attempts to understand the state of this problem is the Fraser Institute’s Gender Disparity Index.

The Gender Disparity Index comes in and says well there are some laws that allow economic freedom for men but not for women. Before this, the Economic Freedom Index overall wasn't accounting for that, so in 2015 um they adjusted the legal system and property rights area of the economic freedom index to adjust for this gender disparity. So, a country that has say a seven out of ten but unequal treatment between men and women, and then we have a country that has like a five out of ten, but equal treatment of men and women in economic freedom. Those kinds of nuances are what this research is getting at now.

Lawson is referring to the Fraser Institute’s Economic Freedom of the World Index which presents data on how nations protect and support economic freedom across a variety of measurements from the scope and scale of regulatory bodies to the ease of international trade.

Lawson states that not much work, besides the Gender Disparity Index, has been done to decipher the effects of expanding economic freedom to women, despite the array of clear questions and meaningful policy prescriptions that research in the field prompts. Lawson states that there is an undeniably positive correlation between women’s economic freedom and women’s life expectancy, educational attainment, and economic independence. But she also makes it clear that the benefits of women’s economic freedom and equality are spread across the entire population and are not exclusive to women.

Increasing the Gender Disparity Index score actually has benefits for all members of the society, not just for women. There are a lot of possible explanations for this. If women are able to work outside the home and participate in formal business, they are able to contribute to the household income which has good impacts for everybody, such as enabling children to go to school and staying in school longer. Of course, this would be great for sons and daughters. We’re showing this time and time again that increasing economic freedom correlates to people living longer and being healthier. These kinds of things aren’t just female-specific outcomes.

Lawson addresses the concern that increased economic freedom for women leads to a lower fertility rate. She says this isn’t necessarily negative, as access to economic freedom allows women to act on their preferences for having children, which is a benefit to both mothers and children. Furthermore, declining fertility can be indicative of the economic progress and standard of living that comes from allowing women to participate in the market just as freely as men. If increasing the fertility rate is a goal, the method to accomplish this should definitely not be stifling economic progress or removing the freedom of choice for women.

There’s a paper by Piano and Stone in this group of papers. It finds that when women have more economic freedom the gap between the wanted number of children and the actual number of children shrinks. Also, the literature that discusses income and fertility suggests that if incomes increase, fertility goes down. I don't think that anyone would suggest that the way to have more children is to cut incomes. I'm going to argue that if we want women to have more children or we want there to be more children we shouldn't necessarily discourage economic freedom. There are plenty of other ways to make having children more attractive but overall, in the developing world declining fertility rates are even a sign of progress and development.

The paper written by Clara Piano and Lyman Stone that Lawson mentions in this quote is titled: The Fertility Gap and Economic Freedom.

This episode shows how economics is everywhere. The Khaya Lam project and Gender Disparity Index show how valuable economics is in improving people’s lives. Economic theory supporting strengthening property rights and addressing economic equality contributes to the alleviation of systemic discrimination and increasing freedom.

I think a lot of it has to do with the importance of individuals to be able to make choices about their daily lives, their businesses, their property. I like to think about outcomes that improve individual well-being, so those are the kind of topics that excite me and usually come with expanding economic freedoms. That's usually how I set out in a research project because I like to focus on the positive. If these thoughts are going to consume me all day long, I like to think about how things can be better for people.

Questions
1. During the podcast Lawson mentioned that barriers to entry for equalizing economic freedom between men and women are not just limited by laws, but also by cultural biases. How can economic theory most optimally be expanded outside of purely academic and policy discussions to break down cultural barriers to individual freedom?

2. Declining fertility rates was discussed during the podcast as an effect of increased economic freedom for women. However, Lawson doesn’t see the two as mutually exclusive. She states that there are other possible methods to incentivize people to have children without limiting economic freedom. What are these other methods Lawson is referring to? How can people in developed nations be incentivized to have children without limiting economic freedom? Should the government be the institution to undertake this goal through a policy like subsidized child care, or should this issue be left to civil society?

3. Lawson and Sellgren address the concern that increased economic freedom for women will lead to lower fertility rates. If increasing fertility rates does come at the cost of economic freedom, is this a goal worth pursuing in the first place?

4. Does freedom only come through reducing barriers, or are there things that people must have access to such as housing, education, and healthcare for their choices to be truly free?

5. In an economy where home ownership is becoming more difficult, and housing is becoming more inaccessible, how can solutions that maximize individual freedom ( like the Khaya Lam project) be marketed, as compared to restrictive and ineffective solutions like rent control?

Related content
Nils Karlson, Is Inequality a Problem? a review of The Poor and the Plutocrats at Econlib
Pedro Schwartz, Poverty and Inequality, at Econlib
Adam Smith and the Follies of Central Planning: Who is the Man of System? a video from Learn Liberty with James Otteson
Peter Boettke's Essay “Hayek’s Epistemic Liberalism” at Liberty Matters
Steven Horwitz's Essay Spontaneous Order in Adam Smith at AdamSmithWorks
Remy Debes’ Essay Facing Up To Oppression: Adam Smith and the Question of Reparations at AdamSmithWorks

Extras: Kerianne Lawson on Equal Economic Freedoms

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