by Archie M. Richards, Jr., CFP^®
September 17, 2001

The terrorist attack was certainly an agony. It gives the appearance that political and economic conditions are worsening. They are not.

The framework for economic growth and individual liberty is created by government, and government conditions have improved immeasurably. Just a few decades ago, China, the Soviet Union, Eastern Europe, most of Central and South America, most of Africa , and most Asian nations were ruled by dictators.

Now, except for the tragic continent of Africa, few dictators are left. Many nations are cutting tax rates, not raising them. The number two man even in the quasi-dictatorship of China has reduced the number of ministries from 40 to 29, and he wants to cut China's bureaucracy by half.

Consider the changes from fifty-to-seventy years ago. Hitler murdered something like 21 million people. Mao Tse-Tung killed about 35 million people and starved an additional 27 million from government-induced famines. Lenin and Stalin murdered 20 million and set up a slave labor system that claimed another 40 million lives. Soviet government murders alone tripled the number of deaths from the African slave trade. The total number of governmental killings in the twentieth century exceeded 200 million. And without help from their enemies, the dictators of the Soviet Union and China brought those massive economies to a standstill.

Most of this governmental psychosis has disappeared. Castro killed about 30 thousand political opponents, but compared to his forebears that guy's a piker. When China tortures a few followers of a religious sect, it's big news. The world hasn't yet turned into Disneyland, but the comparison with just a few decades ago is stunning.

The thrust for a bigger American government came into its own with the well-meaning but disastrous "social engineering" of Herbert Hoover, carried on by Franklin Roosevelt. Tariffs were raised in 1930. Tax rates were increased in 1932. Hoover's effort to keep labor costs high caused the real income of the employed to rise while unemployment increased enormously. These and many other such policies caused the Great Depression, bringing distress to the entire world.

The last big-government effort to solve social and economic problems that had the whole-hearted support of the American people consisted of the well-meaning but destructive policies of Lyndon Johnson. Enormous funds were poured into America's central cities, and the problems grew worse. Yes, the ranks of government have since expanded apace, especially under the leadership of Nixon, Carter, and George Bush the Elder. Government subsidies are hard to stop. They mean a great deal to relatively few, while the costs are spread among the many.

But people are catching on that big government causes more harm than good. In recent election of many nations, the parties favoring bigger government lost, despite heavy campaign spending. America's 100 million investors will eventually induce government policies to become less intrusive. U.S. voters haven't yet realized that big government hurts the poor more than the rich. When they do, the changes will be momentous.

Meanwhile, the huge nations of Indonesia and the Philippines recently ditched rotten presidents constitutionally. For the first time, Asian governments are coming to see the value of a free press. Approximately two-thirds of the U.S. currency lies outside of the United States, because people consider it the most likely currency to hold its value. All of this is incredibly positive, not only for the poor, but for the world's stock markets.

Terrorism is frightening and awful. But it isn't going to last forever. I doubt it will even last for long.

What's disastrous for humanity is severe and extended economic downturns. These are creations of government. The chances of such conditions returning are small and diminishing. So are the chances of great wars. The world's nations are becoming democracies. Democracies don't fight. They talk.

Political and technological advancements are rapidly improving the conditions for mankind, stocks, and the earth. Never have the world's prospects been so bright.

If you sell your stocks, you will almost certainly buy again at higher prices. Turn off the dreadful news, if you must, but hang on for dear life.