The Global Demand for Better Governance

San Salvordor, El Salvador – The struggle—and effective competitive marketplace—for good governance has been the story of humanity for centuries. In a world of mafias, dictatorships, strongmen, and giant regulatory states like those in the West, certain jurisdictions rise up as alternatives. This has sparked a migration not just of people, but ideas and capital, toward states that, however heavy-handed, offer stability. The trade-offs are troubling but increasingly common—what other choice do people have?

I’ve stumbled upon this insight while traveling to 36 countries the past couple of years, including a recent trip to El Salvador. It was among the deadliest places on earth through the mid-2010s due to gang violence. But in the last few years that changed thanks to several law-and-order presidential administrations, ultimately leading to President Nayib Bukele. He directed mass arrests of gang members, including through deploying the military, to the point that over 111,000 people, (1.6% of total population, the world’s highest), are now in jail. El Salvador is a much safer country, with murders going from 5,300 in 2016 to 154 in 2023. Those who I spoke with—cabdrivers, street merchants, small business owners, along with the inbound jetsetting elite who were in the Hilton hotel where I stayed—said uniformly that streets are much safer than a decade ago. This set the foundation for an economic boom, with GDP per capita growing 5.6% annually since the COVID down year  With crime now under control, the country has seen increased migration from less functional central American nations like Honduras and Nicaragua and a rise in foreign direct investment.

But this comes at a cost. Bukele is seen as authoritarian, even dictatorial, and the charges have merit. He has imposed extraordinary emergency powers for two years, replaced judges with loyalists, and suppressed media freedom. The primary criticism is that males who may look like they’re in gangs get profiled by police and thrown into prison without due process. Walking the streets, I saw lots of camouflaged officers toting military guns. This is a common 3rd World setting, and less than demonstrating law and order, suggests the lack of a true functioning society.  

Libertarians and classical liberals instinctively recoil at some of Bukele’s tactics. Yet he has delivered results, as have other illiberal states in the 21st century, raising difficult questions about governance.

While traveling last year through the Global South, I noticed a clear trend. Certain countries are mired in poverty and lawlessness. These places have developed their own forms of spontaneous order, but life is difficult and opportunity scarce. Then there are wealthier nearby nations which have grown largely due to adopting a coherent liberal order—with low taxes and cleaner government. Migrants flock to these places to escape from their dysfunctional homelands.

Not all is well once reaching their destinations. In Dubai, for example, the oppression of migrants starts right when they leave the plane and are often made to hand their passports to immigration authorities for the duration of their stay. Just like that, their freedom of movement is limited. Once there, migrants face discrimination, poor living and working conditions, and authoritarianism in exchange for greater economic and personal security. Similar tradeoffs are made in Singapore, Hong Kong, Qatar, and other “semi-free” zones that mix economic liberalization with rigid social policies.  But it’s a trade-off that many make if they can assemble the resources to do so, because the situation in their home countries is worse.

It’s not just the poor who flock to these neoliberal zones. At the onset of 2024, over 6,000 new millionaires were expected to settle in Dubai. Arash Jalil writes for Forbes that the country’s location and tax policy are attracting a further influx of wealth, but also its stability. 

“The UAE is politically stable and separated from the regional conflicts of the wider Middle East,” Jalil says. “With one of the world’s lowest crime rates, Dubai offers UHNWIs a safe environment for their families and businesses.” 

Many of these millionaires are Europeans who don’t like giving half their money to fund a “social contract” in their homelands rife with censorship, regulation and rampant welfare spending.

Although it has yet to establish the same level of elite interest as the Dubais and Singapores of the world, El Salvador has seen some degree of this due to Bukele’s crime crackdown. Google has made investments. Bitcoiners flock in to create new cities. And beaches south of San Salvador are full of U.S. ex-pats.  

Both El Salvador and the UAE are heavy-handed regimes. The UAE is a monarchy where the royal family has no meaningful restraints on its power. It harshly punishes not just criminals but dissenters, having been involved in attempts to punish them beyond the country’s sovereign borders.

El Salvador must be viewed in the context of a country where gang violence terrorized the populace daily, and prior attempts to quell it failed. But the population may tire of the opposite track being taken if too many of its native sons get thrown in prison, or if Bukele starts pushing this mindset into economic affairs (already he threatened food distributors unless they lower prices).

What these successful if ultimately illiberal regimes show is just how starving people are for better governance. They leave unfree societies for ones that are slightly more free, no matter the indignities they must endure along the way. It makes me wonder just how much demand there would be if even one society on earth offered full economic liberty with full personal liberty, rather than the puritanism and over-policing common now. With the number of countries expanding, and the competitive governance model being tested and tweaked, we may eventually find this truly liberal order pop up somewhere. 

Cover image available in the public domain (Creative Commons CC 1.0 Universal Public Domain Declaration).