I happened to be reading Arnold Kling and Nick Schultz’s excellent new book, From Poverty to Prosperity, when the earthquake struck Haiti. This quake was a 7.0 magnitude event, the same as the Bay Area quake of 1989.

The geological disturbances may have been equal but the result surely was not. The California quake killed less than a hundred. Haiti’s Prime Minister estimates over a hundred thousand dead.

While the proximate causes of injury and death involved falling objects, the fundamental factor was poverty. Nearly four fifths of Haitians subsist on about $2.00 per day. And poverty implies vulnerability. Natural disasters expose these vulnerabilities.

A Haitian is in greater risk in an earthquake simply because he cannot afford quality housing and public buildings were poorly constructed. Here are a few comments on Haiti’s poverty that were made in the early 1990s. Since then the situation has deteriorated.

In his book In the Parish of the Poor, Jean-Bertrand Aristide, a former president of Haiti, writes, “The other day in the midst of Port-au-Prince, the great degraded capital city that is my home, I saw a car, an old battered car, a jalopy, falter and sputter and come to a slow halt. It was out of gas; this happens often in my destitute country, where everyone and everything is so poor that the donkeys and horses are starving and even the cars must try to get by on nothing.”

Joseph F. Bentivegna in The Neglected and Abused: A Physician's Year in Haiti writes, “This is why so many roamed the streets begging, looking for cars to clean, trying to do odd errands, or becoming prostitutes; it was that or nothing. Many Haitians could not get enough money together to buy food or rent a place to sleep. They forever roamed around, until some social organization helped them, or, more commonly and tragically, they lay down and died.”

As a result of this poverty, life expectancy in Haiti is about 60 years. In the U.S. and other developed nations it’s nearly 80 years.

Last Sunday Pilgrim Congregational Church, and likely most American churches, appealed to members for aid to Haiti. That day the New York Times ran several articles urging people to donate funds and provided advice and links on how to do so effectively. We found the need for immediate material aid compelling and wrote a check.

Alas, however generous the response, it won’t fix the underlying problem. And we don’t know what will. The blunt truth is that no one knows how to foster economic development. Foreign aid surely doesn’t. According to William Easterly of NYU’s Development Research Institute, “[T]here’s no connection at all between foreign aid and economic growth....”

So what should we do? First, join in giving immediate assistance to Haiti via established NGOs such as the Salvation Army, Habitat for Humanity, and a host of others. Next, avoid policies that inhibit the growth of poor nations. This implies that we carefully consider the implications of policies justified by a demand for reducing CO2.

I’m not suggesting that global warming is not a major problem, perhaps it is. I do, however, assert that in economics as in ecology we have the ethical duty to ask the key question: “And then what?” What are the predictable consequences of the policy proposed?

Here is an obvious example. A rush to impose severe restrictions on greenhouse gas emissions will have a dramatic, although often indirect, negative impact on the world’s poor. Clearly, some policies will advantage an elite few, those who gain from cap-and-trade legislation, for example. To the degree the legislation, treaties, or regulations hinder prosperity, generally the poor will suffer most.

While we don’t know how to create the conditions for wealth creation in poor nations, we have a robust understanding what conditions favor wealth creation. First is an honest, non-corrupt system of law. Second, are clear and enforceable property rights. Third is governance by the rule of law. The sum of these is economic liberty under sound regulation that constrains exploitation of people and their environment.

As Kling and Schultz argue, economists for too long focused on the classic material factors of production, land, labor, and capital. They neglected the “software” of a successful economy. This includes a culture of openness and honesty, institutions that guide or direct behavior, and entrepreneurship.

The data is clear and compelling. Economic liberty is a key to prosperity. Until Haiti and other impoverished nations establish the “software” that enables people to exercise this freedom, natural disasters will have a wildly disproportionate impact. In the meanwhile, we’ll have endless opportunities to demonstrate our charity.