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When Capitalism Wins, Poverty Loses
Why do folks on the left support punitive policies such as high tax rates and a bigger burden of government?
Some of them are motivated by resentment against those who have achieved success. These are the people who support the hate-and-envy message of politicians such as Bernie Sanders and Elizabeth Warren.
Others folks on the left, by contrast, are motivated by sympathy for the less fortunate.
That’s a noble sentiment. Where they go wrong is in thinking that the economy is a fixed pie. This leads them to the mistaken conclusion that some people are poor because other people are rich.
Maybe I’m overly optimistic, but I think these people can be convinced to support good policy if they learn the facts about how free markets and limited government are a proven recipe for prosperity.
This is why I shared data earlier this year showing how per-capita economic output jumped dramatically once capitalism was allowed starting a couple of hundred years ago.
Today, let’s look at how poor people have been the biggest winners. Professor Max Roser of Oxford University recently shared a profoundly important tweet about the dramatic reduction in global poverty. We see not only that poverty rates have plummeted, but also that falling poverty rates are correlated with increases in per-capita GDP.
In other words, everyone is getting richer. There’s no fixed pie.
As you might expect, regions that are friendlier to capitalismhave enjoyed bigger increases in prosperity and bigger reductions in poverty.
The bottom line is that people who care about the poor should be the biggest advocates of free enterprise.
P.S. It’s worth noting that, according to both U.S. data and global data, the big reduction in poverty occurred before welfare states were created.
Milton Friedman
Biography:
Click here to see the Hoover project showcasing the works of Milton and Rose Friedman.
Milton Friedman, recipient of the 1976 Nobel Memorial Prize for economic science, was a senior research fellow at the Hoover Institution from 1977 to 2006. He passed away on Nov. 16, 2006. (Link to obituary.) He was also the Paul Snowden Russell Distinguished Service Professor Emeritus of Economics at the University of Chicago, where he taught from 1946 to 1976, and a member of the research staff of the National Bureau of Economic Research from 1937 to 1981.
Friedman was awarded the Presidential Medal of Freedom in 1988 and received the National Medal of Science the same year.
He was widely regarded as the leader of the Chicago School of monetary economics, which stresses the importance of the quantity of money as an instrument of government policy and as a determinant of business cycles and inflation.
In addition to his scientific work, Friedman also wrote extensively on public policy, always with a primary emphasis on the preservation and extension of individual freedom. His most important books in this field are (with Rose D. Friedman) Capitalism and Freedom (University of Chicago Press, 1962); Bright Promises, Dismal Performance (Thomas Horton and Daughters, 1983), which consists mostly of reprints of columns he wrote for Newsweek from 1966 to 1983; (with Rose D. Friedman) Free to Choose (Harcourt Brace Jovanovich, 1980), which complements a ten-part television series of the same name shown over the Public Broadcasting Service (PBS) network in early 1980; and (with Rose D. Friedman) Tyranny of the Status Quo (Harcourt Brace Jovanovich, 1984), which complements a three-part television series of the same name, shown over PBS in early 1984.
He was a member of the President’s Commission on an All-Volunteer Armed Force and the President’s Commission on White House Fellows. He was a member of President Ronald Reagan’s Economic Policy Advisory Board (a group of experts from outside the government named in 1981 by President Reagan).
Friedman was also active in public affairs, serving as an informal economic adviser to Senator Barry Goldwater in his unsuccessful campaign for the presidency in 1964, to Richard Nixon in his successful 1968 campaign, to President Nixon subsequently, and to Ronald Reagan in his 1980 campaign.
He has published many books and articles, most notably A Theory of the Consumption Function, The Optimum Quantity of Money and Other Essays, and (with A. J. Schwartz) A Monetary History of the United States, Monetary Statistics of the United States, and Monetary Trends in the United States and the United Kingdom.
He was a past president of the American Economic Association, the Western Economic Association, and the Mont Pelerin Society and was a member of the American Philosophical Society and the National Academy of Sciences.
He was awarded honorary degrees by universities in the United States, Japan, Israel, and Guatemala, as well as the Grand Cordon of the First Class Order of the Sacred Treasure by the Japanese government in 1986.
Friedman received a B.A. in 1932 from Rutgers University, an M.A. in 1933 from the University of Chicago, and a Ph.D. in 1946 from Columbia University.
Two Lucky People, his and Rose D. Friedman’s memoirs, was published in 1998 by the University of Chicago Press.
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https://www.youtube.com/watch?v=1EwaLys3Zak
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