By John Morton
As I write this, I’m wearing a t-shirt, a gift from my daughter. It says “Enjoy Capitalism” written in the style of the cursive Coco-Cola logo. Every day I enjoy what’s left of an economic system that is responsible for improving billions of lives around the world. As Milton Friedman put it: “There is no alternative way so far discovered of improving the lot of ordinary people that can hold a candle in the productive activities that are unleashed by a free enterprise system.”
Yet young people are not feeling the joy. Their contempt for capitalism is just behind their contempt for President Trump. Bernie Sanders, a declared Socialist, almost defeated Hillary Clinton in the Democratic primaries. In Great Britain, voters age 18-34 cast 63 percent of their votes for Labour party leader Jeremy Corbyn, who promised to take the country back to the disastrous policies of the 1960s. The Institute of Politics at Harvard released a survey showing more than half of respondents between 18 and 29 do not support capitalism. Young people have legitimate grievances such as low economic growth, high unemployment and underemployment, stagnant wages, and income inequality. The question is whether the rejection of capitalism would make things better or worse.
Capitalism Rocks the World
Using the World Bank’s definition of extreme poverty as living on less than $1.90 a day, since 1990, over one billion people have escaped extreme poverty. In 1990, 35 percent of the world’s population lived in poverty. By 2013, the percentage of the world’s population living in poverty had been cut to 10.7 percent. The reason for this improvement is not foreign aid but a rise in the number of countries embracing capitalism and an expansion of economic freedom. U-2 frontman Bono, a passionate advocate for aid to underdeveloped nations, gets it. He said, “Aid is just a stop-gap. Commerce and entrepreneurial capitalism take more people out of poverty than aid.”
The world is getting more economically free. Two indexes of economic freedom attempt to quantify how capitalistic countries and territories are. The Fraser Institute’s Economic Freedom of the World Index measures the degree to which “the policies and institutions of countries are supportive of economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to enter markets and compete, and security of the person and privately owned property.” Forty-two data points are used to construct the index. Since 1985, the economic-freedom rating for advanced countries has increased from 6.9 to 7.7. The economic freedom rating for developing countries with ratings since 1985 has increased from 5.0 to 6.7. The world economies are getting freer.
Nations that are economically free outperform non-free nations in indicators of well-being.
Nations in the top quartile of economic freedom had an average per-capita GDP of $41,228 in 2014, compared to $5,471 for bottom-quartile nations (PPP constant 2011 US$).
In the top quartile, the average income of the poorest 10 percent was $11,283, compared to $1,080 in the bottom quartile in 2014 (PPP constant 2011 US$). Interestingly, the average income of the poorest 10 percent in the most economically free nations is twice the average per-capita income in the least-free nations.
Life expectancy is 80.4 years in the top quartile compared to 64.0 years in the bottom quartile.
Political and civil liberties and considerably higher in economically free nations than in unfree nations.
Capitalism Needs a Press Agent
Why, then, are young people so anti-capitalist? How can this be? Let’s try these reasons on for size.
Current statistics show that recent global progress and the decrease in poverty should be the greatest story of our time. Extreme poverty has been halved, life expectancy has increased, infant mortality has decreased, and deaths from HIV have decreased. Yet over two-thirds of Americans believe none of this has happened. In 2015, the United Nations announced its goal was to eradicate poverty in 15 years. This seems mad, but it can happen if governments keep their grubby hands off private markets.
2. The Myth That Capitalism Is Based on Greed
Conservative economists and philosophers are to blame for this myth. Let’s watch greed turn into progress. What a magic trick! Capitalism is based on self-interest, but entrepreneurs profit only if they serve others. You don’t have to like your fellow human beings--just serve them. If entrepreneurs pursue their personal interests rather than improving service to their customers, their businesses will fail. Because trade is voluntary, both the buyer and the seller must be satisfied with the deal. That’s why both people say “thank you” when the deal is done.
3. The Belief That While Capitalism May Deliver the Goods, It Has No Soul
There is so much more to life than materialism, but money expands lifestyle choices. In fact, billionaires love giving their money away (even though they probably did more good for others while they were earning the money). I’ll grant you that capitalism isn’t romantic and challenge you to write an inspiring folk song about capitalism. However, Deirdre McCloskey makes a strong case that virtue is advanced by capitalism. These virtues include love, faith, humility, courage, prudence, temperance, and justice.
4. The Idea That Planning Is More Efficient Than Markets
F.A. Hayek debunked this one. If you don’t believe it, list all the improvements to our lives by capitalist entrepreneurs against all the improvements to our lives by government programs. Nevertheless, when there is a big problem or a crisis, people turn to government to solve it.
Please Oppress Me
Joan Robinson once said, “The misery of being exploited by capitalism is nothing compared to the misery of not being exploited at all” or as Deirdre McCloskey has been rumored to say at conferences: “The only thing worse than being oppressed by a capitalist is not being oppressed at all.”
If you prefer not to read Smith, Hayek, McCloskey, Friedman, Mises, Bastiat, and Schumpeter, try taking a field trip. The international set can visit North Korea, Cuba (cute old cars), and Venezuela. Those with more limited budgets can visit their local DMV facility, VA hospital, or Social Security office.
As for me, I prefer putting on my “Enjoy Capitalism” t-shirt and having a martini. I will contemplate how billions of human beings, most of whom don’t know each other, had a hand in creating my glass (made in Sweden), gin (made in England), vermouth (made in France), and cocktail shaker (made in China). After the second martini, I won’t care.