Patterico's Pontifications

6/10/2014

The Free Market Is the Best Thing That Ever Happened to Poor People

Filed under: General — Patterico @ 7:43 am

The standard narrative in this country is that lefty theories of Big Government serve the poor, and that opponents of Big Government are out to help the rich.

This narrative has it exactly backwards. Big Government protects Big Business while the free market improves the lot of the poor.

Tom Woods recently wrote a wide-ranging response to a speech by a lefty Catholic cardinal. The cardinal had droned on about inequality and Piketty and such nonsense. Woods provides one killer argument after another showing how the free market improves society and helps the poor. Here is one of my favorite passages from Woods’s piece:

The vast majority of the progress that has been made against poverty in the world occurred without violence. The statistics are there for everyone to see: as economic liberalization spread throughout the world, poverty declined. In 1820, 85 percent of the world’s population was living in “extreme poverty.” That had fallen to 50 percent by 1950, 33 percent by the early 1980s, and 18 percent by the beginning of the twenty-first century. As I have explained in The Church and the Market and elsewhere, this is the natural outcome of the extension of the market economy and the division of labor. Shake your fist at reality all you like, but the only way to increase the overall standard of living is to leave the private sector alone to increase the amount of capital per worker.

In the United States, poverty had been falling consistently until the federal government’s war on poverty took shape. But over the past 50 years, that progress has come to a halt: the poverty rate has fallen so negligibly as to be statistically insignificant.

In the United States, the purchasing power of the lowest quintile of income earners increased by 15 to 20 times over the course of the twentieth century. When we look at the figures from 2011, the American poor—not the American public in general, but the American poor—97.8 percent had refrigerators, 96.6 percent had gas or electric stoves, 96.1 percent had televisions, 93.2 percent had microwave ovens, 83 percent had DVR capability, 80.9 percent had cell phones in addition to land lines, and 58.2 percent had computers.

People living in poverty today live better than the kings and queens of several hundred years ago. This did not come about because of government. It happened because of the free market. Government did not invent the light bulb, or give poor people in harsh areas access to climate control. Government did not invent the car, the plane, or the communications devices that spread ideas throughout the globe. The free market did that.

The free market has made it possible for people to do more with less. The free market is why people in the United States do not starve. The free market brought us all the wonders mentioned by Woods, and more.

Meanwhile, Big Business runs to Big Government every time someone comes up with a new innovation, and lobbies government to pass new laws and regulations to protect the existing businesses. Why do you think businesses hire lobbyists? To do away with regulations? In some cases, yes — but in many cases, business actually asks government to enact new regulations that make it hard for newcomers to enter the market.

Again: the standard narrative has this backwards. To some extent, the battle over the size of government is indeed a battle between the 47% and the 1%. But the truth is, the 1% run to government for help, while the free market improves the lot of the 47%.

Proponents of liberty and the free market need to stop acting defensive about their ideas. Liberty and the free market benefit everybody — but they especially benefit the poor.

55 Responses to “The Free Market Is the Best Thing That Ever Happened to Poor People”

  1. Lots more good stuff in that Woods article.

    Patterico (9c670f)

  2. all of this will come as news to Richard Shelby (R-AL)

    happyfeet (8ce051)

  3. “Government did not invent the light bulb,”

    But the crony capitalists in GE and Sylvania used government connections to ban to cheap incandescent bulbs and substitute expensive China manufactured CFL bulbs that are toxic when broken. LIght bulbs went from a cheap commodity to expensive and less useful luxury items.

    Mike K (cd7278)

  4. Government did not invent the light bulb, or give poor people in harsh areas access to climate control. Government did not invent the car, the plane, or the communications devices that spread ideas throughout the globe. The free market did that.

    Government provided took through eminent domain the easements for the power lines and telephone lines, roads and railroads, building codes that forced people to use electricity instead of gas for lighting, gas instead of coal for heating, the rockets for the communications satellites; ….

    And Grace Hopper invented computer networks!!! ;)

    nk (dbc370)

  5. Admiral Grace Hopper.

    nk (dbc370)

  6. The free market helps everyone – everyone – including the rent-seeking monopolists of the 1%, who outsource the labor and materials that serve as their inputs to free market vendors. That is, in fact, how monopoly profits work. If all markets were horizontal monopolies, there would be no unclaimed rent to commandeer and divvy up with the political class. That’s why closed, command economies (think Cuba and the former Soviet Union) are dirt poor.

    ThOR (130453)

  7. Do the free market and capitalism produce disparate economic results for different individuals? Yes, of course it does, because, despite Thomas Jefferson’s stirring words, we are not all created equal, and we do not all take the same decisions. Some people are more prosperous than others because they work harder or smarter, some because they happen to be lucky, and some just because. But, overall, capitalism and the free market are the only systems which have raised more than a small minority above the subsistence level.

    The Church cares for the poor, and does not like inequality, but the uncomfortable fact for the Church — and I am Catholic — is that poverty is usually the result of the inefficiency of poor people. Oops, can’t say that, can we?

    The historian Dana (3e4784)

  8. 1) Any Christian or Jew believing in the redistribution story is violating the 9th/10th Commandment.

    2) Jesus did not believe in using Government force to achieve such aims but charity. “Give unto Cesar ….”

    So when I hear a Christian using scripture to justify their politics, I feel like puking in their mouth and throwing them off a cliff.

    B/c simply, they are wrong on scripture.

    Rodney King's Spirit (e9cae7)

  9. From Prager Univercity.

    Built into the foundation of free enterprise is a promise. It’s a promise that no other economic system offers. This promise has a great deal to do with your sense of well-being, that is, your happiness. George Washington, Thomas Jefferson and Alexander Hamilton understood this. So does renowned social scientist, Arthur Brooks. In five minutes, he explains how happiness and free enterprise are marvelously entwined.

    YouTube Link

    Mobile Link

    The best thing for our happiness and for the poor is a robust economy. The way to make a robust economy is to get government out of the way. Big government makes everything cost more. The company I work for has hired three lawyers and several law firms just to deal with the regulatory mess that the government forces on our industry.

    One of the businesses my youngest stepson has is providing food trailers for people that have all the licenses and permits, because the beaurocracy to get permits, inspections, and licenses is too much for most people. I understand the safety issues, but with some of the hoops people have to go through its amazing to me that anyone is able to start a small business.

    If a person is against the “evil” of big business, then they should be for smaller government, since big government makes it easier for big business and is detrimental to small business. Regulations make it easier for big business because most of the time they can afford the cost, while small businesses can’t afford the cost of a highly regulatory environment.

    Tanny O'Haley (c0a74e)

  10. What is the possibility that some good person would work at
    debunking the television adds that are constantly on saying that
    one out of five children are starving here in the US. I hear
    this, and it sets my teeth on edge because it seems so fake.

    TimothyJ (a33d78)

  11. those must be all those illegal immigrant kids eric cantor invited over Mr. Timothy

    it’s a real mess

    happyfeet (8ce051)

  12. According to the Presiding Judge of the Cook County Criminal Division, it’s not one in five but it is some. The only food they get is the school breakfast and lunch because mommie is a druggie and daddy ain’t around and they steal, sell drugs, and prostitute until the system takes them down.

    nk (dbc370)

  13. 4. Not to mention patents, which does both good and bad, or promotion the stealing of trade secrets from Great Britain, especially those of Arkwright.

    http://www.newyorker.com/talk/financial/2014/06/09/140609ta_talk_surowiecki

    And although federal patents were supposed to be granted only to people who came up with original inventions, Ben-Atar shows that, in practice, Americans were receiving patents for technology pirated from abroad.

    Or marginally improved.

    http://www.jstor.org/discover/10.2307/2947292?uid=3739832&uid=2129&uid=2&uid=70&uid=4&uid=3739256&sid=21104136029057

    http://books.google.com/books?id=4iafgTEhU3QC&pg=PA372&lpg=PA372&dq=trade+secrets+great+britain+hamilton&source=bl&ots=v7notKbgpt&sig=a7ookiy4GAi6sPYrNoT1cfRjKuo&hl=en&sa=X&ei=Vi6XU73mA-al8gHkxIDADA&ved=0CBcQ6AEwAA#v=onepage&q=trade%20secrets%20great%20britain%20hamilton&f=false

    Hamilton put the full authority of the Treasury behind the piracy of British trade
    secrets.

    Sammy Finkelman (2d4607)

  14. Now if the Republicans can find someone to run for President who can explain this to our media gatekeepers they might have something. Is there someone stronger than the dumbassery of our media or are we going to be treated to Romney endorsing a carbon tax (alongside a higher minimum wage)?

    East Bay Jay (a5dac7)

  15. In addition, Catholic tradition would paint any top-down economic system as diabolic (See St. Thomas Aquinas or Pope Leo XIII) because it violates the free will of the subjects. In other words, God inspires people to do things, but top-down economic systems tend to prevent the implementation of the inspiration which is offensive to God, since it thwarts God’s intention. Bishops are supposed to know these things before they can be promoted to a bishop, so this cardinal must have issues somewhere along the line.

    Dean Thomas (658b03)

  16. for an organization what won’t promote a woman no higher than boss nun to whine about top down systems is a lil much

    happyfeet (8ce051)

  17. @3– I think the GE/Sylvania thing is what our host had in mind when the post went up. I can do a fence around my property, but if I wish to “cross-fence” (for instance to keep animals in their own area and others out of areas (garden vs deer) then I need to work with the Building Department for a permit…. for my own fences on my own property.

    Its not limited to light bulbs.

    gramps, the original (c15c43)

  18. Truly, I say to you, truly, it is easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of God.

    nk (dbc370)

  19. that’s just because they make the needles so small Mr. nk

    happyfeet (8ce051)

  20. Oops, can’t say that, can we?
    The historian Dana (3e4784) — 6/10/2014 @ 8:23 am

    Of course we (Catholics) can say that! Jesus did. “The poor will be with us always”.

    Also, the Church is NOT about stamping out inequity, but iniquity.

    felipe (960c75)

  21. Dana, I know you did not say “inequity”. I agree that the church
    dislikes inequality. I was just alluding to the mistranslations
    of the MSM (big surprise) of something Pope Francis said.

    felipe (960c75)

  22. 16.for an organization what won’t promote a woman no higher than boss nun to whine about top down systems is a lil much.

    Feets, In the Catholic world, it goes from TheBigGuy, to TheSon, to The Spirit,
    to Mary, to the angels and Saints, to the Pope, then to everyone else.

    So much for your glass ceiling.

    felipe (960c75)

  23. Batman would kick this cardinal’s ass.

    CrustyB (69f730)

  24. I don’t know if they mention this at the above links, as I haven’t really been able to examine them, but this puts me in mind of a thirty six year study that shows global poverty has declined 80% since 1970 entirely due to free market reforms.

    http://www.aei-ideas.org/2013/12/chart-of-the-greatest-and-most-remarkable-achievement-in-human-history-and-one-you-probably-never-heard-about/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+blogspot%2FmmMP+%28CARPE+DIEM%29

    …80 percent of the world’s worst poverty has been eradicated in less than 40 years. That has never, ever happened before.

    So what did that? What accounts for that? United Nations? US foreign aid? The International Monetary Fund? Central planning? No.

    It was globalization, free trade, the boom in international entrepreneurship. In short, it was the free enterprise system, American style, which is our gift to the world.

    I will state, assert and defend the statement that if you love the poor, if you are a good Samaritan, you must stand for the free enterprise system, and you must defend it, not just for ourselves but for people around the world. It is the best anti-poverty measure ever invented.

    There’s more at the link. Also there’s a link to the actual study.

    Steve57 (5f0260)

  25. amazing news…. as seen over at Ace’s place

    just “wow”

    redc1c4 (abd49e)

  26. amazing news…. as seen over at Ace’s place

    just “wow”

    Terrible legal reasoning, but it couldn’t happen to a nicer bunch. I’m afraid if I were the judge I’d have rule that the teachers are contractually entitled to their tenure, and the students are constitutionally entitled to their education, but the taxpayer is not entitled to anything, so screw him. Pay the bad teachers, but don’t give them any work to do, and instead hire good teachers as well as the bad ones!

    I’d much prefer that the contracts had been struck down as the result of corrupt self-dealing between unions and union-elected politicians.

    Milhouse (b95258)

  27. Methinks the condition of the poor in the US is more an artifact unique to the US than to the world as a whole. Check out the slums in most of the rest of the world with the cardboard shacks, open
    sewers down the streets, and the like. Brazil is a prime example. The Philippines are another. In those places the free market is fighting “tradition”, no easily transferable titles to land, uniform rule of law, and the like. The socialist paradise syndrome in the third world is not helping one bit. Look at the descent of Venezuela into chaos. I’m just saying the issue is not as straight forward as considering the poor in America vs the Bill Gates sorts. A free market kept free and fair is required.

    {^_^}

    JDow (c4e4c5)

  28. 4. Using the phrase “eminent domain” when I am on the thread is usually not wise.

    elissa (60842a)

  29. Jdow, a free market depends on people being secure from thugs, thieves, and swindlers. By definition capitalism is how people behave when they are confident that what is theirs will remain theirs until they choose to give it away, and when they know that the only way to get what belongs to someone else is to persuade her to give it to them. Any time people have to fear that what they have will be forcibly taken from them, whether by private robbers or government ones, the market is not free. Government’s proper role is to hold a monopoly on force, and not use it except to enforce that monopoly.

    Milhouse (b95258)

  30. Government’s proper role is to hold a monopoly on force, and not use it except to enforce that monopoly.

    except, of course, that a government that has a monopoly on force ALWAYS ends up suing it on its citizens, sooner or later.

    hence the 2nd Amendment.

    redc1c4 (abd49e)

  31. the church doesn’t exactly walk the walk when it comes to equality is all i mean Mr. felipe so when they spew their socialist drivel mostly it makes me want to

    I dunno

    rescinding religious tax exemptions would be a good start I think

    we already subsidize more than enough socialist propaganda

    happyfeet (8ce051)

  32. Taxes! Now you’re talking my language, happyfeet. But first, Apple’s $140 billion cash surplus.

    nk (dbc370)

  33. Piracy is good for the economy, nk?

    Steve57 (5f0260)

  34. The free market is the best thing that ever happened to poor people.
    You know, like those po’ Clinton people who were dead-broke once they left the White House.

    Elephant Stone (6a6f37)

  35. hmmm

    taxing the church properties and such would actually militate towards more better allocation of capital

    but, for example, if Apple were to declare a special dividend to liquidate a substantial amount of its cash hoard

    it troubles me how much of a windfall would accrue to failifornia

    failifornia does not allocate capital wisely

    happyfeet (8ce051)

  36. Well, it was happyfeet’s idea. And with Apple’s money right there for the taking, why pass it up on the way to rob the church?

    nk (dbc370)

  37. Are you thinking only a real property tax, or a personal property tax too? What would be a fair valuation of the Shroud of Turin you think?

    nk (dbc370)

  38. just real property tax

    there’s an awful lot of prime real estate locked up and off the tax rolls

    happyfeet (8ce051)

  39. There is a suburb just north of Chicago that has many many churches of varying types.
    Most of them are large beautiful edifices situated on prime land not far from the town center and campus.
    The property tax dollars from which these are exempt is causing major unhappiness there as businesses and residents continually see their own taxes go up. I do not think you are all together wrong about something needing to be done about a lot of tax exemptions and subsidies, Mr. Feet.

    elissa (60842a)

  40. i honestly think it’s something to look at

    especially if we’re gonna be treated to lectures about equality

    happyfeet (8ce051)

  41. I’m not sure we’re not missing a bet by passing up the personal property tax. With gold at $1,200.00/oz, the chalices alone could cure the deficit.

    nk (dbc370)

  42. Dear America,

    If you think the Clintons had difficulty paying for their multiple mortgages, you should see how expensive it is to maintain multiple yachts. Those things just don’t maintain themselves—saltwater can be corrosive ! If we can force Americans to buy health insurance, maybe we should force Americans to buy a yacht so they can see how expensive it is to maintain one.
    Or something.

    Signed,

    John Kerry
    Secretary of State John F. Kerry
    The Honorable John Forbes Kerry

    Elephant Stone (6a6f37)

  43. elissa,

    I’ve been to Wilmette, and happened to see the ginormous Baja’i building.
    It deserves its own zip code.

    Elephant Stone (6a6f37)

  44. the hot airs found an article today that is on point

    it is by a Mr. Kevin Williamson

    tune in to hear Kevin say

    The best that can be said of the clergy’s corporate approach to economic thinking is that it is intellectually incoherent, which is lucky inasmuch as the depths of its illiteracy become more dramatic and destructive as it approaches coherence.

    happyfeet (8ce051)

  45. My father teased a priest once. He told him, “I don’t see any difference between priests and Communists. No matter what, you both expect your plate to always be full.”

    nk (dbc370)

  46. priests and communists

    communists and priests

    lived on a farm with happy farm beasts

    and on this farm all beasts were equal

    but some were more equal than others

    happyfeet (8ce051)

  47. breaking news…Cantor loses primary.

    Elephant Stone (6a6f37)

  48. i love it when cantors lose their primaries i love it more than beans and fishsticks

    happyfeet (8ce051)

  49. mister happy, that’s saying a lot, because you really love beans and fishsticks.

    Elephant Stone (6a6f37)

  50. i do i really do

    happyfeet (8ce051)

  51. Some years ago, I was accused of being pro-business. Hmm, I thought and replied:
    “I work for a small electronics firm that makes products for aviation. Every time you fly on an airplane, you pay part of my salary, so you must be pro-business, too.” He said nothing and just walked away. It sure is fun to be able to come up with the right words at the right time.

    It always amazes me when some anti-business person is wearing mass market clothes, talking on his brand new i-phone, driving a car, while still claiming to be against large businesses. He would have no place to live and starve to death because he could not fend for himself.

    Dave (f5fb18)

  52. The free market gave you the gourmet Burrito vending machine, Mr. feets.

    If you were living in North Korea, you’d have the tree bark and noxious weed soup vending machine. Which wouldn’t work, no matter how badly you needed a cup of tree bark and noxious weed soup after subsisting for a couple of days on ants and undigested corn you picked out of cow dung. It would just eat your Won and laugh at you.

    Something to think about, sir.

    Steve57 (5f0260)

  53. 48. i love it when cantors lose their primaries i love it more than beans and fishsticks
    happyfeet (8ce051) — 6/10/2014 @ 5:29 pm

    Thankfully we still have a free market in cantors, beans, and fishsticks.

    I just wish we still had a free market in Obamas because I want to return mine.

    Steve57 (5f0260)

  54. Stupid Americans are just too dumb to understand what’s good for them. First, authorizing the creation of local, state and a federal government. Then giving those entities taxing powers?

    Fugheddabouttit!!!

    They should have listened to Rothbard.

    daleyrocks (bf33e9)

  55. Hellz yeah!!!

    David Brat (5fc097)


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