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The Greatest Achievement in Human History?

in Liberator Online Archives by James W. Harris Comments are off

(From the Intellectual Ammunition section in Volume 19, No. 20 of the Liberator Online. Subscribe here!)

Despite the best efforts of government to restrict or sometimes even outlaw free markets, free enterprise has brought us perhaps the greatest achievement in history: the largest and fastest reduction in worldwide poverty ever.

This good news comes from economist Douglas A. Irwin’s November 2 Wall Street Journal piece “The Ultimate Global Antipoverty Program.”

The subhead gives the essence of the story: “Extreme poverty fell to 15% in 2011, from 36% in 1990. Credit goes to the spread of capitalism.”

Writes Irwin:

The World Bank reported on Oct. 9 that the share of the world population living in extreme poverty had fallen to 15% in 2011 from 36% in 1990. Earlier this year, the International Labor Office reported that the number of workers in the world earning less than $1.25 a day has fallen to 375 million 2013 from 811 million in 1991. …

The economic progress of China and India, which are home to more than 35% of the world’s population, explains much of the global poverty decline. But many other countries, from Colombia to Vietnam, have enacted their own reforms. …

Such stunning news seems to have escaped public notice, but it means something extraordinary: The past 25 years have witnessed the greatest reduction in global poverty in the history of the world.

And free enterprise deserves the credit, Irwin emphasizes:

“To what should this be attributed? Official organizations noting the trend have tended to waffle, but let’s be blunt: The credit goes to the spread of capitalism. Over the past few decades, developing countries have embraced economic-policy reforms that have cleared the way for private enterprise.”

In contrast, “The poorest parts of the world are precisely those that are cut off from the world of markets and commerce, often because of government policies.”

Why haven’t we heard more about this? Why isn’t the world cheering?

Says Irwin: “The reduction in world poverty has attracted little attention because it runs against the narrative pushed by those hostile to capitalism. The Michael Moores of the world portray capitalism as a degrading system in which the rich get richer and the poor get poorer. Yet thanks to growth in the developing world, world-wide income inequality — measured across countries and individual people — is falling, not rising, as Branco Milanovic of City University of New York and other researchers have shown.”

We have often said that spreading the ideas of liberty is “the great Cause that makes all other great causes possible,” and that liberty is literally a life-and-death matter for the people of the world. Here is proof of that.

Everyone working in our great Cause can take encouragement from this extraordinary leap forward — and redouble our efforts to remove the shackles of poverty and oppression from all the people of the world.

Free Market or… Freed Market?

in Business and Economy, Communicating Liberty, Economic Liberty, Liberator Online Archives by Sharon Harris Comments are off

(From the One Minute Liberty Tip section in Volume 19, No. 10 of the Liberator Online. Subscribe here!)

Free MarketHere’s a neat little phrase that can be very handy when talking about economics: “freed market.”

No, not “free market.”

Freed market.

Here’s why.

As we’ve discussed in the past, “capitalism” is often not a very useful word for libertarians to use to describe the economic system we advocate. Sheldon Richman of the Future of Freedom Foundation gives some good reasons for not always using the word “capitalism” here.

A more accurate and more popular (according to a Gallup poll) alternative I’ve discussed is “free enterprise.”  Also good is “free market.”

But even these useful words are often hijacked by big-government conservatives and others who don’t really mean what libertarians mean by genuine free enterprise.

Today’s economic system is nothing like a free market. Yet it is often described as one. So, when people see massive economic problems and scandals all around them — subsidies and bailouts of rich businesses, unemployment, high taxes, dangerous products, corporate favoritism, monopolies — all of which are due to anti-market actions — it’s natural that they would oppose the “free market” system that we supposedly have. After all, the terms “capitalism” and “free market” are frequently used by those who defend this very system.

Ugh! What confusion!

Which makes “freed market” a great phrase to toss into a discussion.

For example, asked about your economic views, you might say: “I believe in the free market. Or, to be more precise, a freed market.”

Your listener: “What do you mean, ‘freed’ market?”

And that gives you the chance to explain what libertarians actually believe. Something along these lines:

“I want to see our current economic system freed up, for consumers and for competitors. A free market — which we don’t have today — would do that, and we’d all benefit.”

You then persuasively share the many ways everyone would benefit from this.

The use of “freed market” lets you point out how government meddling and crony capitalism, not the market, are responsible for today’s economic woes. It frees you from defending the present system, while still letting you use successful examples from that system as examples of what libertarians are striving for.

Importantly, “freed market” also makes it clear that we don’t have a free market today. It makes it clearer that you are talking about a goal, a better future, something different and better than the status quo.

In short, it lets you present the free market as the solution — not the cause — of today’s problems. It lets you offer a vision of a better future — not a defense of current abuses.

It’s a neat little twist.

The word “freed market” and the idea behind it have been discussed a lot at the Center for a Stateless Society. Here’s an excerpt from “Embracing Markets, Opposing ‘Capitalism’” by Gary Chartier that nicely points out the difference between the economic system we have today — and the free market libertarians want to see:

“To a very significant degree, the economic system we have now is one from which peaceful, voluntary exchange is absent. An interlocking web of legal and regulatory privileges benefit the wealthy and well connected at the expense of everyone else (think patents and copyrights, tariffs, restrictions on banking, occupational licensing rules, land-use restrictions, etc.). The military-industrial complex funnels unbelievable amounts of money — at gunpoint — from ordinary people’s pockets and into the bank accounts of government contractors and their cronies.

“Subsidies of all kinds feed a network of privileged businesses and non-profits. And the state protects titles to land taken at gunpoint or engrossed by arbitrary fiat before distribution to favored individuals and groups. No, the economies of the US, Canada, Western Europe, Japan, and Australia, at least, aren’t centrally planned. The state doesn’t assert formal ownership of (most of) the means of production. But the state’s involvement at multiple levels in guaranteeing and bolstering economic privilege makes it hard to describe the economic system we have now as free.”

With the right listeners, the term “freed markets” can help you open minds to a new understanding of genuine economic freedom and the blessings it can bring.

The Piketty Challenge to Capitalism

in Economic Liberty, Economics, Liberator Online Archives by James W. Harris Comments are off

(From the Intellectual Ammunition section in Volume 19, No. 8 of the Liberator Online. Subscribe here!)

Capital - Thomas PikettySeems like everybody is talking about French left-wing economist Thomas Piketty’s new book Capital in the Twenty-First Century.

It rocketed to the top of the New York Times bestseller list.

Lefty pundit Paul Krugman hails it as “the most important economics book of the year — and maybe the decade.”

An Esquire review was entitled “The Most Important Book of the Twenty-First Century.”

New York magazine described Piketty as a “Rock-Star Economist.”

The title of an article on Bill Moyers website crowed: “Piketty’s Bombshell Book Blows Up Libertarian Fantasies.”

Even the Pope tweeted a thumbs-up to the Piketty thesis: “Inequality is the source of social evil.”

No doubt about it: proponents of massive government intervention and coercive wealth distribution are praising Thomas Piketty’s new book to the skies.

Piketty’s tome is seen as a devastating criticism of the very fundamentals of capitalism. Basically, Piketty examines an enormous amount of historical economic data to conclude that capitalism inevitably, over time, promotes huge inequalities in wealth. This wealth becomes ever more concentrated in just a tiny percentage of the population, leaving the rest of us far poorer and far less powerful politically.

This inequality, Piketty believes, poses a serious threat to the people of the world (except the wealthy). The solution? Although he himself suggests it is probably unrealistic, at least for the moment, he urges a massive worldwide tax on wealth to radically reduce income inequality.

And what a tax it is! For the U.S. Piketty wants a steeply progressive income tax with a top rate of 80% on incomes starting at around $500,000 or $1 million, as well as a 50%-60% tax rate on incomes as low as $200,000, which he confidently asserts “would not reduce the growth of the US economy.” To make sure the beast of inequality remains slain, he suggests an annual wealth tax up to 10% on the largest fortunes, and grabbing up to 20% of lesser estates.

No, he’s not kidding. And the main purpose of this tax is not to flood governments with revenue — though it would, at least at first — but simply to reduce income inequality. Indeed, he has surprisingly little concern with how inefficiently or destructively government might use this money.

These proposals may sound downright insane to libertarians and other market advocates, but at the moment Piketty’s book is sweeping the country. So libertarians will want to learn about this latest challenge to liberty and why Piketty’s arguments against economic liberty are dangerous and wrong.

Here are some good short, very readable places to start:

Piketty Gets It Wrong by Michael D. Tanner (Cato Institute), National Review (Online), April 23, 2014.

Excerpt: “Piketty’s solutions would undoubtedly yield a more equal society, but also one that was remarkably poorer.”

Fighting Inequality: Rule of Law Vs. Legal Plunder by James A. Dorn (Cato Institute), Investor’s Business Daily, April 29, 2014.

Excerpt: “The likely result of this utopian scheme would be to drive creative people out of high-tax countries, slow economic growth, and make societies poorer in the long run.”

Will 80% Income Taxes and a New 10% Wealth Tax Fix Our Economy? by Hunter Lewis, AgainstCronyCapitalism.org, May 2, 2014.

Excerpt: “Perhaps the most astonishing claim in Piketty’s book is that government bureaucracies need to be reformed so that they can make most efficient use of all the new income and wealth taxes that are recommended. The assumption is that almost complete government control of the economy would be best, but that the machinery needs some fine tuning.”

Who Is Thomas Piketty And Why Has The Obama White House Rolled Out The Red Carpet For Him? by Hunter Lewis, AgainstCronyCapitalism.org, April 19, 2014.

Excerpt: “This is all complete nonsense. Economic growth is produced when a society saves money and invests the savings wisely. It is not quantity of investment that matters most, but quality. Government is capable neither of saving nor investing, much less investing wisely.”

The Inequality Trap Distracts from the Real Issue of Freedom by Richard Ebeling, May 5, 2014.

Excerpt: “The only important and relevant ethical and political issue in a free society should be: How has the individual earned and accumulated his material wealth? Has he done so through peaceful production and exchange or through government-assisted plunder and privilege?

“Rather than asking the source or origin of that accumulated wealth — production or plunder — the egalitarians like Thomas Piketty merely see that some have more wealth than others and condemn such an ‘unequal distribution,’ in itself.”

Thomas Piketty’s bestselling post-crisis manifesto is horrendously flawed by Allister Heath, UK Telegraph, April 29, 2014.

Excerpt: “Parts of the US intelligentsia now advocate the same ideas that are to be found on Europe’s Left-wing fringes… Envy is back, disguised as a concern about ‘inequality,’ and the bail-outs and QE were merely a convenient excuse to bash the rich. It is shocking how many intelligent people now support seizing most of the wealth created by entrepreneurs…”

Smith, Marx, and Piketty by George Reisman, Reisman’s Blog, April 21, 2014.

Excerpt: “Contrary to Mr. Piketty, the fact that the rate of return on capital is higher than the rate of economic progress does not at all imply that the fortunes of the rich will increase more rapidly than the overall size of the economic system. … Our problems today result largely from government policies that serve to hold down saving and the demand for capital goods. Among these policies are the corporate and progressive personal income taxes, the estate tax, chronic budget deficits, the social security system, and inflation of the money supply. To the extent that these policies can be reduced, the demand for and production and supply of capital goods will increase, thereby restoring economic progress, and the aggregate amount and average rate of profit will fall.”

On the Piketty Welcome Party by Bas van der Vossen, Bleeding Heart Libertarians, April 21, 2014.

Excerpt: “…inequality per se need not bother us as much as it does the Piketty-acolytes. …What matters is that living standards keep rising, and keep rising for all. That has been the crucial engine of humanity’s greatest achievements in poverty reduction, increases of life expectancy, literacy, culture high and low, and so on.”

Liberal Pundits of the World Unite Over Thomas Piketty’s New Book: Democratic pundits have enthusiastically and unconditionally embraced a book that evokes Karl Marx and talks about tweaking the Soviet experiment“ by David Harsanyi, Reason.com, April 25, 2014.

Excerpt: “…it is worth pointing out that liberal pundits and writers have enthusiastically and unconditionally embraced not only a book on economics but a hard-left manifesto. …But how does a book that evokes Karl Marx and talks about tweaking the Soviet experiment find so much love from people who consider themselves rational, evidence-driven moderates?”

Obama: Wrong About Income Inequality; The problem is joblessness, not rich people by Ronald Bailey, Reason magazine, April 2014.

Excerpt: “Are the rich getting richer? Yes. Are the poor getting poorer? No. In fact, over the past 35 years most Americans got richer. Has income inequality increased in the United States? Yes. Does it matter? …No. …if most Americans’ incomes are rising, does it matter if some are getting a larger share?”

Word Choices: “Free Enterprise” Instead of Capitalism?

in Communicating Liberty by Sharon Harris Comments are off

Word choices are very important. Two words might mean the same thing to you. But to your audience, one word may be far more meaningful and positive than another — and may get your point across not just more favorably, but more accurately.

An example is the word “capitalism” to describe the economic system libertarians believe in.

In a past column, I described some of the positive and negative reactions some audiences have to “capitalism,” and suggested some alternatives that are better in some circumstances.

You can read that column here.

Now we have some fascinating information to add.

A January 2010 Gallup poll makes a very good case for using “free enterprise” in many situations.

This January 2010 poll asked a representative sampling of Americans whether their top-of-mind reactions to several political terms were positive or negative. Respondents were not given explanations or descriptions of the terms.

Two of those terms were “capitalism” and “free enterprise.”

Both words, of course, essentially mean the same thing in typical, common usage.

However, they drew considerably different approval ratings.

First, the word “capitalism.”

Says Gallup: “Americans are more positive than negative on ‘capitalism,’ the word typically used to describe the United States’ prevailing economic system.

“‘Capitalism’ generates positive ratings from a majority of Americans, with a third saying their reaction is negative [61% versus 33%].

Ellis Island“Republicans are significantly more positive than Democrats in their reactions to ‘capitalism,’ although majorities of both groups have favorable opinions.

“Conservatives have the highest positive image [for the word "capitalism"], followed by liberals. Moderates have somewhat lower positive ratings than either of these groups.”

Now consider reaction to the term “free enterprise.”

According to Gallup:

“Americans are almost uniformly positive in their reactions to… ‘free enterprise.’”

“Eighty-six percent of respondents rated the term ‘free enterprise’ positively, giving it substantially more positive ratings than ‘capitalism.’ Although in theory these two concepts are not precisely the same, they are in many ways functional equivalents.

“Yet, underscoring the conventional wisdom that words matter, the public clearly reacts differently to the two terms. Free enterprise as a concept rings more positively to the average American than does the term capitalism.

“Strongly positive ratings of free enterprise are generally uniform across both partisan groups [Democrats and Republicans], and across the three ideological groups [liberals, conservatives, moderates].”

Gallup sums up with a lesson effective libertarian communicators cannot ignore:

“Bottom line: As most politicians and many in business have learned, the choice of words to describe a concept or a policy can often make a substantial difference in the public’s reaction. The current research confirms that assumption.

“It is apparent that ‘free enterprise’ evokes more positive responses than ‘capitalism,’ despite the apparent similarity between the two terms.”

NOTE: The same Gallup report I link to above also offers a very useful analysis by Gallup that breaks the popularity of these phrases down further, by political ideology (conservative, liberal, and “moderate”), by party, and so on. I highly recommend this short analysis to anyone seriously interested in using these terms effectively.