Eight-year-old Phung Xuan Vu and his 10-year-old brother were responsible for fetching food for their family, which was in the constant grip of hunger. They were living in Vietnam in the 1980, so this required ration cards.
One of the family's most important possessions was a booklet of vouchers for food. As the older child, Vu's brother took care of the booklet, knowing that if he lost it, the family would have nothing to eat. The vouchers inside were printed on waxy yellow tissue paper. They meant the difference between going hungry and having something to eat, although it was never enough.
The vouchers had to be redeemed at food distribution centers. People often had to wait hours, sometimes all day, to get a little food, and those who wanted a better chance of leaving with food came at night. They were already queuing up before the food was even delivered, in the hope that it would arrive at some point. Once it was finally your turn, you often found yourself face-to-face with harsh officials. As Vu told Nancy K. Napier and Dau Thuy Ha in their 2020 book The Bridge Generation of Việt Nam: "The officials were not friendly. They were bossy and had power. We felt like we had to beg for the food that was rightfully ours."
The amount of food you got depended on your family's status. State employees received more, factory workers less. If there was not enough rice, people received wheat instead, though hardly anyone knew what to do with it: Even if they knew how to bake bread, they couldn't normally get hold of the other ingredients. In any case, they needed electricity to heat an oven, but electricity was available only a few hours a day.
Today the Vietnamese call this era Thoi Bao Cap—"the subsidy period." It was the time of a socialist planned economy, before the free market reforms of the late 1980s.
In 1990, with a per capita gross domestic product (GDP) of $98, Vietnam was the poorest country in the world, behind Somalia and Sierra Leone. Every bad harvest led to hunger, and Vietnam relied on food aid from the United Nations and financial assistance from the Soviet Union and other Eastern Bloc countries. As late as 1993, 79.7 percent of the Vietnamese population was living in poverty.
By 2020, the poverty rate had fallen to 5 percent. Vietnam is now one of the most dynamic countries in the world, with a vibrant economy that creates great opportunities for hardworking people and entrepreneurs. Once a country unable to produce enough rice to feed its own population, it has become one of the world's largest rice exporters, and a major electronics exporter too.
After the French colonists were defeated, Ho Chi Minh established a system modeled on the Soviet planned economy in North Vietnam. In 1975, after the pro-American government in South Vietnam fell and the last U.S. troops left the country, the newly united country's government decided to bring Soviet-style socialism to the south too.
The war had devastated the country. Some 14–15 million tons of bombs and explosives fell on Vietnam, 10 times as many as had been dropped on Germany in World War II. Napalm inflicted heavy civilian casualties. The South Vietnamese alone lost 1.5 million people, including 300,000 civilians. By the end of the war, there were almost a million orphans in South Vietnam and at least a million war invalids. Civilian losses in North Vietnam were lower than in the South, but it lost far more soldiers.
The planned economy meant yet more devastation.
In 1977, the government started collectivizing agriculture and nationalizing nearly 30,000 privately owned small businesses. Many peasants in the South regarded collectivization as particularly unjust because the communists had given them land during the war to secure their support and now wanted to take it away from them again. Many of them resisted collectivization, and some left their land or sold their animals rather than work in collectives. By 1980, only 24.5 percent of the rural population in the South worked in collectives, compared to 97 percent in the North.
"The peasants in South Vietnam reacted by restricting production, which was primarily oriented towards their own needs," Claudia Pfeifer explained in her book Konfuzius und Marx am Roten Fluss (in English, Confucius and Marx on the Red River). "Within a few months, the agricultural sector almost completely collapsed."
Less than 10 percent of the cultivated area for annual crops could be artificially irrigated and drained, even though pumps were available for about 40 percent of the area—power shortages and blackouts often made their use impossible. Only 30 percent of the agriculture sector's electricity demands were satisfied.
State-owned cooperatives received 40 percent of the government's funds, though they contributed only 5 percent of total agricultural production. The state collectives did not reward members for the amount of rice they produced, but instead counted how many days they had worked. If you worked 30 days, you got 30 points, which gave you the right to a defined share of the harvest. If you worked 20 days, you got 20 points and correspondingly less.
In 1980, Vietnam produced only 14 million tons of rice, though the country required 16 million tons to meet its population's basic needs. Every failed harvest led to immediate food shortages, and to rationing. The second Five-Year Plan envisaged an increase in GDP of 13 percent to 14 percent per year for 1976 to 1980. In fact, it went up only 0.4 percent—and this with a rapidly growing population. Agricultural production was to increase by 8 percent to 10 percent per year; it went up by 1.9 percent. The plan envisaged annual increases in industrial production of 16 percent to 18 percent; the actual annual average was just 0.6 percent. In the entire northern half of the country, the per capita supply of paddy rice declined by about a third in the second half of the 1970s.
Most of the yield was produced on the fraction of the land that was privately farmed. From 1976 to 1988, more than 60 percent of cooperative members' income came from the 5 percent of land they were allowed to keep after 95 percent of the land had been collectivized.
At first, South Vietnam's new rulers declared that they wanted to nationalize only foreign-owned enterprises. Vietnamese-owned enterprises were transformed into so-called parastatals (enterprises with state participation). But this was meant to be a temporary measure: The plan was that all enterprises would gradually become fully state-owned. The same problems arose in industry as in agriculture. Production stagnated, and state-owned industrial production actually declined by 10 percent from 1976 to 1980.
International sanctions against Vietnam—imposed in response to the country's 1978–1979 invasion of Cambodia—exacerbated the country's economic crisis. Later that year, China went to war with Vietnam, heightening the problems.
But 1979 also marked the first attempt to relax the socialist policies. Like several foreign communist governments before it, going back to Vladimir Lenin's New Economic Policy in the 1920s, the Vietnamese regime realized that survival required a retreat from its ideology. "At the beginning of the 1980s, the free market, in which prices were based on cost calculations and supply and demand, was once again allowed," Pfeifer wrote. "At the same time, the first cuts to subsidies for state-owned enterprises were introduced."
These initial reforms legitimized what had already taken place as spontaneous developments in several villages. Many agricultural collectives and even state-owned enterprises had long been turning a blind eye to official rules and regulations. Farmers refused to work in collectives and concentrated their work on the little land they owned themselves, because they could sell the goods they produced here at market prices. There were unauthorized contracts between collectives and families and between state farms and private traders. Such spontaneous grassroots developments, not the party, were the ultimate source of the reforms.
Changes to policy began at the local level and then were applied nationally. The provinces in the Mekong Delta, for example, moved from the rationing subsidy system to a market-based system as early as the 1980s. "Without such illegal or pilot procedures," Tran Thi Anh-Dao wrote in the 2022 book Rethinking Asian Capitalism, "there is evidence that market mechanisms could never have emerged so rapidly."
Here we see parallels with developments in communist China. There too, movements from below were at least as important as top-down, state-initiated reforms. Long before the ban on private farming was officially lifted in 1982, there were spontaneous initiatives all over China to reintroduce private ownership, even though this was officially prohibited. The result was extremely positive: People were no longer forced to go hungry, and agricultural yields increased significantly. As it became apparent that the yields were much higher, party officials let the people have their way.
The Vietnamese reformers' initial focus was on agriculture, at the time the most important economic sector by far. In 1981, for example, the state introduced Directive 100, which allowed individual families to use cooperative land. In the words of Vu Le Thao Chi, this "placed the unwritten custom of family-based production into an officially sanctioned framework."
In the early 1980s, a number of other reforms were introduced in Vietnam. Firms would now be responsible for their own profits and losses. Enterprises could decide for themselves what to do with any excess profits. Planners maintained strong controls, but if nothing else this legalized what had already been taking place illicitly. "For instance," the political scientist David Wurfel found, "when materials were short, goods could be sold in the open market to raise cash to buy supplies, or perhaps to pay bonuses to workers and thus raise productivity. Though largely illegal, these initiatives became more and more widespread. Thus, the first key reform decree for state industry in January 1981 required factories to register all activities they conducted outside the plan at the same time that it allowed them to acquire and dispose of resources as needed to increase their supply of inputs."
Though these reforms improved the situation, supplies of basic foods could still not meet people's needs. Vietnam remained one of the five poorest countries in the world. Officially, there were about 4 million unemployed people in Vietnam, but in April 1987 the Vietnamese ambassador told the foreign minister of Hungary in a confidential conversation that the real figure was 7 million. Meanwhile, inflation rose to 582 percent by 1986.
"Since monthly salaries provided no more than a week's living expenses, almost all households had to find extra sources of income to make up the shortage," the Japanese scholar Mio Tadashi wrote in the 1989 book Indochina in Transition. "It became common in Hanoi for families to use one room of their apartment house units to raise pigs. Pig-farming was the best source of extra income and most families turned one room of a three-room apartment over to pigs, hardening themselves against the noise, odor, and poor hygienic conditions."
Control of the Communist Party shifted back and forth between reformers and a faction more suspicious of change. After the first reforms were introduced in the late 1970s, there was a period in which liberalization was frozen. At the Fifth Party Congress in 1982, those opposed to further changes were in the ascendancy.
But the country's problems became ever more pressing, and gradually the reformers prevailed. At the Tenth Plenum of the Fifth Central Committee in May 1986, Deputy Prime Minister To Huu and others opposed to the reforms lost their seats on the Council of Ministers. And at the Sixth Party Congress in December 1986, large numbers of representatives from South Vietnam supported market reforms. (As Balazs Szalontai pointed out in the Journal of Asiatic Studies, in the South "the private sector was by no means eliminated as thoroughly as in the North, and some cadres were willing to harness its potential for growth.")
The Party Congress was marked by an outpouring of radical self-criticism. In one speech, a delegate openly stated: "The people have lost faith in the party." The official report for the first time dispensed with a detailed description of the long, heroic struggle of the Vietnamese people and contained only the briefest enumeration of the party's successes. The leadership openly admitted that 1976–1980 were lost years in which there had been effectively no economic growth, and the report bluntly addressed such issues as unemployment, inflation, corruption, low manufacturing output, declining labor productivity, and environmental damage.
It says much for the Vietnamese that they did not try to blame external factors, such as natural disasters or the wars with China and the U.S., for their dire situation. The final resolution of the Party Congress declared that the "reasons for the current situation are to be sought above all in mistakes and errors of leadership and direction by the Party and the state." And the Vietnamese drew the right political lessons: The reforms endorsed at the Party Congress and advanced over the next few years focused on pushing back the all-powerful state. It was a seminal event in Vietnam's history, the beginning of the fundamental reforms that came to be known as Doi Moi ("Renewal").
The reforms adopted in the next couple of years included permission for private manufacturers to employ up to 10 workers (later increased), abolition of internal customs checkpoints, elimination of the state foreign-trade monopoly, reduced restrictions on private enterprise, elimination of virtually all direct subsidies and price controls, separation of central banking from commercial banking, dismantling major elements of the central planning and price bureaucracies, the return of businesses in the South that had been nationalized in 1975 to their former owners or their relatives, and the return of land seized in the '70s collectivization campaign if it was "illegally or arbitrarily appropriated."
As in China, Vietnam's leaders did not try to implement a new system from the top down in one fell swoop. They started with experiments at the local level. Where these were successful, they were adopted more widely.
At the end of 1987, family farmers won the right to lease land from cooperative and state farms on a long-term basis. These farmers' rights of disposal over land were expanded in the 1992 constitution and the 1993 Land Law. Although land could not be bought and sold as private property, the transferability and inheritability of land on long-term leases (up to 75 years) was guaranteed.
The character of the agricultural cooperatives changed. The collectives were dissolved, and farmers now joined together voluntarily. The new cooperatives became providers that offered certain services to the farmers, much more cheaply than the collectives had done in socialist times. Their services became both better as well as cheaper.
In the industrial sector, too, enterprises enjoyed much more autonomy. The state headquarters' ability to intervene directly in economic activity was restricted. Economic relations between the enterprises were to be regulated by mutual contracts. The planned economy was not abolished entirely, but planning now only meant setting strategic goals over extended time frames. The setting of wages and the exploitation of profits became a matter for the individual enterprises to determine. As Pfeifer notes, "Enterprises were even granted the right to sell, lend, or rent out capacities that could not be used by the enterprise at a specific moment in time" (though the business's assets remained state property).
There was no great tidal wave of privatizations, as in some Eastern European countries. Instead, state-owned enterprises simply declined in significance in relation to the private economy. Their subsidies were reduced, forcing them to work more efficiently and compete in the marketplace. Many unviable enterprises had to file for bankruptcy, and the overall number of employees in state-owned enterprises fell by about 30 percent (more than 800,000 workers) from 1989 to 1992.
Previously, the only private enterprises allowed in Vietnam had been family businesses, which were not allowed to employ wage labor—at least officially. Now companies were allowed to hire as many workers as they wanted or needed. In 1990–1991, the legal structures of sole proprietorship, limited liability company, and public limited company were introduced. This development culminated in 1992 with Article 21 of the new constitution, guaranteeing the protection of private ownership of the means of production against expropriation.
Before 1989, the state had fixed all prices. Now such regulations applied only to electricity, petrol, cement, steel, and transport services. This liberalization of prices led to an improvement in the supply of goods. Although many prices continued to rise sharply for a while, the prices of basic foodstuffs actually remained stable, and in the case of rice they fell.
Until the reforms began, the state dominated every aspect of Vietnam's foreign trade, which was mainly with the socialist bloc, first and foremost with the Soviet Union. Opening the country meant welcoming foreign investment and integrating Vietnam into the world economy. After a Foreign Investment Law was passed in 1989, money started to flow into Vietnam from Western Europe, Singapore, South Korea, Thailand, Hong Kong, Japan, Australia, and other countries.
One of the most important reforms involved abolishing the system of centrally planned specifications and letting companies manage their own exports and imports. The private import and export of goods was allowed and, in almost no time at all, Vietnam had compensated for its lost trade with socialist countries by increasing its trade volumes with capitalist countries, especially in Asia (Taiwan, South Korea, Hong Kong, Singapore, Japan) and Australia. A series of trade agreements followed, including one with the United States.
In 1999, a new Enterprise Law removed yet more bureaucratic hurdles for private companies. In the five years after it went into effect, Bill Hayton wrote in the 2010 book Vietnam: Rising Dragon, "160,000 enterprises were registered. Most of these were existing businesses which had been operating without licenses and took advantage of the new law to register." Here again, the reformers were sanctioning what was already happening spontaneously at the grassroots.
Vietnam's gross domestic product grew by 7.9 percent a year from 1990 to 1996, faster than any other Asian country but China. Poverty fell sharply. By the World Bank's standard for extreme poverty—living on less than $1.90 a day—52.3 percent of the Vietnamese population was living in extreme poverty in 1993. By 2008, the figure had fallen to 14.1 percent. By 2020, it was only 1 percent. That indicator was developed for "low-income economies," though, and Vietnam has now moved to the "lower-middle-income" category, where poverty is defined as living on less than $3.20 a day. By that measure, the poverty rate dropped from 79.7 percent to just 5 percent.
In 1980, life expectancy in Vietnam was 62 years. Today it is 73.6 years. Vietnam has also risen in the United Nations' Human Development Index, which aims to comprehensively measure the quality of life of people in a country. The index score for Vietnam increased from 0.463 in 1980 to 0.704 in 2020, putting it only slightly below the global average of 0.723.
Despite the incredible successes, there remains much work to be done. There are still too many state-owned enterprises, and they often operate inefficiently. In some economic sectors, such as shipbuilding and tobacco production, it is absolutely implausible that the government should need to own companies, and yet it does.
The Vietnamese government avoids the term "privatization," preferring to speak of "equitization." Whatever you call it, the process is faltering. From 2003 to 2006, a total of 2,649 state-owned enterprises were "equitized," but since then the number has been in the low three-digit or even double-digit range every year. And while the privatizations have included a number of very large state-owned enterprises, in most cases the state has retained majority stakes in such companies. (Some state-owned enterprises that failed in their original fields were forced to change their business models in order to survive. They took advantage of their ownership of land and access to cheap state loans to gain a footing in, for example, the real estate or hotel business.)
Why has privatization been slowing? For one thing, many state-owned enterprises do not operate efficiently enough to give private investors an incentive to acquire them. For another, if the government insists on retaining a controlling stake in the company, investors may suspect that the bureaucrats won't be relinquishing their control. There is also a question of motives: The leaders of state-owned enterprises belong to the party, and they have little interest in their companies being privatized.
That is not the only conflict of interest in the state-owned enterprises. In his 2021 book Crossing the Street: How to make a success of investing in Vietnam, investor Andy Ho offers an example: "One of my first investments in Vietnam was in a fish-processing company that had recently equitized, with the government still the majority shareholder. Upon visiting the plant in the Mekong Delta, it became clear to us that more than half of the inputs (raw fish) came from the fish farms owned by the families of [state-owned enterprise] executives. As such, the CEO was always able to guarantee a 10 percent gross margin!"
Unsurprisingly, Vietnam has a corruption problem. When Transparency International assembled its 2021 Corruption Perceptions Index, Vietnam ranked a middling 87th out of 180 countries in the 2021 ranking. Its score wasn't as bad as it had been a couple of decades earlier, but it wasn't exactly good either. As one Hanoi businessman told me: "The official lists of party and state functionaries' salaries are published in the newspapers, and many only get $500 or $1,000 a month. Nevertheless, they often drive expensive Mercedes and lead lavish lifestyles. Of course, one wonders: Where does the money come from?"
Though Vietnam has created more space for the market and the government is no longer as omnipotent as it was, the party still retains a great deal of influence. That raises the question: To what extent is it really possible to effectively fight corruption in a one-party system without a free press?
But let's not dismiss what they have accomplished. The Vietnamese could have blamed all their problems on the consequences of colonialism and war, but they didn't—they turned to the future. Even with that one-party dictatorship in control, they allowed an enormous amount of grassroots initiative. The official reforms were important, but to a substantial degree they legitimized what was already taking place illicitly in countless villages.
The best thing a country's political leadership can do is to refrain from opposing such spontaneous developments and to create a framework of legal certainty. The proof is the immense increases in both freedom and wealth that are on display today in Vietnam.
This article has been adapted from How Nations Escape Poverty: Vietnam, Poland, and the Origins of Prosperity by permission of Encounter Books.
The post How Capitalism Beat Communism in Vietnam appeared first on Reason.com.
]]>Argentina actually elected a libertarian president.
Javier Milei campaigned with a chainsaw, promising to cut the size of government.
Argentina's leftists had so clogged the country's economic arteries with regulations that what once was one of the world's richest countries is now one of the poorest.
Inflation is more than 200 percent.
People save their whole lives—and then find their savings worth nearly nothing.
They got so fed up they did something never done before in modern history: They elected a full-throated libertarian.
Milei understands that government can't create wealth.
He surprised diplomats at the World Economic Forum this month by saying, "The state is the problem!"
He spoke up for capitalism: "Do not be intimidated by the political caste or by parasites who live off the state…. If you make money, it's because you offer a better product at a better price, thereby contributing to general well-being. Do not surrender to the advance of the state. The state is not the solution."
Go, Milei! I wish current American politicians talked that way.
In the West, young people turn socialist. In Argentina, they live under socialist policies. They voted for Milei.
Sixty-nine percent of voters under 25 voted for him. That helped him win by a whopping 3 million votes.
He won promising to reverse "decades of decadence." He told the Economic Forum, "If measures are adopted that hinder the free functioning of markets, competition, price systems, trade, and ownership of private property, the only possible fate is poverty."
Right.
Poor countries demonstrate that again and again.
The media say Milei will never pass his reforms, and leftists may yet stop him.
But already, "He was able to repeal rent controls, price controls," says economist Daniel Di Martino in my new video. He points out that Milei already "eliminated all restrictions on exports and imports, all with one sign of a pen."
"He can just do that without Congress?" I ask.
"The president of Argentina has a lot more power than the president of the United States."
Milei also loosened rules limiting where airlines can fly.
"Now [some] air fares are cheaper than bus fares!" says Di Martino.
He scrapped laws that say, "Buy in Argentina." I point out that America has "Buy America" rules.
"It only makes poor people poorer because it increases costs!" Di Martino replies, "Why shouldn't Argentinians be able to buy Brazilian pencils or Chilean grapes?"
"To support Argentina," I push back.
"Guess what?" Says Di Martino, "Not every country is able to produce everything at the lowest cost. Imagine if you had to produce bananas in America."
Argentina's leftist governments tried to control pretty much everything.
"The regulations were such that everything not explicitly legal was illegal," laughs Di Martino. "Now…everything not illegal is legal."
One government agency Milei demoted was a "Department for Women, Gender and Diversity." DiMartino says that reminds him of Venezuela's Vice Ministry for Supreme Social Happiness. "These agencies exist just so government officials can hire their cronies."
Cutting government jobs and subsidies for interest groups is risky for vote-seeking politicians. There are often riots in countries when politicians cut subsidies. Sometimes politicians get voted out. Or jailed.
"What's incredible about Milei," notes Di Martino, "is that he was able to win on the promise of cutting subsidies."
That is remarkable. Why would Argentinians vote for cuts?
"Argentinians are fed up with the status quo," replies Di Martino.
Milei is an economist. He named his dogs after Milton Friedman, Murray Rothbard, and Robert Lucas, all libertarian economists.
I point out that most Americans don't know who those men were.
"The fact that he's naming his dogs after these famous economists," replies Di Martino, "shows that he's really a nerd. It's a good thing to have an economics nerd president of a country."
"What can Americans learn from Argentina?"
"Keep America prosperous. So we never are in the spot of Argentina in the first place. That requires free markets."
Yes.
Actually, free markets plus rule of law. When people have those things, prosperity happens.
It's good that once again, a country may try it.
COPYRIGHT 2024 BY JFS PRODUCTIONS INC.
The post Argentina, Once One of the Richest Countries, Is Now One of the Poorest. Javier Milei Could Help Fix That. appeared first on Reason.com.
]]>In a thrilling address at the World Economic Forum, Javier Milei, President of Argentina, presented a robust defense of capitalism and a critical examination of all forms of collectivism. His speech, rich in historical context and economic analysis, offers some vital lessons that are particularly relevant for today's globalized economy. Sadly, these lessons have long been ignored by American politicians on the right and left, whether in Washington or on the campaign trail.
Milei began with a stark warning about the dangers of collectivist policies based on Argentina's own, sometimes sad, history. Once a beacon of prosperity under a capitalist framework, Argentina's shift toward collectivism over the past century caused its prosperity to plummet from a leading global position to a much lower rank. Its story illustrates how losing sight of free market principles can result in economic stagnation or even absolute poverty.
This point is crucial. Milei reminds us that no matter how noble the intentions are behind collectivist policies, whether it's fighting climate change, obtaining justice for all, or enhancing national security—and whether they are pushed, as Milei says, by "communist, fascist, socialist, social democrats, national socialists, Christian democrats, neo-Keynesians, progressives, populists, nationalists, or globalists"—attempting to solve problems in this way harms the very people who are meant to be helped.
Now, readers may think this historical lesson is irrelevant for the United States. After all, Argentina has been an economic basket case, and America in 2024 is still one of the wealthiest nations in the world. Anyone who has taken, as I have, the naturalization test also knows that the expected answer to "what is the economic system of the United States?" is "free market." That one made me smile.
Unfortunately, Milei's warning is relevant to us. While much of our economy remains relatively free, every part of it is subjected to an increasingly intrusive regulatory regime and ineffective, burdensome, and unfair tax code. Furthermore, while Democrats and Republicans fight constantly, their economic policies are strikingly, similarly, and increasingly collectivist.
Both parties have recently become so populist that they could justly be described as modern Peronists who believe that politicians, better than people operating in a free market, can direct investment and determine which industries should succeed and which should fail. It's no exaggeration to say that America has traveled a significant distance down the "road to serfdom" that Milei warns about.
Milei, an economist by training, doesn't only criticize collectivism; he offers a compelling, positive case for capitalism. By tracing global economic history, he highlights a pivotal moment: the advent of capitalism and the Industrial Revolution. This period marked a departure from centuries of economic stagnation, ushering in unprecedented growth in global per capita gross domestic product (GDP) and a significant reduction in poverty.
The data offered by Milei is striking. The transformation from a near-zero growth world to a rapid economic expansion under capitalism testifies not just to the free market's efficiency but to its capacity to subsequently improve people's lives on a massive scale. The fact that poverty and inequality still exist makes Milei's insights more pertinent, not less. They suggest that the path lies not in abandoning capitalism but in more effectively harnessing its immense potential.
Even better: Economic growth isn't just an engine of wealth production but also of peace and tolerance. More of that, please.
Milei's perspective challenges the growing worldwide trend of increased government involvement in economic affairs. He advocates for limited government intervention, where economic freedom, respect for private property, and market mechanisms are paramount. It's a reminder that the road to prosperity is paved with policies that empower individuals and businesses alike, fostering an environment in which innovation, entrepreneurship, and opportunities for all kinds of people thrive.
Better yet, Milei ended his memorable speech with a poignant "Long live freedom, dammit." It's a rallying cry for our times, a reminder of the value of liberty, and a call to defend it against encroaching forces. As we navigate the complexities of the 21st century, his words serve as a beacon, guiding us towards a future where freedom is not just cherished in the abstract but actively protected and nurtured in practice.
Don't think of Javier Milei's address in Davos as a historical analysis or economic lecture; it's a call to action. Let's reevaluate our approach to economic policy, remember and recognize the proven strengths of capitalism, and be wary of the inescapable pitfalls and proven failures of collectivism. Embracing economic freedom while ensuring responsible governance is surely the key to sustainable prosperity and continued global progress.
COPYRIGHT 2024 CREATORS.COM.
The post What Javier Milei Could Teach Democrats and Republicans About Capitalism appeared first on Reason.com.
]]>Presume the economic case for free markets is true: that capitalism makes us freer and richer, creates better jobs and greater opportunities, and helps us solve environmental problems. Does it make us happier too?
The American conservative Patrick Deneen believes liberal capitalism makes us "increasingly separate, autonomous, nonrelational selves, replete with rights and defined by our liberty, but insecure, powerless, afraid, and alone." Under the exhaustive headline "Neoliberalism—the ideology at the root of all our problems," the British leftist George Monbiot claims that these problems include (but are by no means limited to) "epidemics of self-harm, eating disorders, depression, loneliness, performance anxiety and social phobia."
Freedom "doesn't make us free, it makes us lonely," adds Christian conservative Joel Halldorf. "Increasing mental illness, isolation and populism are signs that liberalism cannot sustain itself." The leftist economist Noreena Hertz argues that "neoliberalism has made us see ourselves as competitors not collaborators, consumers not citizens, hoarders not sharers, takers not givers, hustlers not helpers."
Such sweeping statements are only very rarely followed by attempts to document any causal link or even a correlation. Surprisingly often, a quick misreading of classical liberals is supposed to be enough to prove the connection between liberalism and greed and loneliness, as if the resistance to forced relationships was based on a resistance to relationships themselves.
Yet classical liberalism does not deny man's need for belonging; it just denies that an outside authority knows which collectives anyone else should belong to. Liberalism is not about finding all life's meaning in a shopping list, it just says that we need more meaning than can be found in a ballot paper and that those who seek the meaning of life in collective projects that they try to enforce on everybody have less of a sense of the beautiful richness and diversity of human nature than the alleged cold and robotic market liberals. Do we need something more than our lonely, individual lives? Of course we do, but what? Can we even find a single collective project that would make Deneen, Hertz, and Halldorf cuddle together in communitarian hygge?
Even then we are still only talking about a small homogeneous group of Western intellectuals who demand a collective political project. What does the collective utopia look like that would fill the empty hearts of such diverse people as Stephen Fry, MrBeast, Elon Musk, Billie Eilish, Roger Federer, Mario Vargas Llosa, Danielle Steel, Richard Dawkins, PewDiePie, Robert Downey Jr., Nick Cave, LeBron James, Larry David, Donald Trump, Kylie Jenner, The Rock, Quentin Tarantino, Posh Spice, Robert Smith, Chris Rock, Blixa Bargeld, Neal Stephenson, Kim Kardashian, Lionel Messi, Johan Norberg, and some 7.9 billion more?
Liberalism does not ignore the meaningful life; it holds that more people have a chance to find meaning if they have the freedom to search for it.
The counterargument is that we just can't—that there is something in the very freedom of choice that makes us selfish and isolated, that it's precisely this individual search for meaning in life that creates the epidemic of loneliness that is sweeping the Western world.
But is there even such an epidemic?
Few conditions are more destructive to people's physical and mental well-being than the feeling of being abandoned. Loneliness is an individual misfortune and a major social problem. But most articles about an epidemic of loneliness are in fact about the growing number of single households. That's not the same thing.
Living alone has its downsides, but there is actually no strong association between it and feelings of loneliness or lack of social support. Sweden often tops lists of most single households, but at the same time it is also one of the countries where people say they feel the least loneliness—clearly below the European average and, interestingly, much below the feelings of loneliness in southern Europe, despite their reputation for big families and warmth.
Of course, this could be because Swedes are so introverted that they think a visit to the local shop is sufficient to experience community. But Swedes are also in touch with their friends more often than other Europeans.
The problem with assessing our level of loneliness is that we tend to interpret the difficulties we all experience with relationships and relatives as a sign that such connections have fallen into disrepair and that there must have been a better time or place when we all lived in more harmonious relationships. It may be worth recalling that the most common violent crime in the traditional society of the 19th century was violence against parents (at a time when children often had a legal obligation to care for them), suggesting that an enforced relationship is often a cause of conflict rather than concord.
I often hear the claim that poorer and more collectivist countries have a different and deeper form of community than people who live in urbanized, individualized materialist ones. (I hear this from students in rich countries, that is—I have never heard it said in poor countries.) But when the Gallup World Poll asks people around the world: "If you were in trouble, do you have relatives or friends you can count on to help you whenever you need them?" a very different pattern emerges. In African countries, an average of 25 percent answer "no." In South America and Asia, it's about 20 percent. It's around 10 percent in Japan and Taiwan. And it is down to single digits in Europe, the United States, Canada, Australia, and New Zealand.
In November 2022, I read an article in the Financial Times headlined "Are we ready for the approaching loneliness epidemic?" It claimed "the share of people who report having friends and relatives they can count on has been steadily dropping." Yet when I checked the source, it stated that the average level of people who have someone to count on "is almost unchanged" (at more than 90 percent) and that satisfaction with relationships has actually increased slightly.
After reviewing research in the field, the data visualization project Our World in Data concludes: "There is an epidemic of headlines that claim we are experiencing a 'loneliness epidemic,' but there is no empirical support for the fact that loneliness is increasing." One reason many believe there is an epidemic is that those who say they are most lonely are the young, but this is based on the belief that they will keep feeling just as lonely when they grow up. But as teens grow up, stop feeling they are misunderstood by society, establish friendships and romantic relationships, form families, and have colleagues, their loneliness tends to decrease (until a partner dies late in life, when the feeling of loneliness increases again). So a more relevant question is whether those who are young today are more lonely than those who were young before (and whether older people today are more lonely than older people were back then). The answer seems to be no.
Even though Hertz reports depressing data on the number of people who feel alone, she does not make the case this share has risen over time. Studies following American college students since 1977 show the proportion who state they lack friends and feel left out has decreased somewhat. When researchers compare today's middle-aged and older people with previous generations at the same stage of life in the United States, England, Sweden, Finland, and Germany, they don't find evidence of increased loneliness.
As far as I know, there are no studies looking at whether society has experienced Gabriel García Márquez's 100 years of solitude, but we have at least 75 years of British loneliness studies, and they do not show an increase in the proportion who say they feel lonely. We must also take into consideration that it is probably less stigmatized to talk about feelings of loneliness today than in previous generations.
Swedes have answered questions about social relations since the golden age of collectivism, and their responses show that the feeling of loneliness has diminished since then among younger and older people, men and women. In the early 1980s, more than one in four Swedes stated that they lacked a close friend. Now just over one in 10 do so.
In other words, all these autonomous selves seem to be distinctly social. This should not come as a surprise—after all, we are social beings. So collectivist pressures and political programs are not needed to make us seek and develop contact with other people. Freedom is not about opting out of relationships but about choosing relationships that suit you and match your values.
If you want to feel lonely, you should refrain from fantasizing freely about how your opponents destroy all communities and instead, like the political scientist Caspian Rehbinder, compare data on subjective feelings of loneliness in places with different institutions. This shows the opposite of what critics see as the Achilles' heel of liberalism: Loneliness is reported less where freedom is greater. For every point a country gains on the Cato Institute and Fraser Institute's 10-point scale for personal and economic freedom—in effect, a measure of a country's classical liberalism—loneliness is on average six percentage points lower. Rehbinder also looked at each society's equality of distribution and degree of religiosity, since these are often suggested as remedies to the emptiness of liberalism. He found no connection whatsoever. If we trust the broad simple correlations, it seems we need personal freedom and free markets to remedy the existential isolation that equality and spirituality can't solve; it's not the other way around.
Several indicators of loneliness and isolation did worsen sharply during the pandemic, and it will take a long time until we learn whether this is a temporary dip or a new trend. But this is the predictable result of government-enforced social distancing, when people were commanded to stay at home and kids were not even allowed to meet their classmates. If anything, it is a counterargument to the hypothesis that too much liberty and mobility make us lonely.
There is also no evidence for the large increase in mental illness that many people assume exists (again with the caveat that the pandemic probably worsened these problems, at least temporarily). Hannah Ritchie, lead researcher at the Our World in Data project, writes: "Many (myself included) have the perception that mental health issues have been increasing significantly in recent years. The data…that we have does, in general, not support this conclusion." On the contrary, levels of mental illness appear to have been stable since 1990.
In a review of the literature in the field, four researchers writing in Acta Psychiatrica Scandinavica found 42 studies from 1990 to 2017 that used the same methodology to examine mental illness in the same geographical area over time. Most of them showed no increase in bad health (although such studies receive less media attention than the few that show an increase), and the overall result pointed to a "minimal" increase that they believe is due to demographic changes. (Globally, the incidence of depression and anxiety is largest among the middle-aged. So as populations age, a bigger share of people is diagnosed with a mental disorder.) The researchers conclude: "We can be rather confident that the overall global prevalence of mental illness has not dramatically increased in recent decades if it has at all."
In a population of 8 billion, there will always be groups of people in certain countries whose physical and mental suffering increase. There are ominous signs of an increase in depression and anxiety in teenage girls in some countries, for example, and in the United States there has been a worrying increase in drug overdoses. But globally, the suicide rate has fallen by about a third over the last 30 years. In Sweden, the suicide rate has halved since 1980.
So why are we so convinced that mental health is deteriorating? One reason is that we have borrowed terminology that was created for clinical health problems to talk about common forms of grief and worry. As many traditional, tangible sources of suffering disappear, the expectation that we should feel good all the time increases; when we don't, we suddenly start talking in psychiatric terms, even though stress and sadness are part of a good life. After observing that the proportion who experience reduced mental well-being is fairly constant while diagnoses and sick leave increase, Christian Rück, a psychiatrist at the Karolinska Institute, concludes that we have confused two different forms of suffering. Some mental pain is simply the abrasions of the soul, says Rück, which are just a part of life, but we have begun to confuse these with the fractures of the soul, which we need help and treatment to deal with.
And there's another change. Previous generations spoke freely about physical ailments, but the mental ones were hidden away and discussed only in a hushed voice. Today, it is much more common to report mental symptoms and to talk about them and seek help, and society and the health care system are more likely to take it seriously. That is a sign of an increasingly healthy society, not a sick one.
So now perhaps we can go back to the original question of whether capitalism really makes us happier. Can money buy happiness?
Yes, you can buy happiness—but only at a very bad exchange rate. Compared to having health, peace of mind, and good relationships, money is not much to write home about. If your mental worry and anxiety for some reason increase by a tenth, you would need to increase your monthly salary by around $20,000 to get back to the same level of happiness that you had before. But one reason why individual income is less important for one's well-being is that most goods, services, and technologies that make a real difference to one's well-being spread quickly in market-based societies, so a few hundred bucks here or there does not make much of a difference to your happiness. The important thing is to live in a rich, free, capitalist society. If you have been lucky enough to be born there, much of your potential for happiness is already fulfilled.
We are not talking about objective indicators here but about what people say regarding their own emotional state. The sources of error are many: Both those who are too depressed and those who have too much excitement in life may not respond to surveys; occasional events play a disproportionately large role in our mood (such as the weather on the day you respond, if you missed the bus that morning, or if you happened to find a coin in the elevator just now); not everyone is honest even in anonymous surveys (the French believe melancholy is a sign of intelligence, and some think Scandinavians have such low expectations of life that they are constantly pleasantly surprised). One has to treat this data with great care. Still, what well-being research suggests is completely opposite to the notion that free markets and individualism suck the joy out of life.
The data indicate that individuals' average happiness grows with their income and the population's average happiness grows with the country's gross domestic product (GDP) per capita, and that both of these levels increase on average over time, as people and countries become richer. In Western Europe, North America, Australia, and New Zealand, people report the highest levels of well-being. In Africa, South Asia, and the Middle East, the levels are lowest. The correlation is clear, though not perfect: Latin American countries are happier than their level of prosperity would predict, and former communist countries are unhappier.
The Dutch sociologist Ruut Veenhoven sums up the state of research as "the more individualized society, the happier its citizens are"; the World Values Survey documents that the most important factors behind increased well-being are "global economic growth, widespread democratization, growing tolerance of diversity, and a rising sense of freedom." After devoting an entire book to an alleged happiness crisis, even the British economist Richard Layard admits that "we in the West are probably happier than any previous society."
That people claim to be so satisfied with their lives is in itself a surprise to most people. The British believe that only 47 percent of Brits perceive themselves as very or fairly happy, while as many as 92 percent state that they are very or fairly happy themselves. The result is similar in all 32 countries where the question has been asked. People apparently look more depressed on the outside than they feel on the inside. The underestimate is not small. Canadians and Norwegians are most optimistic about their compatriots and assumed that 60 percent of them were happy. That is actually lower than the self-perceived happiness in the least happy country, Hungary (69 percent).
This makes it incredibly risky to speculate about human well-being without relying on data —particularly when it comes to intellectuals, who (according to many studies) suffer more from anxiety and neuroticism than others. This is often what drives them onward, to create, write, and debate in public. Yet it also makes them even more inclined to underestimate the happiness of others, especially as they really can't comprehend how someone can be happy with the trivialities of everyday life, with unintellectual professions and Taco Tuesday. It also makes them inclined to look for causes of these problems in social structures and in vulgar capitalism. David Hume said of his close friend Jean-Jacques Rousseau that he just happens to be unhappy but tries to blame it on society instead of his own melancholy disposition.
When seen from the inside, capitalism is not as depressing as most intellectuals assume. Veenhoven, who was active in the Dutch Social Democrats when he began to study happiness, first believed government redistribution and generous social spending contributed to the well-being of a population. It is easy to assume this when you tend to find countries like Denmark, Finland, and Sweden near the top of the happiness lists. But as Veenhoven got more statistics, it became clear that other small, rich democracies such as Iceland, Switzerland, and New Zealand, with much smaller welfare states, were also at the top of the rankings. Ireland, the Netherlands, and Australia have about half the social spending as a share of GDP as Belgium, Italy, and France do, but they are significantly happier. Government redistribution has not even succeeded in creating a more equal distribution of well-being. "Happiness is not greater in welfare states," Veenhoven told me. "I was simply wrong."
Another conclusion that surprised Veenhoven was that income inequality does not reduce a country's well-being: "Income inequality is a by-product of capitalist societies and they have such a positive effect on well-being that outbalance the negative effect of being relatively poor." This is not a popular conclusion everywhere: "My colleagues are not amused. Inequality is big business here in the sociology department. Entire careers have been built on it."
There is a strong correlation between economic freedom and subjective well-being, and—contrary to most expectations—it is strongest for low-income earners. The researchers suspect this is due to the fact that free markets introduce autonomy and freedom of choice for those in a more difficult socioeconomic situation: "For high-income earners, this effect is much less important, as their income already gives them the access to more choices." No matter how much critics say we should feel like we are naked and afraid in capitalist societies, people insist on saying that it gives them a sense of control over their lives, at least compared to other systems.
None of this means the problems that critics equate with life in an individualist, capitalist society do not exist. It just means the same problems seem to be even greater in noncapitalist societies. Competition for resources and positions does not disappear because they are distributed politically instead of according to supply and demand. On the contrary, in capitalism we search for opportunities for mutual gain, while in economies based on distribution from the top we begin to see other groups as threats because what they take is something we do not get. It is telling that more than 30 years after the fall of communism, its destructive effects on communities and social trust have not completely faded. Although the gap with other countries is narrowing, it is still in post-communist societies that we find less trust, more loneliness, and less well-being.
The hunt for status is no less brutal because there are fewer arenas in which to compete. If there are many different ways in which people can develop their identity and seek confirmation, more people have a chance to find their path than in a more collectivist society where there is just one true way. It may even apply to our consumption. The philosopher Steven Quartz and the political scientist Anette Asp believe that diversity and freedom of choice help explain the fact that increased inequality has not made us more unhappy: "Social status, which was once hierarchical and zero-sum, has become more fragmented, pluralistic and subjective. The relationship between relative income and relative status, which used to be straightforward, has gotten much more complex."
In poorer societies, consumption is often about showing how high one has climbed on the prosperity ladder. That is why, paradoxically, poor societies have such a large share of consumption of pure luxury products that are sought after precisely because they are expensive. That exists in richer and more individualistic societies too, of course, but there consumption increasingly becomes a way of expressing one's personality. People no longer automatically covet the most expensive item but rather pursue what suits their taste and expresses their identity. Someone dreams of a Porsche; someone else prefers to show his green identity with a Tesla; a third person prefers a cheap and comfortable car, because their status is based on not caring about status when choosing a car; a fourth person talks happily and often about how it is vulgar to have a car when you can get anywhere on a bicycle and public transport. They can all converge in feelings of well-being, even if they diverge in income and taste.
The most important word in economic freedom is not economic but freedom. We are all different with different needs, and our chance of finding relationships, communities, work, and consumption that we enjoy increases if we get the freedom to choose. Not everyone wants to constantly work and strive for material rewards, and one of the advantages of an open society is that you do not have to choose that. Even before the pandemic, surveys in the Western world showed that between 20 percent and 50 percent of workers in recent years had chosen a less demanding job with less pay, reduced their working hours, declined a promotion, or moved to a calmer neighborhood to focus on their family, make everyday life easier, or just unwind with a less stressful life.
If you do not like the rat race, you can leave it—provided you live in a growing economy with high productivity so that you can do it without catastrophic consequences. That is exactly what capitalism makes possible, and that is why the working time of the average worker has decreased by about half in the last 150 years.
In 1870, Britons worked more hours from January through August in an average year than they now do between January and December. We also start working later in life and live for far longer after retirement. That's why you sit here and read and think about the viability of different political and economic systems and their implications for human well-being—a pastime that used to be reserved for a tiny elite with many servants and plenty of free time, or someone who happened to have a generous friend whose family lived off a cotton fortune, as Karl Marx had.
This article is adapted from The Capitalist Manifesto: Why the Global Free Market Will Save the World by permission of Atlantic Books.
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]]>Last week, Arkansas Gov. Sarah Huckabee Sanders signed a bill making it a bit easier for teenagers to enjoy gainful employment. Predictably, the usual suspects piled on, accusing state lawmakers of sacrificing children to Mammon. But in the midst of a national labor crunch, Arkansas is hardly alone in contemplating loosened restraints on teenage workers. The move might not only fill jobs, it could also improve young Americans' prospects for future prosperity.
"In Arkansas the days of trapping our people in poverty, welfare and government dependency are over," tweeted Sanders after signing the Youth Hiring Act, which in few words eliminates a requirement that 14- and 15-year-olds get permits from the state government in order to work.
Citing the dangers of illegal child labor involving migrant children, critics immediately attacked the idea of eased legal employment.
"The new Arkansas law is just one of a number of state bills loosening child labor restrictions, despite evidence that young children are already engaged in dangerous and exploitative labor throughout the country," charged Vox's Ellen Ioanes.
"Arkansas Republican Gov. Sarah Huckabee Sanders signed a bill into law this week that rolls back a number of child labor protections across the state," insisted CNN's Sydney Kashiwagi.
"Gotta admit – loosening child labor laws was not on my Top 10 List for our CA legislative session this year," huffed California Gov. Gavin Newsom as he linked to a news report of the reform.
"Our laws are now in line with AZ, CO, and TX," Huckabee Sanders shot back to Newsom. "You might recognize them as states like mine that Californians are fleeing to."
Not only is Arkansas meeting the standard set by other states with its new work rules, it's also, as Vox's Ioanes conceded, in good company in seeking to reduce barriers to teen employment. That's a pressing concern in a tight labor market with adult labor force participation remaining stubbornly lower than it was before pandemic-era restrictions. The worker crunch has pushed employers to hire younger workers (my then-16-year-old son fielded multiple offers when he went job hunting in Arizona) and states to loosen restriction on teenage employment.
"Adding to a growing trend across the country, a Connecticut lawmaker has proposed two bills that would lower the working age in certain industries to help address the state's labor shortage," Hartford Business Journal noted last month.
Axios reports similar proposals in Iowa, Minnesota, New Jersey, and Ohio, as well as Connecticut and the enacted reform in Arkansas. "The laws and proposals have largely been introduced by Republicans but received support from some Democrats in Ohio and New Jersey."
Eased barriers to employment could further expand opportunities for teenagers who have been in demand as many of their elders stepped out of the workforce in recent years. That's a reversal from decades in which the labor force participation of younger Americans declined from 59.3 percent in 1978 to a pre-pandemic low of 32.5 percent in February 2014 (last month it was 37.5 percent).
Importantly, more opportunities mean not just more workers, but potentially greater prosperity for teens who gain early job experience.
"When economist Raj Chetty studied dozens of local factors that correlated with upward mobility, teenage labor force participation proved more powerful than almost any other factor, even high school drop-out rates or violent crime rates," Timothy P. Carney pointed out last week in a Washington Examiner column.
Chetty, a Harvard University economist, is better known for emphasizing the value of social capital—in particular, friendships across class lines—for boosting economic mobility. But his research indicates a strong correlation between teenage participation in the labor force and upward mobility. It's a connection that's been made multiple times in the past.
"A shift in teens' time allocation from market work to leisure or other activities that do not increase their human capital may negatively affect their future productivity," economists Daniel Aaronson, Kyung-Hong Park, and Daniel Sullivan cautioned in a 2006 Federal Reserve Bank of Chicago paper about declining teenage employment. "In general, labor market experience tends to raise subsequent earnings."
Improved future prospects from teenage employment aren't just an American phenomenon; it's an expected outcome form work around the world even when jobs are less than ideal.
"For every young person, a job offering decent work is an important step in completing the transition to adulthood, a milestone towards independence and self-reliance," the United Nations' Commission for Social Development observed in a 2007 discussion paper about workers 15 to 24. "For children and young people living in poverty and in other disadvantaged situations, employment is often the main means for attaining a better life, though such employment is often informal with poor or exploitative working conditions. For more fortunate youth, prospective employment influences their choice of education and training, and increasingly, their decisions regarding marriage, kinship and cohabitation."
"The [International Labour Organization] estimates that if the prevailing youth unemployment rate is reduced to the level of adult unemployment global GDP would increase by between 4.4 and 7.0 per cent," added the commission. "Such a reduction in youth unemployment is achievable and would certainly contribute to poverty alleviation and thus to social development."
That's a lot of benefit to be had from letting teenagers earn income and develop good work habits for later in life when the stakes are higher. And it's a lot to sacrifice to satisfy critics who have their panties in a bunch over very minor reform. The bill that Sanders signed does nothing more than reduce state interference in the youth hiring process and leave work decisions to teens, employers, and parents. If businesses offer jobs, and parents and guardians sign off on the idea, willing 14- and 15-year-olds can now legally work within the tight parameters allowed by the U.S. Department of Labor. That's the extent of the change.
Loosening the rules even further would be a great idea, further enhancing opportunity and prosperity. But prepare for a lot of hyperventilating by people who pretend that the best way to combat illegal child labor in the shadows is to prevent teens from being hired openly and legally.
Pending bolder reform, Arkansas has joined other states in letting some more teens work without bureaucratic approval, so long as their parents say it's OK. It's a step in the right direction.
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]]>Thursday, if you eat a nice meal, thank the Pilgrims. They made Thanksgiving possible.
They left the Old World to escape religious persecution. They imagined a new society where everyone worked together and shared everything.
In other words, they dreamed of socialism. Socialism then almost killed them.
As I explain in my weekly video, the Pilgrims attempted collective farming. The whole community decided when and how much to plant, when to harvest, and who would do the work.
Gov. William Bradford wrote in his diary that he thought that taking away property and bringing it into a commonwealth would make the Pilgrims "happy and flourishing."
It didn't. Soon, there wasn't enough food. "No supply was heard of," wrote Bradford, "neither knew they when they might expect any."
The problem, Bradford realized, was that no one wanted to work. Everyone relied on others to do the work. Some people pretended to be injured. Others stole food.
The communal system, Bradford wrote, "was found to breed much confusion and discontent and retard much employment."
Young men complained they had to "spend their time and strength to work for other men's wives and children without any recompense."
Strong men thought it was an "injustice" they had to do more than weaker men without more compensation.
Older men thought that working as much as young men was "indignity and disrespect."
Women who cooked and cleaned "deemed it a kind of slavery."
The Pilgrims had run into the "tragedy of the commons." No individual Pilgrim owned crops they grew, so no individual had much incentive to work.
Bradford's solution: private property.
He assigned every family a parcel of land so they could grow their own corn. "It made all hands very industrious, so as much more corn was planted than otherwise would have been," he wrote.
People who had claimed that "weakness and inability" made them unable to work now were eager to work. "Women now went willingly into the field, and took their little ones with them to set corn," wrote Bradford.
The Pilgrims learned an important lesson about private property.
Unfortunately, people keep repeating the Pilgrims' mistakes.
Socialism is more popular than capitalism among college students. Many want everything shared, including their student loan debt.
President Joe Biden wants to give them that by forgiving some of their student debt.
Of course, then the debt would become a common to be repaid by all taxpayers.
That would punish people who had long ago paid off their debt.
It would punish people who studied, worked hard, got jobs, and were working to pay off college loans.
It would people who went to trade school or no school at all.
It would punish poor people because student loans are mostly held by the relatively rich.
Government granted student loans already create bad incentives.
People who don't like or benefit from college are encouraged to take out loans they can't afford and go to expensive colleges anyway.
Colleges increase their tuition, knowing that government will pay what students don't.
Forgiving student debt would make all that worse.
Fortunately, Biden's student loan forgiveness program ran up against legal challenges. I hope it's dead.
Students should learn from the Pilgrims: take responsibility for your own debt, work hard to pay it off, and don't expect the public to fund your bad decisions.
Bottom line: In a common, everybody takes as much as they can. That creates shortages.
Private property creates prosperity.
Every Thanksgiving, I'm thankful for that.
COPYRIGHT 2022 BY JFS PRODUCTIONS INC.
The post The Pilgrims Dreamed of Socialism. Then Socialism Almost Killed Them. appeared first on Reason.com.
]]>About 20 million Americans turned out for the first Earth Day on April 22, 1970. Lectures and rallies took place at more than 2,000 college campuses, 10,000 elementary and high schools, and thousands of other places across the country. Forty-two states adopted resolutions endorsing Earth Day, and Congress recessed so that legislators could participate in the activities in their districts. It is sometimes described as, up to that time, the largest public demonstration in history.
The lectures and literature surrounding the event featured lots of dismal predictions about the future. One such compendium of doom was The Environmental Handbook, whose cover noted that it had been "prepared for the first national environmental teach-in." Commissioned by the group Friends of the Earth, the book preached the perils of rising population and imminent depletion of nonrenewable resources. Many of its contributors—let's call them the Catastrophists—warned that even such drastic actions as halving the number of human beings and stopping economic growth completely might not be enough to prevent the imminent ecological cataclysm.
A different group of researchers believed that while economic growth and technological progress had created some ecological problems, these things also would be a source of solutions. Let's call these folks the Prometheans. The economist Theodore Schultz argued in the Bulletin of the Atomic Scientists in 1972 that the expansion of modern agriculture would free up more land for nature. Other proponents of this more sanguine outlook included the oceanographer Cy Adler, the economist Christopher Freeman, and Nature editor emeritus John Maddox, author of the 1972 book The Doomsday Syndrome.
Today, the Earth Day Network hopes a billion people across the world will participate in Earth Day 2020, where the 50th anniversary focus will be on man-made climate change. Living as we do in the future that the Catastrophists and the Prometheans were forecasting, now is a great time to look back at the claims made five decades ago. Which side had the abler prophets?
In his contribution to The Environmental Handbook, an essay called "The Limits of Adaptability," the biologist René Dubos claimed that "the dangers posed by overpopulation are more grave and more immediate in the U.S. than in less industrialized countries. This is due in part to the fact that each U.S. citizen uses more of the world's natural resources than any other human being and destroys them more rapidly, thereby contributing massively to the pollution of his own surroundings and of the earth as a whole."
Handbook editor Garrett De Bell's essay claimed that overpopulation was the biggest reason for mankind's increasing use of pollution-causing energy sources. While "population control will take time," De Bell argued, we could get a start on a solution "by ceasing to use power for trivial purposes." Specifically, the prices for energy supplies should be so scaled as to discourage people from using such "abundant luxuries" as blenders, can openers, power saws, mowers, clothes dryers, air conditioners, hair dryers—and cars, of course: "If you wanted to design a transportation system to waste the earth's energy reserves and pollute the air as much as possible, you couldn't do much better than our present system dominated by the automobile."
De Bell also noted that burning fossil fuels was increasing the amount of carbon dioxide in the atmosphere. "Scientists are becoming worried about increasing CO2 levels because of the greenhouse effect, with its possible repercussions on the world climate," he wrote. Reducing energy use in the U.S. by 25 percent during the following decade could be a start toward "preventing disastrous climatic changes."
In their contribution to the Handbook, political scientist Robert Rienow and his wife, author Leona Train Rienow, declared that "a New Yorker on the street took into his lungs the equivalent in toxic materials of 38 cigarettes a day." Although factories and residential heating contributed to urban smog, automobiles were the biggest culprits: "While cars get faster and longer, lives get slower and shorter. While Chrysler competes with Buick for the getaway, cancer competes with emphysema for the layaway. This generation is indeed going to have to choose between humans and the automobile. Perhaps most families have too many of both."
The book's most urgent vision of imminent global environmental disaster was courtesy of the Stanford biologist Paul Ehrlich. He sketched a scenario in which devastating famines would kill tens of millions of people in Asia, Africa, and Latin America by the end of the 1970s, and smog disasters in Los Angeles and New York would kill 200,000 Americans in 1973. Warning that "America's resource situation was bad and bound to get worse," he dismissed "cornucopian economists" by imagining future congressional hearings in which a "distinguished geologist from the University of California" would urge that "economists be legally required to learn at least the most elementary facts of geology."
Ehrlich's essay was not a prediction for how the 1970s would literally unfold. But it was obviously designed to scare people about the impending ecological apocalypse, and it did conclude with an actual prediction: "Most of the people who are going to die in the greatest cataclysm in the history of man have already been born." He added that by 1975, "some experts feel that food shortages will have escalated the present level of world hunger and starvation into famines of unbelievable proportions. Other experts, more optimistic, think the ultimate food-population collision will not occur until the decade of the 1980s."
"Population will inevitably and completely outstrip whatever small increases in food supplies we make," Ehrlich confidently declared in the April 1970 issue of Mademoiselle. "The death rate will increase until at least 100–200 million people per year will be starving to death during the next ten years."
Harrison Brown of the National Academy of Sciences published a chart in the September 1970 issue of Scientific American projecting that humanity would run out of copper shortly after 2000; lead, zinc, tin, gold, and silver would be gone before 1990. Brown claimed that his estimates took into account the possibilities that "new reserves will be discovered by exploration or created by innovation." The February 2, 1970, issue of Time quoted the ecologist Kenneth Watt: "By the year 2000, if present trends continue, we will be using up crude oil at such a rate…that there won't be any more crude oil."
And in January 1970, Life magazine warned: "In a decade, urban dwellers will have to wear gas masks to survive air pollution."
People in developed countries "have been assailed by prophecies of calamity," Maddox wrote in The Doomsday Syndrome. "To some, population growth is the most immediate threat. Others make more of pollution of various kinds, the risk that the world will run out food or natural resources or even the possibility that economic growth and the prosperity it brings spell danger for the human race."
The trajectories Maddox foresaw for population and food production differed dramatically from those predicted by the Catastrophists. Technologically advanced rich countries, he noted, had undergone a demographic transition from the Malthusian past of high fertility/high mortality societies to a high fertility/low mortality combination. But this, he argued, was a temporary stage; we were already entering a population-stabilizing low fertility/low mortality state. "Although the demographic transition has only just begun in large parts of the developing world, there is every reason to expect that it will produce demographic stability entirely comparable with that which now exists in Western Europe and elsewhere in the industrialized world," he concluded. "The population explosion has all the signs of being a damp squib."
Food production, meanwhile, was "now increasing much faster than population." During the 1960s, Maddox observed, it grew at 2.7 percent annually, handily outstripping the global population growth rate of 2 percent a year. In India and Southeast Asia, food production was increasing at 4 percent annually, about double their population growth rates. And further improvements were possible.
With regard to energy, Maddox cited estimates from 1970 that "there are more, but not much more, than 300,000 million tons of petroleum [about 2.1 trillion barrels] still to be extracted from the ground." At the then-current rate of extraction of 15 billion barrels annually, he calculated that supplies would last for 135 years.
And other natural resources? "Techniques for exploration and extraction of metals seem to have kept ahead of scarcity," he observed. Consequently, supplies of metals "are becoming economically more plentiful, not more scarce."
Maddox fully acknowledged that pollution was harming people and the natural world. Cutting air pollution in the U.S. by 50 percent, he said, would increase life expectancy by three to five years. But he did not think pollution threatened the very existence of the human race. It was, he argued, an open-access commons problem that could be solved through technology and sensible public policy. In 60 American cities, he pointed out, average levels of smokiness had already declined by 20 percent from 1957 to 1970; sulfur dioxide had fallen by a third from 1962 to 1969.
Noting that burning fossil fuels was increasing concentrations of carbon dioxide in the atmosphere, Maddox calculated that CO2 would increase by 15 percent by 2000. That is, in fact, what happened. He also predicted that that rise would result in "an increase of the temperature on the surface of the earth by something like one-half degree centigrade." That was also just about right.
Finally, "if it turns out that the scale of industrial activity is so great that the accumulation of carbon dioxide threatens climate change," Maddox wrote, the same ingenuity that was reducing other forms of pollution "could be applied to regulate the concentration of the gas. To be sure, such an intervention would require expensive and historically important changes in industrial practices, but calamity is avoidable."
The bottom line for Maddox was that "technology and prosperity are not the inherent nuisances of which environmentalists continually complain, but rather, the means by which a better environment could be created."
World population has increased since 1970, though at a lower rate than predicted by the Catastrophists. At the time of the first Earth Day, there were 3.7 billion people on Earth; that has now risen to 7.6 billion. On the other hand, the global total fertility rate back then was 4.8 children per woman; it has now plummeted to 2.4. In 83 countries—including the United States—fertility is below the replacement rate of 2.1 children per woman. Those 83 countries represent half the world's population. Wolfgang Lutz, a demographer at the International Institute for Applied Systems Analysis, projects that world population will peak in this century and then begin to fall.
Though our population doubled, those globe-spanning famines did not occur. Instead, world food production more than tripled, with average per-capita calories supplied rising from around 2,400 to nearly 3,000 per day. In the U.S., corn yields since 1970 have grown from about 60 bushels per acre to nearly 170 now. Modern agriculture is becoming so productive that the Rockefeller University researcher Jesse Ausubel thinks humanity is at the cusp of "peak farmland," and that our total use of land for agriculture will soon begin to decline.
Meanwhile, Maddox appears to have been too conservative—not too optimistic—in his beliefs about global petroleum resources. In 2014, the U.S. Energy Information Administration estimated the total amount of technically recoverable petroleum at about 3.4 trillion barrels.
Just as the world did not run out of oil, it did not run out of copper, lead, zinc, tin, gold, or silver. In 1974, the total world reserves of copper amounted to 417 million tons. The U.S. Geological Survey reports that in 2019, world copper reserves stood at 830 million tons. In 1974, world lead reserves were 132 million tons. In 2019, they were 83 million tons. Zinc reserves went from 236 million tons to 230 million tons. Tin reserves moved from 10 million tons to 4.7 million tons. Gold reserves rose from 41,000 tons to 54,000 tons. Silver reserves moved up from 187,000 tons to 560,000 tons.
As you may have noticed, city dwellers in developed countries are not wearing gas masks as they go about their daily lives. As forecast by Maddox, urban air was cleared using technology and the "vigorous application of social instruments, laws, and taxes." From 1970 to 2018, the Environmental Protection Agency reports, America's combined emissions of six key air pollutants dropped by 74 percent, even as the U.S. economy grew by 275 percent. The United Kingdom and the European Union have likewise experienced steep declines in air pollution.
Surface water pollution has also been reduced. Based on 14.6 million pollution readings at 265,000 monitoring sites between 1972 and 2014, the EPA reports that in 1972, 30 percent of tested surface waters in the United States did not meet the fishable standard (thriving habitats for fish that are safe to eat); only 15 percent failed that standard in 2014.
Both Catastrophist De Bell and Promethean Maddox worried about the possible climatic effects of rising atmospheric concentrations of carbon. Indeed, the amount of CO2 in the atmosphere has increased by 25 percent, from 328 parts per million in April 1970 to 412 parts per million today. Since the first Earth Day, the globe's average temperature has increased by about 1 degree Celsius, and recent research suggests that the world is on track to increase by another 2 degrees Celsius by the end of this century.
De Bell responded to climate change by recommending energy austerity, while Maddox argued that the same human ingenuity that was solving other air pollution problems could be brought to bear on greenhouse warming. Given how thoroughly economic growth and sci-tech prowess have falsified the Catastrophists' other forecasts, it's not implausible that those same forces will let us surmount the problems posed by climate change too.
In his 1967 book The Sense of an Ending, the literary critic Frank Kermode argued that human beings try to give significance to our short lives in the long sweep of history by placing ourselves in the middle of a narrative arc. That arc typically traces civilization's fall from a golden age through a current stage of decadence to an impending apocalypse—one that may, through the bold efforts of the current generation, usher in a new age.
"The great majority of interpretations of Apocalypse assume that the End is pretty near," observed Kermode. But since the end never arrives, "the historical allegory is always having to be revised….And this is important. Apocalypse can be disconfirmed without being discredited. This is part of its extraordinary resilience."
The dire prophecies of the first Earth Day have been mostly proven wrong, but the prophets of an always-impending environmental apocalypse have not thereby been discredited. Auguries of imminent catastrophe remain resilient, even as the world of 2020 is in a much happier state than the Catastrophists of 1970 ever expected.
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]]>Over the past 20 years, arguably no libertarian thinker has cut a broader or deeper intellectual swath across American public policy and culture than Tyler Cowen.
The 56-year-old New Jersey native holds the Holbert L. Harris Chair of Economics at George Mason University and acts as chairman and general director of the Mercatus Center, a think tank based at the school. Cowen also co-founded the popular economics blog Marginal Revolution and is a regular contributor to Bloomberg. He is the host of Conversations with Tyler, a podcast series that includes interviews with people as diverse as tennis pro Martina Navratilova, New York Times columnist Paul Krugman, and comedian Dave Barry, and he is the author of a shelf full of books, including 1998's In Praise of Commercial Culture, 2007's Discover Your Inner Economist, and 2017's The Complacent Class.
His work covers everything from the literal and figurative prices of fame to how globalization empowers Mexican folk artists to whether public funding for the arts has been more successful than most free marketers would grant. A recurring theme over the past decade is a fear that the West may have entered a period he calls "the great stagnation," in which technological innovation and economic growth have slowed even as risk taking and moonshot-type ventures are demonized or ignored altogether.
In October, Reason's Nick Gillespie spoke with Cowen about his latest book, Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals (Stripe Press). The work is an unapologetically libertarian argument for what he calls long-term sustainable economic growth and, more importantly, for intellectual and cultural attitudes devoted to freedom and prosperity.
Reason: You write in your new book that we need to develop a tougher, a more dedicated, and indeed a more stubborn attachment to prosperity and freedom. What do you mean?
Cowen: I think of this book as my attempt to defend a free society and give it philosophical underpinnings. The world is moving away from classical liberal ideas, and that case needs to be made in a new and fresh and powerful and vital way.
How important is prosperity to the ideals of freedom?
Prosperity is central to most human values. A wealthier world helps you be more creative. It helps you choose a job or a spouse that you might want to have rather than someone you have to marry for, say, the money. It helps us pay our bills. It helps us take care of needier members of society. It just keeps us on track and gives us some ability to control our environment and not entirely be at the mercy of nature. I think prosperity, oddly, is still underrated.
What are the main things that are dragging prosperity down? How are we shooting ourselves in the foot?
Bad [elementary school] education would be a major problem. Lack of freedom to build in America's major cities would be another problem. Lack of fiscal responsibility—I don't think it's been a problem so far, but I think it will be over the next 10 or 15 years. In general, just not husbanding our resources very well or making good decisions on infrastructure or having enough interest in risk taking and science and building a bigger, bolder, brighter future.
In the book, you talk about pluralism and commonsense morality. Let's start with pluralism—what do you mean by that?
The general meaning of pluralism is simply that there are many values, but I deploy it quite specifically: It's the notion that a prosperous society does well on most of these values. For instance, the arts, or human caring, or cooperation, or civic society. Even if a person cares about something more than just money or more than just, say, libertarian rights, I think there's nonetheless a strong argument for a society, a polity, that will maximize the rate of economic growth subject to rights constraints.
Do you feel that we've moved away from pluralism in that sense?
Most people will accept pluralism if it's presented to them. The idea that there's a fairly simple formula for serving pluralism—that's where the controversy lies. The idea that economic growth over enough time is better for virtually everyone, we don't emphasize that enough. Again, I think when you present it to people, a lot of them agree. That's one of the main goals of my book. It's not front and center of most political discussions today. They're often about redistribution or this group's feelings were hurt or what are we going to do for some specific town in the Midwest? They're not about higher rates of economic growth for the country and the world.
Talk about commonsense morality.
That term comes from the British philosopher Henry Sidgwick. It's simply what ordinary, smart, well-meaning people will tell you if you ask, "How should I live my life?" They'll say, "Work hard, save some money, marry well, be good to family, cultivate your friends." All that's commonsense morality. My book defends that and also tries to argue that if more people followed it more strictly, that would in fact coincide with this call of maximizing sustainable economic growth.
Nobody really is against commonsense morality, are they? Where is it breaking down in American society?
Well, actual actions are mixed. If you look at aggregate social indicators for significant parts of America, they're getting worse. For highly educated people, it's clear that they're getting better. That's a good thing. But for too much of the nation, people seem to be moving away from commonsense morality.
"Even if a person cares about something more than just money…I think there's nonetheless a strong argument for a society, a polity, that will maximize the rate of economic growth."
You also write about "wealth plus." What does that mean?
Economists usually focus on [gross domestic product] as a measure of wealth. For a lot of purposes that's fine. "Wealth plus" says you need to think about people's leisure time, which is not counted in GDP. You need to think about the environment, which at least at times is not counted in GDP. Think of it as modified and improved GDP. For a lot of purposes it will behave in the same way.
What more do we need to be doing to take care of the environment?
Wealthier societies generally do a better job with the environment. This gets us back to pluralism. I do worry about carbon emissions, and there's an issue with biodiversity. I'm not sure how worried we should be about that, but I don't think we should simply ignore it.
A lot of libertarians chafe at anything that's related to improving the environment or paying for that. You also talk about wealth transfers as part of commonsense morality. How do you allow for economic freedom and prosperity and individual rights but also have transfers of wealth to people who need help?
I've seen numerous public health programs around the globe that have remedied, say, malnutrition in poor children. They help those societies grow at a more rapid clip, help them become closer to the rule of law and more democratic, and just make them nicer places. I don't feel we should condemn those. Quite to the contrary, we should applaud them. I don't believe in just tearing down wealthy people to give poor people more money, but it seems to me that some redistribution is a really good investment.
You say we're investing way too much in old people relative to young people. That's because old people vote. How do we flip the script so we're not talking about which class gets to vote itself more of other people's money?
I'm not sure it will flip it until we run out of money, which will happen. If we're in there with better ideas and the time comes where we need to flip that switch, I think there's some chance we do. No guarantees, of course.
In Stubborn Attachments you give a couple of shout-outs to Ayn Rand. You laud her for emphasizing the role of production in a good society, because a lot of people seem to take the productivity of modern society for granted.
In her book Capitalism: The Unknown Ideal, she makes this point quite clearly: The idea that wealth is the foundation for the creative individual human mind. Wealth gives creative independence. Wealth enables us to interact as freestanding, cooperative individuals. It may seem trivial to many [people], but still those are vastly underrated points in contemporary intellectual discourse.
Why do you think so many economists and philosophers just take for granted the idea that we will always have a lot of [material] stuff around us?
If you're an academic, you're not involved with producing it in a direct way. You like to play games with other people's money. I think it's a sickness of American society that we've forgotten where it comes from. Some of that itself comes from the fact that we are now wealthier than we used to be. But we need to relearn that.
We become wealthy. We take it for granted. Then we start pissing it away as a culture and as individuals.
Too many people are in bureaucratized jobs, so they think of the world as a big bureaucracy.
Besides Rand, who were your intellectual or cultural influences growing up?
I played a lot of chess early on. That was maybe the single biggest influence, because when you play chess and you lose, you have no excuses. You're always looking for feedback, and you tend not to blame other people.
In chess, most of your moves are wrong. We learn this by playing computers. You can be a world champion and most of your moves are [still] wrong. That's a very startling observation that we should take more seriously.
I also played chess for money as a kid. Not enormous sums, but the idea that no one owed me a living and that you can support yourself, I learned early on.
It's not simply Donald Trump who is rejecting pluralism and asserting a certitude about what is right or what is good. That also happens among his opponents. Are we in a particularly brittle moment in American society?
It's certainly possible. I mean, you can think of [Barack] Obama like John Quincy Adams. He was very intellectual, very pro-government, very cosmopolitan. Come 1828, the nation rejects that and opts for Andrew Jackson. I think in 1828, few people really had a sense of what would be coming over the next 30, 40 years. I wonder if today is not another 1828 moment.
Well, that is certainly not a happy thought.
Is there a tripwire that we can watch out for where the politics gets to a point where it actually diminishes the ability of people to live their lives in America?
I guess my modal prediction, which I would be very cautious about, is not some new age of totalitarianism or fascism, but that the center doesn't hold in a lot of governments. They lunge at a lot of things in ill-conceived ways, and volatility and political risk go up for most people, and that makes our lives worse. The old Orwellian libertarian nightmare of this encroaching Big Brother, I don't think that's what we're seeing right now.
The rhetoric, in some ways, does not correspond to the reality. The reality is that governments spend most of their money on old people and can't perform a lot of basic functions and are dysfunctional. I don't quite think they're going to enslave us.
You're what Donald Trump would call pejoratively a "globalist," in that you believe in international order. You believe in the idea of open borders and a lot of transfer of goods and people and knowledge. What is the globalist answer to the nationalist or the populist who says you don't care about the people who are in your actual community? And how do pluralism and commonsense morality come into play?
I think globalism works better when more people pursue commonsense morality. Just one example: Look at Utah. The state is about half Mormon. Utah has quite an intact middle class and robust economic growth. It's pretty well-run. It's not that I think everyone should become a Mormon. I'm not a Mormon myself. But it does show there's a kind of moral cultural foundation for capitalism. It's not that I think everyone has to live a particular way, but you need some middle-class core in a society doing that, if only to support the people who really wish to deviate.
There's been more poverty alleviation in the last 20 years than any other time in human history ever, by a large amount. It is true, some of the middle class in this country has been hurt or has ceased to see income growth. We ought to acknowledge that. I think mainly it's been an era of incredible triumphs, but now we're seeing some backlash.
The world is growing richer. There is a global middle class that's emerging in a way that was unimaginable 20 or 25 years ago. Is the problem just a decline of America's fortunes relative to the rest of the world? Are we in a position like England and France after World War II where we don't quite want to admit that we're not the only thing on the block anymore?
America still is the world's No. 1 power and still has a lot of soft power and a great deal of influence. It's not like the British Empire that went from a quarter of the world to this quite small place, which is now even probably Brexiting from the European Union. We can be the world's No. 1 country for a long time to come, or at the very worst, No. 2 or 3.
This interview has been condensed and edited for style and clarity. For an audio version, subscribe to the Reason Podcast.
The post Tyler Cowen's Gospel of Prosperity appeared first on Reason.com.
]]>This article originally appeared in the August 6 edition of America: The Jesuit Review.
I was sitting in a nondescript hotel ballroom, press credential strung around my neck, listening to the opening remarks at a conference in Washington, D.C. On stage, the cartoonishly villainous-sounding Wolf von Laer, the executive director of the group Students for Liberty, leaned into his microphone and announced something he knew would come as no surprise to the audience: Recently, for the first time, extreme poverty had fallen below 10 percent of the global population.
He was hoping to pump up the crowd, and he succeeded. Around me, people erupted into cheers.
A thousand or so college kids and recent grads had gathered for 2017's iteration of the largest meetup for young libertarians in the world. They would spend the next 48 hours socializing with fellow attendees, scouting job opportunities in the "liberty movement," and watching panel discussions with titles like "Got a Permit for That Bouquet? Why Occupational Licensing Laws Restrict Opportunity" and "How to Defund the Government and Help Your Community: The Arizona Model." Later, the libertarian activist Matt Kibbe would declare that "changing the world is not only possible, it's inevitable, if we all do this together."
One of the widespread misconceptions about libertarianism is that it denies the importance of community—assuming, in the words of the Notre Dame political scientist Patrick Deneen, that "the individual lives, or could live, in splendid isolation" from others. Another is that it preaches a selfish unconcern for the plight of one's fellow humans, especially the least among us. If these portrayals were correct, the libertarian philosophy would indisputably not be compatible with the Catholic Church's social doctrine—in particular with its teaching on the common good. But sneaking a peek into that Students for Liberty conference (or, for that matter, reading Reason) should make clear that, in fact, neither of those positions is integral to the libertarian worldview.
One way to think about libertarianism is that it is a political philosophy that prefers voluntary, nonviolent human interactions over coercion. Because government dictates are by nature coercive—we do not get to choose whether to pay taxes or comply with zoning restrictions—libertarians advocate relying on private solutions to problems whenever possible. Civil society institutions—family units and neighborhood groups, labor unions and trade associations, churches and charities—must do the heavy lifting. State interference in people's lives should be a last resort and then undertaken only for grave reasons.
Consistently applied, this idea has radical implications. As David Boaz of the Cato Institute has put it, libertarians generally believe "the only actions that should be forbidden by law are those that involve the initiation of force against those who have not themselves used force—actions like murder, rape, robbery, kidnapping, and fraud." Everything else people should be free to work out organically, through trial and error, give and take, pressure and persuasion.
Treating People as Ends, Not Means
Ask a libertarian why we believe what we do and the answer may be rooted in abstract moral principles: We think people deserve to be treated as ends, not means—which is to say we think their autonomy should be respected as long as they are not infringing the rights of others. But very often, the explanation you get will be pragmatic. An honest assessment of reality tells us that maximizing the scope of freedom from government coercion creates the conditions for material progress and human flourishing.
That is not limited to progress and flourishing for a select few. Good-faith skeptics might be surprised to learn how active libertarians have been in the fight to end mass incarceration and advance criminal justice reform in the United States, for example, or how many libertarian groups filed amicus briefs siding with the Little Sisters of the Poor during their showdown over the Obamacare contraception mandate. When on a randomly chosen Saturday in June I visited the homepage of HumanProgress.org, a project of the Cato Institute, three of the featured stories were "Charitable Giving in U.S. tops $400 Billion for First Time," "Paraguay Declared Free of Malaria by World Health Organization," and "Zero Carbon Natural Gas: Is This the Solution We Have Been Searching For?"
I came to identify as a libertarian after studying economics in college. I was moved by the realization that market capitalism is the most efficient engine of economic growth the world has ever known. Both theory and empirical observation told me that government regulation is more likely to interfere with this process than it is to correct flaws in the system.
That reality is of great importance to libertarians, who are wont to share a graph depicting global per-capita gross domestic product over time. The curve looks like a hockey stick: It is nearly flat for centuries and then turns skyward suddenly around the time of the Industrial Revolution. As restrictions on trade among countries are loosened following World War II, the trend picks up speed.
When capitalism spreads to new corners of the world—especially as it begins to reach the 2.7* billion residents of India and China—it brings enormous prosperity along with it. In 2016, the World Bank reported that nearly 1.1 billion people moved out of extreme poverty between 1990 and 2013, and that the overall rate of poverty fell by half. As a result, we are living through a decline in global inequality. "This is the best story in the world today," the World Bank President Jim Yong Kim said in 2015. And it comes as middle-class citizens of more affluent countries are also gaining access to an ever-wider array of foods, medicines, communication technologies, and more.
Though libertarians do not usually speak in theological terms, this surely contributes to the common good—what the Church defines as "the sum total of social conditions which allow people, either as groups or as individuals, to reach their fulfillment more fully and more easily."
A key aspect of the common good is that "it's there for us all if it's there at all," says David Hollenbach, a professor in the Walsh School of Foreign Service at Georgetown University who has written widely about this aspect of Catholic social teaching. "You can't take it and divide it up and give everybody a private piece of it—it's inherently shared."
Material well-being is part but not all of the story: "An increase in the gross national product is valuable for everybody," Fr. Hollenbach explains. "But it can get divided up into very definite pieces that some people get part of and some people get none of…. It's not enough to say the GDP grew and therefore the common good went up if half of the population is starving to death. So there's a distributive element as well."
But where are people actually more likely to starve to death, choke on pollution, contract malaria, or go without education—in industrialized countries with relatively unencumbered markets or in places that globalization has yet to reach?
"The proof of the pudding is always in the eating," says Robert Whaples, an economist at Wake Forest University and editor of Pope Francis and the Caring Society (Independent Institute). "In the systems where there are more economic freedoms, you see much more rapid economic growth. And if you don't think economic growth is important, you see a much more rapid drop-off in absolute poverty—and who's going to argue about that?"
'The Right Ordering of Economic Life'
All well and good, you may think—but man cannot live by bread alone. Papal teachings are rife with warnings about inequality ("the riches which are so abundantly produced…are not rightly distributed and equitably made available to the various classes of the people") and the rise of consumerism (we are "slaves of possessions" in a "throw-away culture"). As the Catholic writer Thomas Storck put it at The Distributist Review, "Do we recognize that the fall of our first parents has affected our appetites for external goods just as much as our appetite for sexual pleasure, and that a free-market…is much like free sex or free love, in that both regard the appetites of fallen mankind as fundamental axioms of human behavior"?
For more than a century, the church has held that "the right ordering of economic life cannot be left to a free competition of forces." Are good Catholics not required, then, to accept government wealth redistribution and other economic regulations—that is, to reject fundamental tenets of libertarianism?
I do not believe we are. The particular program of aggressive public intervention favored by many on the left is not the only answer to social ills. Individuals working creatively through private institutions provide an alternative, and people exercising their values in the market can also be a check on the market.
In the first great social encyclical, "Rerum Novarum," in 1891, Pope Leo XIII taught that men and women can solve most problems by forming "associations and organizations" and working together in goodwill. Public authorities should step in when suffering "can in no other way be met or prevented," but they "must not undertake more, nor proceed further, than is required for the remedy of the evil." Even almsgiving "is a duty, not of justice (save in extreme cases), but of Christian charity—a duty not enforced by human law."
It is true that the church sees state intervention as at least occasionally necessary. Many libertarians also think government has a (small) legitimate role to play—making sure contracts are enforced and assaults are punished, for example. But more to the point, the church has never tried to enumerate the precise conditions under which government institutions should take over. Official teachings are intentionally vague on this question, calling for "a wise provision on the part of public authority" (without fleshing out what would make an intervention unwise) and "a just and rational co-ordination of public and private initiative" (while leaving lay Christians to make prudential judgments about what such a system might actually look like).
In "Octagesima Adveniens," in 1971, Pope Paul VI wrote explicitly that "in concrete situations…one must recognize a legitimate variety of possible options. The same Christian faith can lead to different commitments." Or as Michael Novak and Paul Adams put it in Social Justice Isn't What You Think It Is (Encounter Books), Christians are impelled to give "a central place" to concern for the poor, but we do not have "a moral mandate to support any particular policy or party line on how best to help the poor."
While the church's authority on moral questions is the bedrock, it seems clear that some additional political theory is needed to help us know when government can, should, or must leave private individuals and groups to figure things out on their own. Libertarianism is such a theory—one that gives a presumption of liberty to virtually all peaceful behaviors.
The Moral Imperatives of Freedom
To be free is not necessarily to be consumed with oneself. On the contrary, libertarians understand that freedom can be morally, not just materially, empowering. A robust state makes complacency easy: Some far-away institution with billions of dollars at its disposal is responsible for solving that problem, not me. If instead we have a shared expectation that civil society is on the frontlines and that our choices have meaningful consequences, each of us is challenged to step up.
As I was researching this article, a controversy ignited within American politics: News broke that the Trump administration had begun separating immigrant children from parents caught entering the country in unauthorized places, sometimes holding them in detention centers thousands of miles apart. The ostensible purpose was to keep minors from getting caught up in prosecutions, which are being carried out under a "zero tolerance" policy for illegal entrants. But some Trump officials have acknowledged the real goal was to deter future crossings.
This development was a gut punch to me as a Catholic but also as a libertarian. Allowing goods and people to move freely is fundamental to my political worldview. The reasons for that are practical (trade and immigration allow resources of all kinds, from chewing gum to computer programming talent, to move to where they can be most productive) as well as philosophical (because I value liberty, I do not think the government should be able to prevent me from hiring, sharing my home with, buying things from, or selling things to another person just because he or she was born in a different country). I doubly oppose such restrictions when they impose human costs on an already suffering population—and if refugees fleeing humanitarian disasters do not qualify, it is hard to imagine who does. Yet the most powerful entity in the world was using force of arms in my name to tear foreigners' children away from them.
Until someone did something about it. "When I was a boy and I would see scary things in the news," Mr. Rogers famously said, "my mother would say to me, 'Look for the helpers.'" In this case, help came from Charlotte and Dave Willner and over 500,000 of their closest friends. That is the number of people who have donated to a fundraiser the couple set up on Facebook to support the Refugee and Immigrant Center for Education and Legal Services (RAICES). They hoped to crowdfund $1,500, the minimum needed to post bail for someone detained at the border. To that end, the name of the page was "Reunite an immigrant parent with their child."
Eight days later, the couple had raised more than $20 million. By the time you read this article, the total will likely be much higher.
I tried to get in touch both with the Willners and with RAICES, but understandably—since it takes time and energy to process an outpouring on such a scale—I did not get a response. When the page had been active for less than 72 hours, however, the legal aid group posted an emotional message of gratitude: "We've been occasionally crying around the office all day when we check the fundraising totals," it read. "This is such a profound rejection of the cruel policies of this administration."
The incredible show of solidarity did more than provide money for a worthy nonprofit. With his executive order on June 20, President Trump partially backtracked on family separation. Parents are still being prosecuted, but they will now be held together with their children if possible. Though far from perfect, it is a start.
People often stare, eyebrows cocked skeptically, when libertarians say individual initiative and private generosity can be better than government largesse at solving collective problems. The doubters exhibit too little faith in the human capacity for miracles of caritas. Acts of kindness, small and large, are happening all the time for those with eyes to see. And they would happen more and perhaps in even grander ways if people were not frequently desensitized to injustice by the presumption that whatever can be done is already being done by the state.
'A Society of Liberty Under Law'
According to the Catechism of the Catholic Church: "Every human person, created in the image of God, has the natural right to be recognized as a free and responsible being. All owe to each other this duty of respect. The right to the exercise of freedom, especially in moral and religious matters, is an inalienable requirement of the dignity of the human person. This right must be recognized and protected by civil authority within the limits of the common good and public order."
Compare that to the following from the Cato Institute's Boaz: "Libertarian thought emphasizes the dignity of each individual, which entails both rights and responsibility….It is not a claim that 'people can do anything they want to, and nobody else can say anything.' Rather, libertarianism proposes a society of liberty under law, in which individuals are free to pursue their own lives so long as they respect the equal rights of others."
In fact, there is significant overlap between what the church proclaims and what libertarians believe—which is startling, given that only about one in 10 libertarians identifies as Catholic.
Richard D. Mohr, a professor emeritus at the University of Illinois, once wrote in Reason that "we believe that government exists for the sake of the individual, rather than that the individual is to be viewed as a resource for society." Is that really so different from Pope John XXIII's "one basic principle" articulated in "Mater et Magistra," that "the individual is prior to society and society must be ordered to the good of the individual"?
To be clear, I am not saying libertarianism provides a complete and accurate picture of human anthropology. As I define it, libertarianism is merely a philosophy of government. It tells us about the proper role of the state, that entity Max Weber defined as holding a monopoly on violence. It cannot answer the far more numerous and consequential questions about how to "live well" in the private sphere.
There are, admittedly, disagreements among libertarians on a number of important questions. Some think we should not just limit the size and scope of government but abolish it altogether. They are called "anarcho-capitalists." A few believe people are never morally obligated to sacrifice themselves for the benefit of others. They are called "Objectivists." And so on. But these are all strains within a larger philosophical tradition. The common ground is a commitment to maximizing freedom from government coercion.
Critics sometimes aver that libertarians think interpersonal bonds "have to be cut" because they "limit freedom," to borrow Pope Francis' words. They think we deny that humans are social creatures who need each other in manifold ways. After nearly a decade in the liberty movement, I can say that this is simply not an accurate description. As Virginia Postrel, a former editor in chief of Reason, has put it: "The market is liberating. But it is not, as its critics charge, 'atomistic,' except in the sense that atoms have a tendency to form molecules, which in turn create larger structures."
Libertarians extol capitalism because it provides a framework for people to interact peacefully and achieve mutually beneficial outcomes. (Have you ever noticed that after a commercial exchange, each party instinctively thanks the other?) As proud globalists, we want people who are struggling to escape desperate, backbreaking poverty to get the same material opportunities we are lucky enough to have. There is a thoroughly moral dimension to our worldview that is hard to miss when observed with an open mind.
In the final analysis, libertarians see the human person as worthy of respect. For the most part, they do not recognize the deeper truth: that this is so because we are made by God in His image and are incomparably valuable to Him. But in a real sense, without meaning to, libertarianism takes that idea more seriously than most other political philosophies.
In 1981, the free-market economist Julian Simon published The Ultimate Resource. His book challenged the notion, advanced over centuries by people like Thomas Malthus and Paul Ehrlich, that overpopulation would eventually deplete the planet and lead to mass starvation. Simon took a radically different view, writing that "population growth is likely to have a long-run beneficial impact on the natural-resource situation."
Though he was not Catholic, his reasoning has a remarkably Catholic quality to it. Simon believed in the immense potential of human ingenuity to address social problems. The bigger the challenge, the greater the incentive to find a creative solution. It follows that government attempts to curb fertility are deeply misguided if not immoral in themselves, the product of a "complete lack of imagination" on the part of lawmakers—because more people means more brains working away at making the world a better place.
"Our capacity to provide the good things of life for an ever-larger population is increasing as never before. Yet the conventional outlook—perhaps because of a similar lack of imagination—points in exactly the opposite direction," he wrote. The doomsayers "do not imagine the adjustments that individuals and communities," left to themselves, can make.
Libertarians believe that a program of freedom redounds to the benefit of us all. It fosters peace and prosperity while creating vast space for intellectual and moral pursuits. One might even say, in the words of the Catechism, that it helps produce the "conditions which allow people, either as groups or as individuals, to reach their fulfillment more fully and more easily."
*CORRECTION: This piece originally misstated the number of people living in India and China.
Listen to me discuss this story on the Cato Daily Podcast yesterday and Sirius XM's Catholic Channel on Wednesday of this week.
The post Skeptical of the 'Common Good'? Don't Be! appeared first on Reason.com.
]]>Americans' trust in their national government hovers around historic lows according to a Pew Research Center poll this month. The poll reports that "only 18 percent of Americans today say they can trust the government in Washington to do what is right 'just about always' (3 percent) or 'most of the time' (15 percent)." This is down from a post–September 11 high of 60 percent in 2001. In modern polling, public trust in the federal government was at its zenith at 77 percent, in 1964.
Americans are not just more skeptical of their government; their trust in their fellow citizens has also been declining. Since 1972, the General Social Survey has been asking Americans if "most people could be trusted." In 1984, 47 percent answered yes. In 2014, the last year for which data is available, interpersonal trust had fallen to 31 percent—the lowest level so far.
What is going on? Perhaps President Donald Trump is partially at fault. Now why would I suggest that possibility? That brings me the results of intriguing new study, "Do Lies Erode Trust?," just published in the International Economic Review. In that study, two economists from the University of California, Merced, conduct a couple of experiments to see how lying affects the way people treat each other. Without going into great detail, the researchers first have a set of subjects play a deception game such that the first player gets a bigger payoff by lying if the second player chooses to trust the offer being made is the best deal for both.
In the next round, all the first players are sent home while each of the second players now matched with a different player. The second players are given general information on how much lying took place in the first game, and some are told whether they had personally been lied to in the first game. In the first game, 60 percent of first players told the truth to the second players. In the new game, both senders and returners are given an initial stake of $4. If the sender gives his $4 to a returner, the amounts are combined with an added $4 amounting to a total of $12. The returner then has the option of returning $7 to the sender and keeping $5 for himself (win-win) or returning only $2 while paying a $2 fine, thus netting $8 for himself (lose-win).
It turns out that players who had been lied to in the first game were much less trusting or trustworthy in the second game. Only 32 percent of the lied-to players would trust sending their $4 stake to the second players for possible gains, whereas 49 percent of told-the-truth players did. In addition, only 39 percent of lied-to returners were trustworthy (choosing to return $7), compared with 61 percent of told-the-truth returners, a difference of over 22 percentage points.
Consequently, the researchers find that "being on the receiving end of a lie (vs. a truth) leads to an erosion of trust, even in interactions with those who have nothing to do with the initial deception." They further speculate, "Given the central role that trust is known to play in promoting economic interchange and growth, this conclusion suggests that social institutions that deter dishonesty and promote norms of truthfulness are of potential economic value." In fact, the invaluable Our World in Data site shows a very strong relationship between social trust and per capita income. Economic research has found that trust is the egg that hatches into the chicken of economic development and prosperity.
So what about Trump? It is true that social trust has been declining in the United States for a while now. That being said, there is no doubt that our president is a shameless and enthusiastic liar. As of November 14, the Washington Post fact checker has tabulated 1,628 false or misleading claims made by the president over the preceding 298 days: an average of 5.5 fibs per day. If he can keep the pace up, he'll have told more than 2,000 whoppers before the end of his first year in office. And his dishonesty may be having an effect on his plunging public approval ratings. Earlier this week, the Monmouth University Poll reported that the president's "current job rating stands at a net negative 32 percent approve and 56 percent disapprove." This is the lowest so far for that poll.
Surely it's not too much of a stretch to conclude that if lies do erode trust, that the torrent of lies coming from our president may be especially corrosive.
My colleagues over at Reason TV cogently explain that people who have the misfortune to live in low-trust societies tend paradoxically to want more, not less government. They note that "it turns out that government may be growing not in spite of our lack of confidence in it, but because of our lack of confidence in it. This self-defeating spiral will only get worse if the United States fails to stem its slide toward being a low-trust country." See "Why Libertarians Should Want More Trust in Government" below:
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]]>Jonathan Haidt, the well-known psychologist from New York University, started as a "typical" liberal intellectual, but came to appreciate the awesome ability of free markets to improve the lives of the poor. Earlier this year, he penned an essay in which he pointed to what he called "the most important graph in the world." The graph reflected Angus Maddison's data showing a massive increase in wealth throughout the world over the last two centuries and which is reproduced, courtesy of Human Progress, below.
The "great enrichment" (Deirdre McCloskey's phrase) elicits different responses in different parts of the world, Haidt noted. "When I show this graph in Asia," Haidt writes, "the audiences love it, and seem to take it as an aspirational road map… But when I show this graph in Europe and North America, I often receive more ambivalent reactions. 'We can't just keep growing forever!' some say. 'We'll destroy the planet!' say others. These objections seem to come entirely from the political left, which has a history, stretching back centuries, of ambivalence or outright hostility to capitalism."
Haidt's experience mirrors my own. When giving talks about the benefits of free markets, audiences in Europe and America invariably note the supposedly finite nature of growth and express worry about the environmental state of the planet. Why? In Haidt's view, capitalist prosperity changes human conscience. In pre-industrial societies, people care about survival. "As societies get wealthier, life generally gets safer, not just due to reductions in disease, starvation, and vulnerability to natural disasters, but also due to reductions in political brutalization. People get rights."
This more prosperous generation, then, starts caring about such things as women's rights, animal rights, gay rights, human rights, and environmental degradation. "They start expecting more out of life than their parents did." All that is fine, of course, so long as the pampered youth in the West and newly empowered youth in the Far East remember that roughly 800 million people in the world, many of them in Africa, still live in absolute poverty and experience the kinds of existential challenges that only free markets can solve. Denying dirt-poor people access to cheap fossil fuel energy, for example, can mean a death sentence to a newborn child on life support in an electric-powered incubator in rural Africa.
Let me conclude with two final thoughts. First, there is no obvious reason why growth should not continue indefinitely—although future growth will likely be more dependent on technological change than in the past. In the West, for example, we cannot replicate the growth boost that resulted from the entry of large number of women (50 percent of the population) into the labor force. Second, let's not fall into the trap of thinking that, because the initial stage of industrialization was bad for the environment, pre-industrial society saw man and nature coexist in harmony. Part of the reason why the Industrial Revolution started in England was that the country had to switch from almost depleted wood to coal as a source of energy. Industrialization, and subsequent enrichment, saved European forests, and it can do so in Africa as well.
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]]>Maybe what the country needs is a good 5-cent distemper shot. Only 29 percent of the public thinks America is headed in the right direction. (The rest are too busy sharpening their pitchfork tines to answer the question.) Yet in many ways things have never been better. Take, for example, the ballpoint pen.
No, seriously. It's a marvel of modern engineering—the iPhone of its day, which was not so long ago.
James Ward told the story a while back in a brief article for The Wall Street Journal. Ballpoint pens went on sale in the U.S. in 1945. The first ones cost $12.60, which comes to $166 in today's dollars. Despite the price, there was a mad run on the things. Gimbels in New York sold nearly 8,000 on the first day.
Before Laszlo Biro invented the ballpoint, people used fountain pens. And fountain pens were just a short step up from quill pens made from large birds' feathers, which had been in use since the sixth century. That's the equivalent of taking 1,500 years to go from Windows 95 to Windows XP.
Within 15 years of the ballpoint's debut, desktop calculators made an appearance. The first ones weighed 33 pounds. Before desktop calculators, if you wanted to perform advanced mathematics you had to use something called a slide rule, which required a three-year college course to learn how to use.
Desktop computers came along only a few years after that—although you had to assemble them yourself with a soldering gun and spare parts from an Erector set. Then you had to program the thing, in FORTRAN or COBOL or some other language that sounded like an alien planet in a 1950s sci-fi movie. And if you wanted to store any information, you had to write over your favorite Van Halen casette tape with your dad's cassette recorder.
Eventually Steve Jobs had a brilliant idea: People might want to buy computers already assembled and programmed. Apple was born. Then along came Commodore and Sinclair and a few others, until IBM horned in on the market and PC clones proliferated. By 1990 you could get your hands on a 386 with a 33-megahertz microprocessor, four megabytes of RAM, and a 200-megabyte hard drive for the low, low price of $5,299 (only $9,739 in today's dollars).
Today, less than $400 will get you a run-of-the-mill machine with a 2-gig processor, 8 gigs of RAM, and a terabyte of hard drive space in case you want to store movies on your PC. All of the movies.
Most people don't, though, because they can live-stream everything in high-definition over connections so fast that the end of the movie arrives before the middle does. A few years ago people Googled "free wi-fi" a lot because there wasn't much of it. Now 89 percent of the public thinks free wi-fi is listed in the Bill of Rights, and if the YouTube video of the kid falling off the swing buffers for more than a picosecond they're never going to set foot in that McDonald's again dammit, because what an outrage.
This is what psychologists call habituation—the tendency to get used to things, no matter how good or bad. You buy a new car and for the first few weeks you absolutely love it, but then one day you find the shine of it has worn off and it's just a car. Or you lose your job and spend the first two weeks crying so hard you have mucus swinging from your nose, but by week four you're genuinely curious about what Jerry Springer has in store this afternoon. Life goes on.
A few decades ago rich people could buy encyclopedia sets on the installment plan. Now most of us walk around with a little box in our pocket that gives us instant access to nearly the entirety of human knowledge. And it's like that in field after field.
Transportation? Nothing but horses (if you were lucky) for century after century, and then—boom!—motor vehicles, transatlantic flight, and maglev trains. Medicine? Leeches and eating parts of dead people for centuries—and now, positron emission tomography and genetic editing.
Even ordinary goods are, today, almost miraculously more available.
As the Federal Reserve Bank of Dallas pointed out back in 1997, around the time Google was registering its domain name: "A pair of stockings cost just 25 cents a century ago. This sounds wonderful until we learn that a worker of the era earned only 14.8 cents an hour. So paying for the stockings took 1 hour 41 minutes of work. Today a better pair requires only about 18 minutes of work. Put another way, stockings cost an 1897 worker today's equivalent of $22, whereas now a worker pays only about $4. If modern Americans had to work as hard as their forebears did for everyday products, they'd be in a continual state of sticker shock—$67 scissors, $913 baby carriages, $2,222 bicycles, $1,202 telephones."
Robert J. Samuelson recently noted that the middle class is shrinking—not because people are getting poorer, but because they are getting richer. The share of the populace that qualifies as upper middle class has more than doubled since 1979. But you listen to Bernie Sanders or Donald Trump and you'd think America has been sliding downhill since the Johnson administration. Don't believe it for a second.
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]]>The world has enough real problems without declaring everyone a "victim."
Bill Clinton says Hillary is a victim of a right-wing conspiracy.
Lindsay Lohan, when jailed for driving drunk and breaking parole, says she's a victim of cruel and unusual punishment.
Michael Sam says his NFL career would have gone better had he not come out as gay.
A Philadelphia dentist caught groping his patients' breasts said he is a victim of frotteurism, a disease that compels you to fondle breasts. Really.
People benefit by playing the victim.
Activists look for people they can declare victims, to bring attention to their causes.
The New York Times once called the Super Bowl the "Abuse Bowl," claiming that during the game many more women are abused than usual because their men get crazed watching violence. CBS called Super Bowl Sunday a "day of dread." The Boston Globe claimed a study showed calls to anti-violence emergency lines go up 40 percent during the game.
Then Ken Ringle of the Washington Post tried to trace those claims.
The Globe reporter admitted she never saw the study in question but got the numbers from the left-wing group Fairness and Accuracy in Reporting. FAIR said they got them from a psychiatrist on "Good Morning America." That psychiatrist referred callers to another psychiatrist, who said, "I haven't been any more successful than you in tracking down any of this."
The "Super Bowl victim" claim was bunk.
Sometimes I feel like a victim. I stutter. Had today's disability laws existed when I began work, would I have fought to overcome my stuttering? Maybe not. I might have sued my employer, demanding they "accommodate my disability" by giving me a non-speaking job. Maybe I would have just stopped working and collected a disability check.
I also felt like a victim the day I taped a TV report on how pro-wrestling is fake, and a wrestler beat me up, hitting me on both ears.
Weeks afterward, loud noises hurt my ears. Someone then said that that the wrestler's boss, Vince McMahon, told him to hit me, so I sued McMahon.
As part of the lawsuit, McMahon's lawyers demanded I see a certain doctor, who told me, "Your ear pain is a jurosomatic illness."
"What's that?" I said.
He answered, "Jurosomatic … like psychosomatic. You hold onto your ear pain because you're involved in a lawsuit."
I was furious. I screamed at him, "You haven't even examined me, and you make this accusation?"
But guess what? After the World Wrestling Federation settled the lawsuit and paid me, my ear pain slowly went away.
Was I holding onto pain because litigation kept reminding me that I was a victim?
Maybe.
It makes me wonder about those well-intended government programs meant to help the disabled. Social Security disability money used to go to blind people, people in wheelchairs, people clearly disabled.
But now billions go to people who say they're disabled by things like headaches and back pain. Disability payments have increased so much that the program will soon go broke.
But the increase in payments makes no sense.
Medicine improved since 1990. People do less hard manual labor. There should be fewer disabled people. Why are there more?
Perhaps it's jurosomatic pain? Or government-handout-omatic pain?
Some people are just inclined to complain, and the modern welfare state encourages that. Lawyers made it worse by encouraging people to sue, rather than strive. That changed America.
When you reward something, you get more of it.
We change people's character by teaching them that "victimhood" is a way to get attention and moral status.
Our ancestors never would have accomplished much if they'd labeled themselves victims. They crossed oceans and the prairie knowing that many people on the journey would die.
Some of them really did end up being victims. But they were proud of striving, not proud of being victimized. They accomplished far more because of it.
COPYRIGHT 2015 BY JFS PRODUCTIONS INC.
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]]>Increases in overall freedom correlate with larger total market income growth-that is, growth in earned income, as opposed to government transfers, and excluding capital gains. So concluded a study that compared levels of "freedom" in the various American states, as measured by the Economic Freedom of North America index from the Fraser Institute.
The study, conducted by the Mississippi State University economist Travis Wiseman, was published by the National Bureau of Economic Research in November 2014. All things being equal, it concluded, a one-point increase on the seven-point freedom index is associated with an $8,156 increase in real average market incomes.
Wiseman also reported that higher freedom index scores are linked to larger average market income growth for earners in the bottom 90 percent relative to those in the top 10 percent. Wiseman speculates that this might be because more freedom from "takings and discriminatory taxes" signifies less "crony capitalism"-that is, less shifting of money to benefit those with the best political connections. That in turn decreases the incomes of the richest tenth of Americans.
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]]>If you're wondering why the stock market has risen in recent months despite uninspiring economic news, look no further than the Federal Register. This massive volume, where all new regulations are published, promises a bright economic future that should ease anyone's concern over the direction of the U.S. economy.
Agencies are required to conduct cost-benefit analysis for regulations estimated to cost more than $100 million. Thankfully, there are hundreds such rules underway, and they forecast tremendous growth for our sluggish economy.
Consider one such regulation, the Utility Mercury and Air Toxic Standards (MATS), which applies to coal-fired power plants. Finalized by the EPA in 2011, the regulation is estimated to cost the economy about $10 billion per year. But the EPA claims the annual benefits from the rule will be between $37 billion to $90 billion. In other words, its benefits will be four to nine times higher than its costs.
The EPA doesn't claim such benefits are theoretical. The agency says they are "monetized," meaning they will show up in higher gross domestic product. And since GDP is about $16 trillion, this one rule should add as much as half a percent of growth to the economy—hardly a trivial amount.
Regulations have costs as well, a fact the EPA acknowledges. Implementing the MATS rule will result in the loss of 23,000 megawatts of electricity production and 200,000 jobs by 2015. It's just one of seven major rules that will eliminate between 544,000 and 887,000 jobs and cause a 1.5 percent reduction in the nation's electric generation capacity.
But this loss is swamped by the economic benefits of lower carbon emissions resulting from the MATS rule. The government asserts that the value of carbon not emitted into the atmosphere is somewhere between $12.60 and $119 per ton. Whether you take the high or low value doesn't matter. The benefits of environmental regulations clearly exceed their costs. Exactly how these benefits are monetized in the economy is not explained, but the EPA asserts they are real, so the regulations must provide a fabulous rate of return.
Such growth-inducing regulations are being implemented for a wide range of products and industries from microwaves to cement manufacturing. The Department of Energy, for instance, recently issued new energy standards for residential furnace fans. The agency's analysis admits that the industry will lose 21 percent of its value, but that loss will be more than offset by energy savings for consumers and, even more, by billions of dollars in benefits from reduced carbon emissions. A single microwave regulation is said to produce benefits that are 35 times higher than its costs.
The benefits of regulation are derived primarily from the social cost of carbon, as it has been divined by a panel of experts. An interagency working group determined the price of carbon based on estimates from the Intergovernmental Panel on Climate Change of the future impact of carbon emissions. Those estimates are routinely used to justify nearly any regulation. Investments in carbon reduction, the experts tell us, will pay off for decades to come and will show up in GDP.
Anytime now, the benefits from all these regulations will reveal themselves and drag the economy out of its rut. The value of carbon, as decreed by experts, will finally materialize into real economic growth. Then the forced allocation of resources by the EPA and other regulatory agencies will make perfect sense.
Until then, we can sit back and relax knowing that growth is on its way. And if we're lucky, even more regulations will be justified as economic stimulus. Nearly any proposed environmental regulation should pass the cost-benefit test. With central planners promising such extraordinary economic returns from regulation, what could possibly go wrong?
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]]>The following essay introduces a new website, Human Progress, hosted by the Cato Institute that debuts today, October 30, 2013. Human Progress seeks to document changes in living standards in the past and present while explaining and exploring the best ways to improve conditions for people.
The Historical Thesaurus of the Oxford English Dictionary defines progress as "advancement to a further or higher stage, or to further or higher stages successively; growth; development, usually to a better state or condition; improvement… applied especially to manifestations of social and economic change or reform."
In a world where we are constantly bombarded with bad news, it can sometimes be difficult to think of "progress" and "humanity" in the same sentence. Are there not wars taking place, people going hungry, children at work, women being abused, and mass poverty around the world?
In fact, for most of human history, life was very difficult for most people. People lacked basic medicines and died relatively young. They had no painkillers and people with ailments spent much of their lives in agonizing pain. Entire families lived in bug-infested dwellings that offered neither comfort nor privacy. They worked in the fields from sunrise to sunset, yet hunger and famines were commonplace. Transportation was primitive and most people never traveled beyond their native villages or nearest towns. Ignorance and illiteracy were rife. The "good old days" were, by and large, very bad for the great majority of humankind.
Average global life expectancy at birth hovered around 30 years from the Upper Paleolithic to 1900. Even in the richest countries, like those of Western Europe, life expectancy at the start of the 20th century rarely exceeded 50 years. Incomes were quite stagnant, too. At the beginning of the Christian era, annual incomes per person around the world ranged from $1,073 to $1,431. As late as 1820, average global income was only $1,274 per person. (Angus Maddison, whose income estimates I use here, gives his data in 1990 dollars. I have adjusted Maddison's figures for inflation.)
Humanity has made enormous progress—especially over the course of the last two centuries. For example, average life expectancy in the world today is 67.9 years. In 2010, global per capita income stood at $13,037—over 10 times what it was two centuries ago.
It is not only income and life expectancy that are improving. Harvard's Steven Pinker has documented a propitious decline in physical violence. He writes,
Tribal warfare was nine times as deadly as war and genocide in the 20th century. The murder rate in medieval Europe was more than thirty times what it is today. Slavery, sadistic punishments, and frivolous executions were unexceptionable features of life for millennia, then were suddenly abolished. Wars between developed countries have vanished, and even in the developing world, wars kill a fraction of the numbers they did a few decades ago. Rape, hate crimes, deadly riots, child abuse—all substantially down.
If anything, the speed of human progress seems to be accelerating. As Charles Kenny of the Center for Global Development writes,
4.9 billion people—the considerable majority of the planet – [live]… in countries where GDP has increased more than fivefold over 50 years. Those countries include India, with an economy nearly 10 times larger than it was in 1960, Indonesia (13 times), China (17 times), and Thailand (22 times larger than in 1960). Around 5.1 billion people live in countries where we know incomes have more than doubled since 1960, and 4.1 billion—well more than half the planet—live in countries where average incomes have tripled or more….
According to a 2011 paper by Brookings Institution researchers Laurence Chandy and Geoffrey Gertz,
the rise of emerging economies has led to a dramatic fall in global poverty… [The authors] estimate that between 2005 and 2010, the total number of poor people around the world fell by nearly half a billion, from over 1.3 billion in 2005 to under 900 million in 2010. Poverty reduction of this magnitude is unparalleled in history: never before have so many people been lifted out of poverty over such a brief period of time. And using forecasts of per capita consumption growth, they estimate that by 2015 fewer than 600 million people will remain in poverty.
Similarly, the world's daily caloric intake per person, an indirect measure of well-being, has increased from an average of 2,600 in 1990 to 2,840 in 2012. In sub-Saharan Africa, the caloric intake increased from 2,180 to 2,380. To put these figures in perspective, the U.S. Department of Agriculture recommends that moderately active adult men consume between 2,200 and 2,800 calories a day and moderately active women consume between 1,800 and 2,000 calories a day.
The Internet, cell phones, and air travel are connecting ever more people—even in poor countries. More children, including girls, attend schools at all levels of education. There are more women holding political office and more female CEOs. In wealthy countries, the wage gap between genders is declining. Our lives are not only longer, but also healthier. The global prevalence rate of people infected with HIV/AIDS has been stable since 2001 and deaths from the disease are declining due to the increasing availability of anti-retroviral drugs. In wealthy countries, some cancer rates have started to fall. That is quite an accomplishment considering that people are living much longer and the risk of cancer increases with longevity. Our dwellings are larger and, in many ways, of better quality. Workers tend to work fewer hours and suffer from fewer injuries. Shops are bursting with a mindboggling array of goods that are, normally, less expensive and of higher quality than in the past. We enjoy more leisure and travel to more exotic destinations. To top it off, we enjoy more political freedom and economic freedom.
Progress Is Uneven
Yet progress can sometimes be derailed. Europe, for example, experienced an unprecedented period of peace and rapidly improving standards of living between the conclusion of the Napoleonic Wars in 1815 and the outbreak of World War I in 1914. Between 1820 and 1914, real or inflation-adjusted income per person rose by 127 percent in Western Europe. In Great Britain, for example, life expectancy at birth rose from 41 years 1818 to 52 years in 1914. In Sweden, the improvement was even more dramatic, with life expectancy rising from 39 years in 1814 to 58 years in 1914.
The period between the start of the 20th century and the outbreak of World War I saw the introduction of such life-changing technologies as the radio, the vacuum cleaner, air conditioning, the neon light, the airplane, sonar, the first plastics, the Model T motorcar and more.
On June 28, 1914, the heir to the throne of the Austro-Hungarian Empire, Archduke Franz Ferdinand, was assassinated in Sarajevo, Bosnia-Herzegovina. The murder led to the outbreak of World War I, in which some 39 million people lost their lives. Incomes in Western Europe fell by 11 percent between 1916 and 1919. Life expectancy in Great Britain, one of the war's main participants, collapsed from 52 years in 1914 to 40 years in 1918.
Other horrors followed. The devastation of World War I undermined the Russian monarchy, leading to the rise of communism and the establishment of the USSR. Globally, well over 100 million people died because of purges and socialist economic mismanagement in communist countries. Defeat in World War I and harsh reparation demands led to resentment in Germany. That contributed to the rise of National Socialism, the outbreak of World War II, and the subsequent Holocaust. Some 73 million people died in World War II. After the war ended, communist dictatorships and free-market democracies fought in a variety of proxy conflicts as part of the Cold War, including the Korean War and the Vietnam War.
In spite of all that suffering, people's lives continued to improve. New technologies were introduced. They included the microwave oven, the mobile phone, the transistor, the video recorder, the credit card, the television, solar cells, optic fiber, microchips, lasers, the calculator, fuel cells, the World Wide Web and the computer. Medical advances included penicillin, cortisone, the pacemaker, artificial hearts, the MRI scan, HIV protease inhibitor, and vaccines for hepatitis, smallpox, and polio.
Over the course of the 20th century, the income of an average Western European rose by 517 percent. In terms of life expectancy, a typical Frenchman could expect to live 34 years longer in 1999 than in 1900.
The United States escaped much of the devastation of the two world wars, but suffered the Great Depression and carried many of the burdens of the Cold War. Between 1929 and 1933, the average U.S. income declined by 31 percent. It was not until 1940 that incomes returned to their pre-Depression levels. Over the course of the 20th century, however, average American income rose by 581 percent and life expectancy by 28 years.
In Asia, average per capita income rose by 473 percent between 1913 and 1999. Chinese incomes rose by 427 percent between 1820 and 1999. Indian incomes rose by 212 percent between 1821 and 1999. In China, life expectancy rose from 32 years in 1924 to 71 years in 1999—an increase of 39 years. Indian life expectancy increased from 24 years in 1901 to 61 years in 1999—an increase of 37 years.
The story of Africa is more complex and disheartening, but still, on balance, positive. Between the time of the European colonization in 1870 and African independence in 1960, a typical inhabitant of the African continent saw his or her income rise by 63 percent. Incomes increased by a further 41 percent between 1960 and 1999. While Africa had underperformed relative to the rest of the world, Africans were better off at the end of the 20th century than they were at the beginning. Moreover, since the start of the new millennium, Africa has been making up for lost time. In the 12 years from 1999 to 2010, African incomes rose by 36 percent.
When it comes to life expectancy, Africa has experienced serious progress. However, increases in life expectancy vary, mostly depending on the harm caused by the spread of AIDS. Life expectancy in South Africa rose from 34 years in 1930 to an all-time high of 62 years in 1990. But by 2011, life expectancy declined to 52 years. Ghana was less affected by the epidemic, which allowed life expectancy in the country to increase from 28 years in 1921 to 64 years in 2011.
The Great Recession reminds us that progress is uneven. In the United States, a country that was both originator and victim of the recession, per capita income, adjusted for inflation and purchasing power parity, decreased by 3.1 percent, from $46,760 in 2008 to $45,305 in 2009. This relatively small fall in average income does not make the suffering of millions of Americans, especially those who lost their jobs and homes, any less real. Thankfully, at the time of writing, the economy appears to be on the mend, with average incomes rising of an all-time high of $49,965 in 2012.
Progress Is Not Inevitable
We must keep human development in proper perspective. The present, for all of its imperfections, is a vast improvement on the past. Understanding and appreciating the progress that humanity has made does not mean that we stop trying to make the future even better than the present. That said, we should avoid making two mistakes.
First, we should correctly identify, preserve, and expand those policies and institutions that have made human progress possible. If we misidentify the causes of human progress, we could put the well-being of future generations at risk. One way of avoiding serious policy mistakes in the future is to avoid concentrating power in a single pair of hands or in the hands of a small elite. Instead, we should trust in the choices made by free-acting individuals. No doubt, some of those individual choices will turn out to be bad, but the aggregate wisdom of millions of free-acting individuals is more likely to be correct than incorrect.
Second, we should beware of utopian idealism. Utopians compare the present with what might be called the future perfect, not the past imperfect. Instead of seeing the present as a vast improvement on the past, they see the present as failing to live up to some sort of an imagined utopia. Unfortunately, the world will never be a perfect place because the human beings who inhabit it are themselves imperfect. Today, it is difficult to imagine the emergence of a powerful new utopian movement. But few people in 1900 foresaw the destruction brought on by communism and Nazism. We cannot rule out that utopian demagogues akin to Lenin, Stalin, Hitler, Mao Zedong, or Pol Pot will emerge in the future.
Sources of Progress
When it comes to global standards of living, human history resembles a hockey stick resting on its side, with a long straight shaft and an upward facing blade. For most of our existence, progress was painfully slow (resembling that long straight shaft). At the start of the 19th century, however, the speed of human progress rapidly accelerated (resembling that upward facing blade). What was responsible for that acceleration? Many books have been written on this subject and it is beyond the scope of this essay to provide a full answer. That said, few scholars deny the central role played by two forces that are routinely demonized: industrialization and globalization.
Industrial Revolution
First, let us look at the industrial revolution. According to the Encyclopedia Britannica, the industrial revolution was "the process of change from an agrarian, handicraft economy to one dominated by industry and machine manufacture." It started in Great Britain in the 18th century and then spread to other parts of the world.
The technological changes included the following: the use of new basic materials, chiefly iron and steel, the use of new energy sources, including both fuels and motive power, such as coal, the steam engine, electricity, petroleum, and the internal-combustion engine, the invention of new machines, such as the spinning jenny and the power loom that permitted increased production with a smaller expenditure of human energy, a new organization of work known as the factory system, which entailed increased division of labor and specialization of function…. These technological changes made possible a tremendously increased use of natural resources and the mass production of manufactured goods…. There were also many new developments in nonindustrial spheres, including the following: agricultural improvements that made possible the provision of food for a larger nonagricultural population, economic changes that resulted in a wider distribution of wealth, the decline of land as a source of wealth in the face of rising industrial production, and increased international trade, political changes reflecting the shift in economic power, as well as new state policies corresponding to the needs of an industrialized society, sweeping social changes, including the growth of cities, the development of working-class movements, and the emergence of new patterns of authority, and cultural transformations of a broad order.
The Industrial Revolution had many contemporary critics. Observers like Charles Dickens commented on the squalor of 19th-century cities and the backbreaking labor of the people, including children, in the factories in much the same way that our journalists today comment on the squalor of the rapidly industrializing Indian cities and backbreaking labor of people, including children, in Bangladeshi factories.
But things should be kept in a proper perspective. Life on an 18th-century farm was extremely difficult, and the city offered the former country dwellers higher wages and new opportunities. In time, sanitation, healthcare and other benefits of civilized life caught up with the cities' rising population, giving us the modern metropolis. In a similar vein, legislation caught up with rising standards of living and codified in law what was happening already in practice—as productivity increased and wages rose, fewer children were needed to supplement their parents' incomes. Increased productivity of workers led to greater competition for workers, and factory owners started taking better care of their employees. Working conditions improved and work injuries declined.
Another major criticism of the industrial revolution concerns the spoliation of the environment and exploitation of natural resources. Who can forget William Blake's condemnation of industrialization in his 1808 poem Jerusalem?
And did those feet in ancient time
Walk upon England's mountains green?
And was the holy Lamb of God
And did the Countenance Divine
Shine forth upon our clouded hills?
And was Jerusalem builded here
Among these dark Satanic mills?
Blake's "satanic mills" refer to factories that in his view pockmarked the bucolic face of the English countryside. As was the case with other writers of the Romantic era, Blake's description of pre-industrial society was highly idealized. The reality, alas, was much less appealing. Most pre-industrial societies, Great Britain included, were heavily dependent on agricultural output. Agricultural production was labor intensive, but productivity was very low. Before the arrival of machines powered by steam and combustion engines, agriculture depended on much less efficient human and animal labor. People and animals had to be fed, which meant that most of the calories produced on the farm were immediately consumed by the laborers. Prior to the industrial revolution, there were no synthetic fertilizers, such as nitrogen, and crop yields were much lower than what they are today. As a consequence, more land was required to feed people and pack animals. Land clearing was usually accomplished by burning of forests. Yet more trees were cut down to heat houses and cook food. Environmental damage aside, a major reason for switching from wood to coal was the simple fact that there were very few trees left. Thanks to the use of fossil fuels, global forest coverage has stabilized and is expanding in the world's richest and most industrialized countries.
Globalization
Second, let us consider globalization, which the Organization for Economic Cooperation and Development (OECD) defines as "an increasing internationalization of markets for goods and services, the means of production, financial systems, competition, corporations, technology and industries. Amongst other things this gives rise to increased mobility of capital, faster propagation of technological innovations and an increasing interdependency and uniformity of national markets."
Contrary to the common misperception, globalization is not a new phenomenon. The trade links between the Sumer and Indus Valley civilizations go back to the third millennium BC. Later, tere was the Silk Road between Europe and Asia, and European voyages into India and the Americas. Clearly, trade has been fundamental to the process of globalization from antiquity. But why do people trade?
Trade delivers goods and services to people who value them most. An additional ton of corn produced in Kansas may be of little importance to the people in the American Midwest, but it can be crucial to the people living in the drought-stricken East Africa. Trade, to use economic jargon, improves efficiency in the allocation of scarce resources. Another reason for trade is the principle of comparative advantage. As the Nobel Prize-winning economist Paul Samuelson noted,
The gains from trade follow from allowing an economy to specialize. If a country is relatively better at making wine than wool, it makes sense to put more resources into wine, and to export some of the wine to pay for imports of wool. This is even true if that country is the world's best wool producer, since the country will have more of both wool and wine than it would have without trade. A country does not have to be best at anything to gain from trade. The gains follow from specializing in those activities which, at world prices, the country is relatively better at, even though it may not have an absolute advantage in them. Because it is relative advantage that matters, it is meaningless to say a country has a comparative advantage in nothing. The term is one of the most misunderstood ideas in economics, and is often wrongly assumed to mean an absolute advantage compared with other countries.
Moreover, trade allows consumers to benefit from more efficient production methods. For example, without large markets for goods and services, large production runs would not be economical. Large production runs are instrumental to reducing product costs. For example, early cars had to be individually hand crafted. The Model T assembly line revolutionized car manufacturing and allowed the Ford Motor Company to slash the price of the Model T from $850 in 1909 to $260 in the 1920s in nominal dollars (in 2013 dollars, the drop would be from $20,000 to about $4,000). Lower production costs, in other words, lead to cheaper goods and services, and that raises real living standards.
Besides better resource allocation, and greater specialization and economies of scale, trade encourages technological and cultural exchanges between previously disconnected civilizations. It is for those reasons that great commercial cities like Florence and Venice during the Renaissance, and London and New York today, also tend to be centers of cultural life and technological progress.
The development of the steam engine and the opening of the Suez Canal in the 19th century made seafaring faster and cheaper. The volume of traded goods greatly increased. Through the process of price convergence, prices fell and consumers benefited. The gold standard and the invention of the telegraph – and later telephone – also allowed for massive transfers of capital. Attracted by higher profits, capital flowed from more developed to less developed countries, thus stimulating global economic development. As the British economist John Maynard Keynes recalled, before World War I,
The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth…. He could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages… He could secure … cheap and comfortable means of transit to any country or climate without passport or other formality.
This earlier era of globalization ended with the outbreak of World War I and the concomitant disruption of world trade. By some estimates, globalization did not reach its pre–World War I levels until the 1970s or even 1980s. In fact, it was the 1980s that marked the beginning of the period of globalization that we live in today. Spurred by economic deregulation within countries, trade liberalization between countries, privatization of state-owned companies, further improvements in transport and the arrival of the Internet, globalization got a new lease on life. As important—and in keeping with the dramatic decreases in violence and conflict noted above—past episodes of often-violent colonization and mercantilist economics has been mostly replaced by positive-sum exchanges among countries and individuals.
The World Is Getting Better, But There Is an Abundance of Skepticism
As we can see, Europe and America, and, later, other regions of the world, experienced previously unimaginable improvements in standards of living. The process of rapid improvement that started in the early 1800s continues to this day. Accordingly, historical evidence makes a potent case for optimism. Yet optimism about the current state and future well-being of humankind is difficult to come by. As author Matt Ridley writes in his book, The Rational Optimist,
If… you say catastrophe is imminent, you may expect a McArthur genius award or even the Nobel Peace Prize. The bookshops are groaning under ziggurats of pessimism. The airwaves are crammed with doom. In my own adult lifetime, I have listened to the implacable predictions of growing poverty, coming famines, expanding deserts, imminent plagues, impending water wars, inevitable oil exhaustion, mineral shortages, falling sperm counts, thinning ozone, acidifying rain, nuclear winters, mad-cow epidemics, Y2K computer bugs, killer bees, sex-change fish, global warming, ocean acidification and even asteroid impacts that would presently bring this happy interlude to a terrible end. I cannot recall a time when one or other of these scares was not solemnly espoused by sober, distinguished and serious elites and hysterically echoed by the media. I cannot recall a time when I was not being urged by somebody that the world could only survive if it abandoned the foolish goal of economic growth. The fashionable reason for pessimism changed, but the pessimism was constant. In the 1960s the population explosion and global famine were top of the charts, in the 1970s the exhaustion of resources, in the 1980s acid rain, in the 1990s pandemics, in the 2000s global warming. One by one these scares came and (all but the last) went. Were we just lucky? Are we, in the memorable image of the old joke, like the man who falls past the first floor of the skyscraper and thinks 'So far so good!'? Or was it the pessimism that was unrealistic?
Ridley's recollection raises an interesting question: Why are we as a species so willing to believe in doomsday scenarios that never quite materialize in practice?
In their 2012 book, Abundance: The Future is Better than You Think, Peter H. Diamandis and Steven Kotler offer one plausible explanation. Human beings are constantly bombarded with information. Because our brains have a limited computing power, they have to separate what is important—such as a lion running toward us—from what is mundane. Because survival is more important than all other considerations, most information enters our brains through the amygdala—a part of the brain that is "responsible for primal emotions like rage, hate and fear." Information relating to those primal emotions gets our attention first because the amygdala "is always looking for something to fear." Our species has evolved to prioritize bad news. Pessimists survived, while optimists got eaten by lions.
Newspapers and other media have long since recognized that pessimism sells. According to one analysis, about 90 percent of all articles in The Washington Post tend to be pessimistic in tone. As the old saying among journalists goes, "If it bleeds, it leads." Politicians, too, have realized that banging on about "crises" increases their power and can get them reelected, and may also lead to prestigious prizes and lucrative speaking engagements. Thus politicians on both left and right play on our fears—from crime supposedly caused by playing violent computer games to health maladies supposedly caused by the consumption of genetically modified foods.
More than the physical structure of the human brain may be at play, of course. Take, for example, the role of ideology in shaping our perception of the world around us. If we start from a premise that the dominant economic system in the world today (i.e., some combination of private ownership, competition, free trade, deregulation, and moves toward liberalization) is either immoral or destructive, then it is difficult to reconcile that system with good news about human development. In other words, to maintain skepticism about the "system," one is forced to ignore or discount positive developments in human well-being.
The dominant economic system in the world today is, of course, capitalism or, to use less ideologically loaded terminology, free enterprise or the free market. Just how "free" the free market really is, is debatable. In many supposedly free-market societies, like Europe and the United States, local and national governments tend to redistribute between 40 percent and 50 percent of the gross national product.
Where does the skepticism about free market come from? The late Harvard University philosopher Robert Nozick provides one plausible answer. The intellectual elite (i.e., the wordsmiths who occupy many positions within academia, the media, and government bureaucracies) tend to take a more negative view of free market than the one presented here. These individuals shape society's language and access to information. As such, the anti-free-market sentiment of the intellectual elite carries great weight.
"From the beginnings of recorded thought," Nozick writes, "intellectuals have told us their activity is most valuable. Plato valued the rational faculty above courage and the appetites and deemed that philosophers should rule; Aristotle held that intellectual contemplation was the highest activity." Intellectuals have thus come to think of themselves as the "most valuable" members of society and "feel entitled to the highest rewards their society has to offer." The markets, however, tend to reward "economic contribution." Consequently, intellectuals tend not to be the most rewarded members of a free-market society. That runs counter to the intellectuals' expectations. When they socialize with the most rewarded individuals in society, the intellectuals resent that they are not compensated to the same degree. To rectify this perceived injustice, intellectuals advocate for a society that distributes compensation in line with their expectations, rather than economic contribution.
What Are We Trying to Achieve?
It is perhaps best to start by explaining what the Human Progress website is not trying to accomplish. It will not try to convince you that the world is a perfect place. As long as there are people who go hungry or die from preventable diseases, there will always be room for improvement. To that end, we all have a role to play in helping the destitute in our communities and beyond.
Our goal, then, is not to paint a rosy picture of the state of humanity, but a realistic one. A realistic account of the world should focus on long-term trends, comparing living standards between two or more generations. Crucially, it should compare the imperfect present with a much more imperfect past, rather than with an imagined utopia in the future.
As such, this website has two main aims. First is to inform you about the many ways in which the world has become a better place. Second is to allow you to search for reasons that brought that improvement about. While we think that policies and institutions compatible with freedom and openness are important factors in promoting human progress, we let the evidence speak for itself and hope the website stimulates an intelligent debate on the drivers of human progress.
Please check out Human Progress, a new website hosted by the Cato Institute. Human Progress seeks to document changes in living standards in the past and present while explaining and exploring the best ways to improve conditions for people.
The post Human Progress: Not Inevitable, Uneven, and Indisputable appeared first on Reason.com.
]]>In 1980, four men placed a bet on the future prices of five commodity metals. That seemingly small event still resonates powerfully in the ongoing fight between doomsters and optimists. Gambling that prices would spiral ever upward as a growing population used up the world's resources was Population Bomb author Paul Ehrlich and two of his acolytes, John Holdren and John Hart. Holdren is now President Barack Obama's chief science advisor, and Harte has become a professor in the College of Natural Resources at Berkeley. On the other side of the bet stood the University of Maryland economist Julian Simon. Simon believed that human ingenuity would increase the availability of natural resources and lower their prices.
In his intriguing new book The Bet: Paul Ehrlich, Julian Simon, and Our Gamble over Earth's Future, the Yale environmental historian Paul Sabin uses this famous wager to frame 40 years of rancorous debate over humanity's impact on the planet and the prospects for human flourishing. Sabin also argues that understanding the genesis of these controversies can help illuminate the choices that confront us as we try to navigate further economic and ecological challenges.
So what was the famous bet? In October 1980, Ehrlich and Simon drew up a futures contract obligating Simon to sell Ehrlich the same quantities that could be purchased for $1,000 of five metals (copper, chromium, nickel, tin, and tungsten) 10 years later at 1980 prices. If the combined prices rose above $1,000, Simon would pay the difference. If they fell below $1,000, Ehrlich would pay Simon the difference. In October 1990, Ehrlich mailed Simon a check for $576.07. There was no note in the letter. The price of the basket of metals chosen by Ehrlich and his cohorts had fallen by more than 50 percent.
Sabin points out that had the bettors chosen different starting and end dates, Simon could have actually lost, since commodity metal prices have fluctuated considerably over the past century. In fact, had the same bet been made between 2002 and 2012, Simon would have lost badly. Researchers have identified "supercycles" in which commodity prices rise and then fall, but they generally report that the overall trend has, nevertheless, been for most commodities to become cheaper over time. It is true that there has been a recent run-up in commodity prices, but a 2002 International Monetary Fund study found that "there has been a downward trend in real commodity prices of about 1 percent per year over the last 140 years."
As Sabin builds up to the bet, he traces the development of the epic scientific and intellectual fights between doomsters like Ehrlich and doomslayers like Simon. Ehrlich became publicly prominent with the 1968 publication of The Population Bomb, which declared that the "battle to feed humanity is over. In the 1970s, the world will undergo famines. Hundreds of millions of people are going to starve to death in spite of any crash programs embarked upon now." Apocalypse was in the air. Sabin also recounts the dire computer model predictions of imminent resource depletion made in the Club of Rome's Limits to Growth report published in 1972. Even if global resource consumption rates didn't increase at all, the modelers calculated 41 years ago that known world copper reserves would be entirely depleted in 36 years, lead in 26 years, mercury in 13 years, natural gas in 38 years, petroleum in 31 years, silver in 16 years, tin in 17 years, tungsten in 40 years, and zinc in 23 years.
In other words, at then current rates of consumption, the known reserves of these nonrenewable resources were expected to be used up before the end of the 20th century. These doleful prognostications of impending scarcity were largely endorsed by The Global 2000 Report to the President, commissioned in 1980 by President Jimmy Carter. Carter himself declared that the world's entire proven reserves of oil could be gone by 1990.
While Ehrlich and other doomsters were achieving fame, Simon was largely ignored. Simon had initially agreed with Ehrlich that population was a significant problem. In 1969, he calculated that a poor country gained $114 per avoided birth, concluding that contraceptive distribution programs costing $5 per avoided birth were a "fantastic economic bargain."
Simon changed his views on population growth when he delved deeper into the economic research that found no strong correlation between economic development and lower fertility. He concluded that economist Simon Kuznets had been right when he observed, "More population means more creators and producers." When people encounter scarcity, they use their brains to figure out a way to innovate around it, if they are left free to do so. In his 1977 book The Economics of Population Growth, Simon wrote: "Commonsense notices our use of resources but fails to see how our needs lead to our creation of resources—planting forests, exploration of new oil fields and invention of ways to obtain oil from rocks, discovery of substitute sources of energy and nutrients, invention of new tools of all kinds. Clearly we now have available to us vastly more resources of almost every kind than did people in any preceding age." The world's problem, Simon concluded, "is not too many people, but lack of political and economic freedom."
The intellectual sparring between the two men came to its end when Simon died of a heart attack in 1998. Ehrlich, now age 81, continues to prophesy imminent doom. Earlier this year, Ehrlich co-authored articles predicting civilizational collapse in two prestigious journals, Science and The Proceedings of the Royal Society B. In February 2013, over at Project Syndicate, he and his wife Anne asked, "Can humanity avoid a starvation-driven collapse?" Their answer: "Yes, we can—though we currently put the odds at just 10%." (Back in 1990, Ehrlich told me that the population collapse would occur in the decade between 2000 and 2010.)
In a 1981 article, Simon asked, "How often does a prophet have to be wrong before we no longer believe that he or she is a true prophet?" That's an even more salient question after 30 more years of failed predictions. The mountains of evidence that the last four decades have given us should persuade any reasonable person that Ehrlich is a false prophet.
Sabin does a pretty good job of even-handedly outlining each man's intellectual strengths and flaws. The author goes wrong, though, when he tries to give Ehrlich and Simon equal blame for contributing to the often bitterly polarized state of contemporary debates over environmental and economic policy. Sabin is quite right when he points out that both men were unfortunately prone to overstatement in the heat of argument, but he underplays the two big differences between them. First, Simon's predictions were mostly right and Ehrlich's predictions mostly wrong. And second, Ehrlich harbored the totalitarian desire to tell people how they should live, whereas Simon wanted people to be free to choose for themselves how they would like to live.
By the end, even Sabin acknowledges that "history over the past forty years has not conformed to Paul Ehrlich's predictions. By the most basic measure, human populations have continued to grow and no population collapse or broad-scale famine-caused by population outstripping food supply-has occurred." In other words, Simon was right and Ehrlich was wrong.
In his conclusion, Sabin argues that the fierceness of the debate between environmental doomsters and free-market techno-optimists is getting in the way of solving real environmental problems. Specifically, he is concerned about the political polarization over the "strong consensus that greenhouse gas emissions are warming the planet." In an interview, I reminded Sabin that there were once strong scientific consensuses that world was running out resources, overpopulation was a problem, and exposure to trace amounts of synthetic chemicals would cause cancer epidemics. Yet none of them turned out to be right. Given that track record, is it any wonder that a significant portion of the public is doubtful about a consensus that humanity faces imminent climate doom?
Sabin responded that we should exercise "a measure of humility" when dealing with environmental claims and "make our best efforts based on our current level of knowledge." He added, "At the same time it seems important to make prudent decisions based on our best knowledge of what works." Well, yes. But it would seem to me that those who continue to predict imminent ecological catastrophe are especially in need of "a measure of humility."
I asked Sabin who ultimately came out ahead, Simon or Ehrlich. "I am optimistic that humans can adapt and flourish," he replied. "Of course, we must recognize the real environmental problems that we face, climate change in particular, and then apply our creative forces to solve them. I'm hopeful."
I pressed him further: Do you believe that Ehrlich is right in his predictions about the impending collapse of human civilization? Sabin paused, "No, I don't."
Julian Simon was right: Betting against human ingenuity in free societies will always be a losing proposition.
The post Betting on Humanity's Future appeared first on Reason.com.
]]>In October 1980, Stanford University biologist Ehrlich and University of Maryland economist Julian Simon drew up a futures contract obligating Simon to sell Ehrlich the same quantities that could be purchased for $1,000 of five metals (copper, chromium, nickel, tin, and tungsten) 10 years later at 1980 prices. If the combined prices rose above $1,000, Simon would pay the difference. If they fell below $1,000, Ehrlich would pay Simon the difference. In October 1990, Ehrlich mailed Simon a check for $576.07. Simon won the bet. Environmental historian Paul Sabin uses this famous wager to frame 40 years of rancorous debate over humanity's impact on the planet and the prospects for human flourishing in his intriguing new book, The Bet: Paul Ehrlich, Julian Simon, and Our Gamble over Earth's Future. In his review, Reason Science Correspondent Ronald Bailey picks a side.
The post Ronald Bailey Picks Sides in the Wager Between the Cornucopians and the Collapsists appeared first on Reason.com.
]]>The researchers, economists John Dawson of Appalachian State University and John Seater of North Carolina State, constructed an index of federal regulations by tracking the growth in the number of pages in the Code of Federal Regulations since 1949. The number of pages, they note, has increased six-fold from 19,335 in 1949 to 134,261 in 2005. (As of 2011, the number of pages had risen to 169,301.) They devise a pretty standard endogenous growth theory model and then insert their regulatory burden index to calculate how federal regulations have affected economic growth. (Sometimes deregulation extends rather than shortens the number of pages in the register; they adjust their figures to take this into account.)
Annual output in 2005, they conclude, "is 28 percent of what it would have been had regulation remained at its 1949 level." The proliferation of federal regulations especially affects the rate of improvement in total factor productivity, a measure of technological dynamism and increasing efficiency. Regulations also affect the allocation of labor and capital—by, say, raising the costs of new hires or encouraging investment in favored technologies. Overall, they calculate, if regulation had remained at the same level as in 1949, current GDP would have been $53.9 trillion instead of $15.1 in 2011. In other words, current U.S. GDP in 2011 was $38.8 trillion less than it might have been.
Let's use those results as the starting point for some rough calculations. The Bureau of Economic Affairs estimates that real GDP in 1947 was $1.8 trillion in 2005 dollars. The real GDP growth rate between 1949 and 2011 averaged 3.2 percent per year. Compounded over the period, that would yield a total real GDP of about $13.3 trillion in 2011; that's the same figure the bureau gives for that year. If regulation had remained fixed at 1949 levels, GDP growth would have averaged 2 percent higher annually, yielding a rate of about 5.2 percent over the period between 1949 and 2011. Compounded, that yields a total GDP in 2005 dollars of approximately $43 trillion, or $49 trillion in 2011 dollars, which is in the same ballpark as the $53.9 trillion figure calculated by Dawson and Seater.
But let's say that the two economists have grossly overestimated how fast the economy could have grown in the absence of proliferating regulations. So instead let's take the real average GDP growth rate between 1870 and 1900, before the Progressives jumpstarted the regulatory state. Economic growth in the last decades of the 19th century averaged 4.5 percent per year. Compounding that growth rate from the real 1949 GDP of $1.8 trillion to now would have yielded a total GDP in 2013 of around $31 trillion. Considerably lower than the $54 trillion estimated by Dawson and Seater, but nevertheless about double the size of our current GDP.
All this means that the opportunity costs of regulation—that is, the benefits that could have been gained if an alternative course of action had been pursued—are much higher than the costs of compliance. For example, the Competitive Enterprise Institute's report Ten Thousand Commandments 2013 estimates that it costs consumers and businesses approximately $1.8 trillion—about 11 percent of current GDP—to comply with current federal regulations. That's bad enough, but it pales in comparison to the loss of tens of trillions in overall wealth calculated by Dawson and Seater.
Defenders of regulation will argue that regulations also provide benefits to Americans: lower levels of air pollution, higher minimum wages, and so forth. But the measure devised by Dawson and Seater accounts for both the aggregate benefits and the costs of the regulations. The two researchers note their results "indicate that whatever positive effects regulation may have on measured output are outweighed by negative effects." There may be some unmeasured positive outputs that result from regulation. But the benefits would have to be hugely substantial to offset the loss of $39 trillion in output in 2011 alone. Is that plausible?
Dawson and Seater explicitly do not attempt to separately measure the benefits of regulation in their study, only its overall effects on output. But the Office of Management and Budget does claim to measure the costs and benefits of federal regulation. In the most recent Office of Information and Regulatory Affairs (OIRA) report, the highest estimates for costs and benefits for regulations adopted from 2002 to 2012 are $84 billion and $800 billion respectively. Let's be extremely generous in calculating regulation's benefits and assume that they provide not just $800 billion in total benefits over 10 years, but that much in just one year. Then, just to be sure that we haven't overlooked any non-monetized benefits unaccounted for the OIRA, and to take into account of the fact that number of pages in the CFR have risen six-fold, let's multiply that by 6, yielding an estimated annual regulatory benefit of $4.8 trillion.
That's just a bit more than a quarter of the current GDP. Recall that Dawson and Seater have calculated that if the regulatory burden had remained the same as it was in 1949, the U.S. economy would be about $38 trillion bigger than it currently is. So the upshot of this wildly optimistic set of assumptions regarding the benefits of regulation is that Americans have foregone $33 trillion in income that we otherwise would have had. Or in the alternative case, where a lower rate of growth results in a GDP of only $31 trillion, that would mean that Americans have foregone about $10 trillion in income due to overregulation.
Whatever the benefits of regulation, an average household income of $330,000 per year would buy a lot in the way of health care, schooling, art, housing, environmental protection, and other amenities.
Since GDP growth rates in other industrialized countries more or less track U.S. growth rates over the period, I asked both Dawson and Seater via email if it would be fair to conclude that those countries had also adopted a similar suite of regulations that also slowed their potential GDP gains. Being careful not to go beyond the data in the study, Dawson replied, "Similarity of growth rates really doesn't tell us anything about the growth effects of regulations in the different countries. However, it would be fair to say that many studies (cited in our paper) examine the effects of regulation in many European countries and find large negative effects on employment, investment, rates of new business start-up, and so on."
For example, a 2004 World Bank study of the effects of regulation in a large sample of industrial and developing countries constructed an index of severity of regulation. It revealed that increasing a country's index of regulation by one standard deviation (34 percent) reduces its per capita GDP growth by 0.4 percent. Dawson and Seater's article, in comparison, finds that "an increase in total regulation of 600 percent reduces growth by just 2 percentage points. Relatively speaking, our effect is smaller." With appropriate caveats about differences in various studies, Seater told me via email, "The uniform message that comes through from all the studies I have seen is that regulation has strong negative effects on economic growth."
So if the effects of regulation are so deleterious to economic growth and the prosperity of citizens, why do countries enact so much of it? Dawson and Seater's paper mentions three theories: Arthur Pigou's notion that governments enact regulations to improve social welfare by correcting market failures, George Stigler's more cynical view that industries capture regulatory agencies in order exclude competitors and increase their profits, and Fred McChesney's argument that regulations are chiefly aimed at benefiting politicians and regulators. I asked if their results fit most closely with McChesney's. Dawson replied: "This could be the conclusion that one reaches based on our empirical results (since they show a net cost of regulation over time), but again we did not set out to prove or disprove any particular theory." Seater added that their research does not address the question of "why society allows excessive regulation….It's an important [issue], but it is one for the public choice people to study, not for macroeconomists like me and my coauthor."
One such public choice theorist, Mancur Olson, argued in The Rise and Decline of Nations (1982) that economic stagnation and even decline set in when powerful special-interest lobbies—crony capitalists if you will—capture a country's regulatory system and use it to block competitors, making the economy ever less efficient. The growing burden of regulation could some day turn economic growth negative, but in a note Dawson and Seater suggest that in the long run that will "not be tolerated by society." Let's hope that they are right.
The post Federal Regulations Have Made You 75 Percent Poorer appeared first on Reason.com.
]]>Nevertheless, American political leaders have a myriad of varied historical narratives explaining what led the United States to prosperity.
Mitt Romney argues the "nation was founded on the principle of being a merit society, where education, hard work, risk taking, have lifted the individual, and they have helped lift …the entire nation."
Ron Paul contends individual liberty is what made the country prosperous: I believe our country has been the greatest and most prosperous because we had a better understanding about liberty than any other country."
Rick Santorum agrees that liberty is necessary but believes that it "is only possible if we have strong families and strong marriage." He argues, "what transformed the world in this United States of America was a belief in the family."
President Obama asserts "government investments …have made this country great." Similarly Vice President Joe Biden suggests that "every single great idea that has marked the 21st century, the 20th century, and the 19th century has required government vision and government incentive."
Obama suggests that economic equality is also a necessary precondition, "What drags down our entire economy is the growing gap between the ultra-rich and everyone else".
Professor Elizabeth Warren vociferates the social contract drives prosperity, "there is nobody in this country who got rich on his own…you moved your goods to market on the roads the rest of use paid for. You hired workers the rest of us paid to educate…part of the underlying social contract is you take a hunk of that [profit] and pay forward for the next kid who comes along."
Several of these narratives place government at the helm of American success, others place what remains outside of the government domain as the main driver of prosperity. Despite extensive public opinion polling, it remains unclear what the public thinks is responsible for American affluence.
A recent national Rasmussen poll finds that only 27 percent of likely voters think government investments made America great, and 42 percent disagree, yet 32 percent are unsure. Instead 69 percent agree the free enterprise system made America great. Moreover, 50 percent say the society would become less fair if the government got more involved in regulating the economy. Perhaps this is a result of the perception that government contracts tend to be granted based on political connections (66 percent) but private sector negotiations favor those who provide the best service for the best price (51 percent).
Another Rasmussen poll finds that only 18 percent of Americans agree "every great idea in American history required government vision and government incentive." Instead 64 percent disagree government was essential. Moreover, 60 percent agree with the statement "government is not the solution to our problem, government is the problem."
Emily Ekins is the director of polling for Reason Foundation where she leads the Reason-Rupe public opinion research project, launched in 2011. Follow her on Twitter @emilyekins.
The post 27 Percent Say Government Investments Made America Great appeared first on Reason.com.
]]>Nevertheless, American political leaders have a myriad of varied historical narratives explaining what led the United States to prosperity.
Mitt Romney argues the "nation was founded on the principle of being a merit society, where education, hard work, risk taking, have lifted the individual, and they have helped lift …the entire nation."
Ron Paul contends individual liberty is what made the country prosperous: I believe our country has been the greatest and most prosperous because we had a better understanding about liberty than any other country."
Rick Santorum agrees that liberty is necessary but believes that it "is only possible if we have strong families and strong marriage." He argues, "what transformed the world in this United States of America was a belief in the family."
President Obama asserts "government investments …have made this country great." Similarly Vice President Joe Biden suggests that "every single great idea that has marked the 21st century, the 20th century, and the 19th century has required government vision and government incentive."
Obama suggests that economic equality is also a necessary precondition, "What drags down our entire economy is the growing gap between the ultra-rich and everyone else".
Professor Elizabeth Warren vociferates the social contract drives prosperity, "there is nobody in this country who got rich on his own…you moved your goods to market on the roads the rest of use paid for. You hired workers the rest of us paid to educate…part of the underlying social contract is you take a hunk of that [profit] and pay forward for the next kid who comes along."
Several of these narratives place government at the helm of American success, others place what remains outside of the government domain as the main driver of prosperity. Despite extensive public opinion polling, it remains unclear what the public thinks is responsible for American affluence.
A recent national Rasmussen poll finds that only 27 percent of likely voters think government investments made America great, and 42 percent disagree, yet 32 percent are unsure. Instead 69 percent agree the free enterprise system made America great. Moreover, 50 percent say the society would become less fair if the government got more involved in regulating the economy. Perhaps this is a result of the perception that government contracts tend to be granted based on political connections (66 percent) but private sector negotiations favor those who provide the best service for the best price (51 percent).
Another Rasmussen poll finds that only 18 percent of Americans agree "every great idea in American history required government vision and government incentive." Instead 64 percent disagree government was essential. Moreover, 60 percent agree with the statement "government is not the solution to our problem, government is the problem."
Emily Ekins is the director of polling for Reason Foundation where she leads the Reason-Rupe public opinion research project, launched in 2011. Follow her on Twitter @emilyekins.
The post 27 Percent Say Government Investments Made America Great appeared first on Reason.com.
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