Economic Growth

Free Markets Make the World a Better Place

Economic growth, capitalism, improves standards of living, health, life expectancy.


Last Friday, the Cato Institute hosted a forum on a new book, Neil Monnery's Architect of Prosperity: Sir John Cowperthwaite and the Making of Hong Kong. Sir John Cowperthwaite was the financial secretary of Hong Kong between 1961 and 1971, as well its financial under-secretary between 1951 and 1961. As such he has contributed to establishing the policies—small government, low taxes, fiscal probity and free trade—which are credited for turning a poor backwater of the British Empire into one of the richest places on earth.

When I asked Monnery, the British author of the book, to put Hong Kong's success in context, he noted that in the years following the end of World War II, Hong Kong's per capita income was one third of that in Britain. By the time of the British transfer of the territory to China in 1997, incomes in the two countries were the same. Today, the average inhabitant of Hong Kong is over 30 percent richer than the average Briton.

As late as 1960, people in Hong Kong enjoyed lives that were four years shorter than those in Britain. Today, they live four years longer than their British counterparts. Economic growth, we concluded during our discussion, is key not only to rising standards of living, but also to health and life expectancy. Put plainly, the richer the country is, the better the hospitals and higher the quality of care and the environment that it can afford to buy.

That got me thinking about the region I came from and the changes that Central Europe underwent since the fall of the Berlin Wall, the 28th anniversary of which we will commemorate on November 9. Following the end of the communist period, the region went into an economic recession, as unproductive industries shut down and millions of people lost their jobs. Life expectancy started to decline, which opponents of market reforms saw as proof positive of capitalism's deleterious consequences for people's welfare.

Revisiting the life expectancy statistics some three decades later, a different picture emerges. Between 1960, the first year for which World Bank data is available, and 1989 (i.e., a period of 29 years), life expectancy in the Czech Republic, Hungary, Poland and Slovakia rose by 1.33, 1.46, 3.36 and 1.05 years respectively. Between 1989 and 2015 (i.e., a period of 26 years), it increased by 7.1, 5.68, 6.44 and 5.24 years respectively. The post-communist dip in life expectancy, such as it was, proved to be small and temporary.

Further afield, post-communist depression was much more pronounced in the Baltic countries, which is, in retrospect, unsurprising. These economies, being parts of the Soviet Union, were much more heavily distorted than their neighbors to the west. In other words, a deeper restructuring was necessary.

Yet, the relationship between economic growth and life expectancy still holds. In the 31 years between 1960 and 1991 (i.e., the year of the dissolution of the U.S.S.R.), life expectancy in Estonia and Lithuania, rose by 1.47 and 0.52 years respectively, while in Latvia it fell by .75 years. Between 1991 and 2015 (i.e., a period of 24 years), life expectancy rose by 7.33 years in Estonia, 2.97 years in Lithuania, and 5.02 years in Latvia.

All in all, a switch from socialism to capitalism appears to be good for the health and longevity of the citizenry.

NEXT: Brickbat: The Chief Problem

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. following the end of World War II, Hong Kong’s per capita income was one third of that in Britain. By the time of the British transfer of the territory to China in 1997, incomes in the two countries were the same. Today, the average inhabitant of Hong Kong is over 30 percent richer than the average Briton.

    Does “richer” now mean having a greater income rather than having a greater net worth?

    1. It means enjoying more WEALTH, so it’s neither by themselves. But having a higher income that buys you more things is the surest way to accumulate more wealth.

      1. I Make up to $90 an hour working from my home. My story is that I quit working at Walmart to work online and with a little effort I easily bring in around $70h to $86h.. Go this site and start your work..

        Good luck…..

  2. But…but…Scandinavia!!!! /every socialist on Reason H&R

  3. So communist rule is a good thing now?

    1. Hong Kong is an autonomous territory whose economy is separate from and not controlled by Beijing, and even the ChiComs know better than to smother a goose that lays golden eggs. Or, to put it in terms that you’d understand, they know better than to eat a really slutty chicken.

  4. Economic Growth, Capitalism, Improves Standards of Living, Health, Life Expectancy: New at Reason

    “‘The free market has been sorting it out and America’s been losing,’ [now vicepresident] Pence added, as [then candidate] Trump interjected, ‘Every time, every time.'”

    You can see the implications: MAGA means abandoning Economic Growth, Capitalism and Improving Standards of Living to impose American-style Juche.

  5. You ever been to Hong Kong? Nobody goes to Hong Kong, it’s too crowded. And chaotic. People just doing whatever the heck they want wherever they want with no authorities telling them what they should want. It’s like a nightmare of some sort, a nightmare of too much economic liberty and individualism.

      1. Or so Zeb’s been told.

        1. No, I’ve got first hand knowledge.

      1. Off-limits to US military, but it was fascinating when I went there, regardless of regulations..

      2. I thought they tore that place down.

    1. I’ve been there 25-30 times. It’s a wonderful city. I once had a mosquito bite on my leg that turned into blood poisoning overnight. I went to a hospital for treatment and the clerk said that she was sorry, but I wasn’t covered by Hong Kong’s
      nationalized insurance system and had to pay cash. Two visits to the hospital, surgery, pharmaceuticals, and three follow-up visits with a nurse cost about $US 100.

    2. Sounds like New York. A slightly richer and happier New York.

  6. ‘Changing ‘the’ world?!

    Again and again:

    The world (each one of the 7.5+ billion individual ones, mansions within our Father’s house), is a mere REFLECTION of the state of mind of its harbinger.

    Just like one cannot ‘change’ one’s reflection in the mirror, but only by enhancing one’s appearance to do so, one CANNOT ‘change’ the world by any effort on the ‘outside’.

    Each individual must move upward from the currently lowest level of hell with their mind (HENCE THE EXISTENCE OF BIBLE ALLEGORY) to the top of Mount Zion (highest abstract idea that supersedes all else) in order to make their experience (world) the way their I-AM-ness is to emprise it accordingly.

  7. It is a mistake to measure the prosperity of any group by per capita
    figures. A few billionaires can skew the figure so that it
    misrepresents what most people’s lives are like. If you want to
    compare the standard of living of two groups, the meaningful way is to
    use the median income or the fraction in poverty.

  8. Marian,

    If “economic growth” were not tied one-to-one with “population-growth” and “resource-destruction”, I would agree with you. However, this “exponential economic growth” model that “businessmen-types” espouse is not sustainable. This chart should be self-explanatory:
    Your “economic growth” support will be the reason that your grandchildren are going to live in a very dark age. Short term “exponential economic pleasures” will result in long term economic disaster. So instead of “economic growth” for 7,000,000,000 humans going into 10,000,000,000 humans, we need both population and economic contraction for 7,000,000,000 humans going into 3,500,000,000 humans. If we do not do this voluntarily, it will be done for us either by global collapse or Hitler II. Mark my words here in 2017. And just be glad that you are probably “old”. No youngster would say the things you say. You probably will not have to see the collapse or Hitler II.

  9. What a delightful article. How clearly the graphs show that as menacing by deadly coercion decreases, life–especially life worth living–flourishes proportionally.

Please to post comments

Comments are closed.