Tag: market exchange

Poverty’s Decline and Its Causes

It is always refreshing to see journalists draw attention to the incredible decline in world poverty. An article that did just that appeared yesterday in the Christian Science Monitor. The piece shines a spotlight on three heartening facts in particular. 

First, poverty is decreasing. Not only have poverty rates fallen, but the total number of people in poverty has decreased. This is incredible when one considers population growth—there are more people alive today who aren’t in poverty than ever before. The Brookings Institution projects poverty will be practically eliminated by 2030. 

Second, average incomes are rising. World per capita GDP, adjusted for inflation and differences in the cost of living, has never been higher. And average income growth is not limited to developing countries: the average American has more disposable income left after basic expenses

Finally, humanity is healthier. Globally, average life expectancy is at an all-time high, largely due to plummeting infant mortality rates. More people have enough to eat and enjoy access to clean drinking water and improved sanitation facilities. The developed world has also seen health gains, with cancer death rates falling for both men and women in the OECD countries. 

The article attributes improvements in well-being to three main factors: the fall of communism, the rise of trade and globalization, and the courage of those who stood up against tyranny. 

While the CSM article gives some credit to international aid programs, it is important to recognize that aid is not a good driver of economic development. Even vocal aid-proponent Bono acknowledges that international aid and charity pale in comparison to the prosperity-creating power of people engaging in market exchange. 

When given the freedom to do so, it is truly remarkable what ordinary people can achieve. Consider the utter transformation of Singapore from poverty to riches – that is the power of economic freedom!

Appreciating Abundance

Thanks to market exchange, Americans enjoy a greater variety of food choices, pay less for groceries than before, and have more income left over after grocery expenses. And, of course, this abundance is not limited to food, but extends to material goods and technology.

Bafflingly, there are those who bemoan abundance. Bernie Sanders, to name one, has said, “You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers.”

When grocery-shopping to stock up for the impending blizzard, many of us on the U.S. East Coast were met with extremely limited choices and nearly barren aisles. When I attempted to buy sliced cheese, for example, there was only a single kind left: Swiss. There was no provolone or Muenster or pepper jack or cheddar or Colby any of the other varieties normally available. Although I find Swiss cheese bland, I bought it because it was my only option. I and many others were “living the dream” of those who romanticize scarcity.

An economics professor summed up the situation in this humorous tweet:

Topics:

This Month at Cato Unbound: A Little Foundational Theory

The October, 2011 issue of Cato Unbound tackles some of the foundational questions of political theory: how do we recognize justice? If it’s not utopia, is it still good enough to command our respect? Or allegiance? How do we know? Who are the members of the political community? How are they chosen? What counts as a “reason” for political action?

If all of this sounds abstract, rest assured that lead essayist Gerald Gaus is both lucid and engaging. He writes:

Liberalism’s founding insight was the recognition in the sixteenth and seventeenth centuries that controversial religious truths could not be the basis of coercive laws and public policies. The task is now to apply this insight to philosophizing about justice itself. This is an extraordinarily difficult lesson for many. Can it really be that I should not endeavor to ensure that my society conforms to my “knowledge” of justice? (Compare: can it really be that my “knowledge” of God’s will should not structure the social order?)

Gaus argues for a “range of justice”—a range of theories that, while perhaps not perfect by anyone’s standards, are still close enough to demand our respect, especially given the large benefits that come from freely engaged social cooperation.

Discussing with him this month are a panel of three other prominent social theorists. Richard Arneson argues that we tolerate one another not because we’re all pretty close to rational (clearly a lot of us aren’t!)—but because intolerance breeds atrocity. Eric Mack argues that classical liberalism is no mere contending sect; it is the right approach to politics, because it offers the greatest leeway for individuals to choose their own ends in life. And Peter J. Boettke argues that any social system that neglects private property will fail to produce a cooperative society in any sense; without market exchange, individuals will fall into strife over scarce resources.

Obviously I won’t be able to do justice to their arguments here, so please do check out Cato Unbound, where discussion will continue through the end of the month.