Governance, Capitalism and Alleviating Misery

As discussed in previous posts, good governance makes it easier for free market economic systems to work their magic in generating wealth and lifting people out of poverty. Recognizing the benefit and/or harm of past actions might be helpful in making better decisions in the future. Drawing on a Thomas Sowell column, Mark Perry makes the following points: Political Solutions: Socialism on Installment Plan?

Sowell outlines a dangerous pattern:

1. Based on some perceived market failure, a political solution (regulation, subsidies, legislation, tariffs, price controls, property rights restrictions, below-market insurance programs, zoning laws, real estate regulations, etc.) is implemented to solve the "problem."

2. The political solution is inherently distortionary, introduces inefficiencies, and makes the original situation even worse.

3. Additional politcal solutions are then proposed to addresss the growing problems created by the previous political solutions.

Steps 1-3 continue to repeat, leading to the possibility of "socialism on the installment plan," or Hayek's concept of "The Road to Serfdom," because of the "fatal conceit" of policymakers.

Improving the rules and institutions that allow the private sector to work better without trying for a direct government solution would be a step forward in many cases. Milton Friedman reminds us of the primary source of wealth creation.

The Land of Makebelieve: Where are the Philosopher Kings?




HT: The Club For Growth Blog

Dr. Sanity deals with the significance of this and the global reach of the extended order in Helping The World Out Of Its Misery. She quotes Alvaro Vargas Llosa:

Ever since the Industrial Revolution, poverty has been significantly reduced throughout the world. Two hundred years ago, the average income per person worldwide was the equivalent of less than $2 a day; the figure is $17 today. This fact is relevant to the current discussion on globalization because, even though the information technology revolution, biotechnology, the emergence of new world players and outsourcing may give us the impression that we are in the midst of something entirely new, we are simply witnessing a new phase in the process of innovation that is the market economy -- and this began a few hundred years ago.

The fact that 20 percent of the world's population is extremely poor should not make us forget that millions of lives have improved dramatically in the last three decades. Illiteracy has dropped from 44 percent to 18 percent, and only three countries out of a total of 102 included in the U.N.'s Human Development Index have seen their socioeconomic conditions deteriorate. China's economy used to represent one-26th of the average economy of the countries that comprise the Organization for Economic Cooperation and Development; today it represents one-sixth.

These are not arcane facts. They are widely available and easy to understand. Publications such as Indur Goklany's "The Improving State of the World," David Dollar and Aart Kraay's report on the global economy, and Francois Bourguignon and Christian Morrisson's "Inequality Among World Citizens" -- to mention but three among many recent studies -- provide overwhelming evidence that the world is better off thanks to the increased flow of capital, goods, services and ideas.

All of which falls on the face of those who predict that in the next few years we will see a massive concentration of wealth among a few winners who will leave millions of losers behind. While it is probably true that the gap between low-skilled workers and those who are better educated will mean that different people will be impacted in very different ways by the continuing evolution of the global economy, the reality is that even those on the bottom rungs stand to benefit from the worldwide embrace of globalization.

Poverty was the natural condition of all of humanity until the market economy opened up the possibility of ever-increasing productivity.

The world was not rich and suddenly turned poor. The progress of the market economy that began to free the world of its shackles continues at an even faster pace today despite the many restrictions still faced by the people who create wealth and exchange it, and despite the fears that these momentous times understandably inspire in those who have difficulty adapting. What a heartening thought.

She then presents the following notion regarding people who would resist this approach:

An even more subtle approach is to insist that wealth and prosperity is directly correlated to unhappiness.

All these global luddites, along with their medievalist and jihadi brothers have one thing in common. They despise capitalism and are all deeply resentful of the modern era because despite all the material things available to make life easier and more enjoyable, they aren't happy!

But, guess what? Happiness is not related to the number of things one possesses. It has more to do with the power and energy that actually creates the wealth and technology--the free expression of that creative impulse that lies within every human. It has to do with taking responsibility for your own individual life and striving for the best that is within yourself.

This is the real opportunity that capitalism on a global scale brings--not the general wealth and better living conditions--those are just the by-product of unleashing the inner creative spirit and pursuing one's individual happiness; and by doing so, raising the general happiness.

Many of these anti-globalism elites mistakenly believe power over others is what will make them happy, and so they attempt to control and shackle that creative power--the best that is within others.

Their idea of "social justice" is intimately tied to making themselves feel good and establishing their own caliphate of the do-gooders, where happiness is mandated for all in equal measure. But they approach happiness from the wrong direction.

She draws upon a Robert Samuelson column and then continues:

What is most distressing is the desire on the part of the anti-globalists to oppose the very thing that will ease human misery; while their underlying socialist ideology encourages them to legislate or mandate happiness. This is more than just an illusion; it is a frank utopian delusion.

And, it is at the heart of why about half the population of this country isn't happy.

Happiness is not related to power over others; rather it is intimately connected to learning to have power over one's self in order to harness the capabilities within and become the best person you can be, or as Samuelson notes, "Happiness depends heavily on individual character and national culture."

And that last says it all. A culture that promotes victimhood and the entitlement mentality; and which fosters class consciousness and envy is going to be stuck in a hopeless "happiness quagmire." There are actually people who believe that they can not only "redistribute wealth", but that in doing so they will be "redistributing happiness".

But these do-gooder dictator wannabees can't have it both ways (and, of course, they do want it both ways; no matter how perverse the contradiction). They can't simultaneously morally condemn the materialism of capitalism and then at the same time redistribute the wealth it produces. So, instead they claim that they are trying to minimize human misery and promote social justice by opposing the very policies that are most likely to put the world out of its physical misery and give each person a fighting chance to tap into the potential within.

Global capitalism can't guarantee happiness; or an end to evil in the world. All it does is provide the conditions that enable the pursuit of happiness. It is the freedom to pursue that which one thinks will make one happy that, slowly but surely, decreases the level of misery in the world.

Without human freedom there can be no wealth created; because wealth is the product of the unfettered human mind. If the do-gooders really wanted to help poor of the world out of their misery, they would stand aside and let the market do what it does best.

There is quite a bit to this freedom thing, although it has a minority of serious defenders!