Thanksgiving is my favorite holiday, a uniquely American time to remember the blessings that our nation enjoys. We solemnly but happily reflect on what made us strong and resolve to continue works conceived and defined by the people who found and built our country. We are so fortunate that they crafted a social and economic system based on freedoms to allow this country to prosper and become a world model. Thanksgiving is a time to ponder blessings and issues described in "Wealth, Poverty, & Human Destiny," a collection of essays edited by Doug Bandow and David Schindler, addressing what capitalism means for mankind.
Our capitalist system blossomed during the 20th century, an age of politics and reigning statism. During the period of industrial growth, it is often noted that, while capitalist markets are efficient, they are "unjust," they harbor a "spiritual sterility" inured to material inequality among people that commands charity and appropriate policy response. When expressing thanks for blessings, it is necessary to recognize the role for charity to others and to seize initiatives for correcting inequities. We must remember that this is a personal and private responsibility, that governments must not be allowed to intercede or to redistribute income or wealth, inhibiting creation of these blessings.
All societies have a degree of inequality, but during the 20th century nearly 100 million people were killed by governmental attempts at social engineering, motivated by radical egalitarianism. History shows that governments are not correct repositories for judgments about economic merit beyond the rule of law. The United States avoided these horrors due to economic freedoms installed at the founding. As a result, about three quarters of all income generated here is from human capital, reflected in the facts that real per capita income on average doubles every generation in growing economies, spurred by family teachings about work habits, personal choices and education. On a worldwide basis, nations in the bottom quintile of economic freedom had per-capita GDP of $2,256 in 2000, but the top quintile produced $23,450. In poor countries with enhanced economic freedom in the last generation, moving from weak to strong property rights related to life expectancy improvement (mortality at age 40 is 7% versus 25%), illiteracy dropped from 43% to 13%, and those without access to safe drinking water declined from 35% to 6.5%. If you doubt the importance of property rights, think about your own residence and think of this; in Peru it takes an average 289 day and three months salary to open your business legally; in Egypt it takes 6 to 11 years to establish land rights, in Haiti 19, and Phillipines up to 23 years. When a liberal elitists talks about inequities in capitalism, cite examples like this.
It is instructive to think of economic freedom as a system containing free markets where no exchange occurs unless both parties benefit, is voluntary, free from deceit and free from interference by government. It is here that corporate responsibility must share and accept a role that government will otherwise usurp. We are in an age where business dictates patterns of production and consumption, seeks globalization for efficiency but risks earning the wrath of citizens in all national economies for adhering to the concepts that embody that stigma and often reality of "spiritual sterility."
Globalization and protectionism (tariffs are a form of stealing by governments to benefit an interest group at general population expense) are keystones in this international debate. Suffering of the world poor is not a product of globalization; poverty was reduced dramatically in the decades of capitalisms' rise. Witness China's economic reforms of the past decade as "the greatest antipoverty program the world has ever seen." We do not endorse China's version of implementing the U.S. capitalist model but note that capitalism works.
American industry should extend an agenda to reduce global poverty including these ideas:
- Encourage trade and market reforms
- Open rich country markets to poor country exports
- Relax intellectual property rules, especially as applied to medicines
- Reserve foreign aid for true emergencies
- Relieve poor countries of bad debts they cannot repay; avoid "good money after bad"
- Set examples in corporate management regarding suitable balance in compensation
On Thanksgiving, as you recall your blessings, remember words of philosopher Thomas Hobbes about life. Within the memory of many, living world citizens, life is "solitary, poor, nasty, brutish, and short." Remember that capitalism with all its foibles has improved the human condition and its destiny. We must strive to perfect economic freedom, improve capitalism, and stay the course.