Monday, June 29, 2009

Economic heresy

Good intentions are no substitute for practical results. Just as the promotion of ethanol and carbon taxes will negatively affect the poor the most, various socialist proposals to regulate business and re-distribute wealth retard rather than promote the well-being of those at the bottom of the economic ladder. Our individual and church obligation to the poor is not well served by left-wing economic panaceas.

Michael Novak explains in "Economic Heresies of the Left" that, if the goal is to help the poor, capitalism produces actual results:
.... An accurate presentation of real existing capitalism requires at least three modest affirmations:
  1. Markets work well only within a system of law, and only according to well-marked-out rules of the game; unregulated markets are a figment of imagination.
  2. In actual capitalist practice, the love of creativity, invention, and groundbreaking enterprise are far more powerful than motives of greed.
  3. The fundamental systemic motive infusing the spirit of capitalism is the imperative to liberate the world’s poor from the premodern ubiquity of grinding poverty. This motive lay at the heart of Adam Smith’s important victory over Thomas Malthus concerning the coming affluence—rather than starvation—of the poor.
Since the origins of modern capitalism around 1780, more than two-thirds of the world’s population has moved out of poverty. In China and India alone, more than 500 million have been raised out of poverty just in the last forty years. In almost every nation the average age of mortality has risen dramatically, causing populations to expand accordingly. Health in almost every dimension has been improved, and literacy has been carried to remote places it never reached before.

Whatever the motives of individuals, the system has improved the plight of the poor as none ever has before. The contemporary left systematically refuses to face these undeniable facts. ....

In brief, nearly all the leftish critiques of American and other forms of capitalism are empirically false. They do not fit the actual facts. But these three—greed, unregulated markets, and the idea that capitalism makes the poor of the world worse off—are especially tiresome, and very far from reality.

Will all those good Catholic leftists who announce their own enthusiastic preference for the poor actually help to liberate the poor, even by a little? Will their anticapitalist policies help alleviate poverty? The historical record offers very little evidence for that contention.

And yet wherever a healthy, inventive capitalism goes, the poor soon rise by the millions out of poverty, come to better physical health, and advance into higher education.

You can look up the record. [more]
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