Free Markets do not Exploit Workers

A common complaint about freedom and free markets is that it exploits workers.  This argument stems from a centuries old idea that because one person is richer than another, they must necessarily take from another person.  Nothing could be further from the truth.

Going back to our initial description of markets, the mere fact they are voluntary means exploitation is insanely difficult.  Second, wealth isn’t fixed; it grows (as we demonstrated in our exchange example).  This means one person can become wealthier without taking from another person.  Finally, the evidence refutes this notion of exploitation.

Take a look at this chart:


Here we have the GDP per capita (purchasing power parity) of various nations plotted against their Index of Economic Freedom score.  There is a clear relationship here: the higher the Index score (the more economically free the nation is), the wealthier are its people.  What’s more, the relationship appears to be exponential: the greater the freedom, the even faster wealth rises.

Also, take a look here:


This chart shows the global distribution of wealth over time in constant dollars.  You can see the “bump” moving more to the right.  That means more and more people worldwide are becoming wealthier.  Couple this with a halving of the global poverty rate since globalization began, and you got a pretty bright picture.

If this is “exploitation,” then by George we need more of it!