“Poverty is engineered by capitalism.” Thus began a post I saw on Facebook today. In a similar vein, Sen. Bernie Sanders, in Vox, proclaims: “Unfettered free trade has been a disaster for the American people.” These statements are utterly baffling.
Why are they utterly baffling, you say? Simply because there is no evidence to support these claims. In fact, the evidence is overwhelmingly opposite: capitalism and free trade help end poverty and help people, not make them worse off.
This is not a partisan issue. 96% of economists polled agree. Their opinions are backed up by research, too. The Peterson Institute found that trade has helped increase American incomes by $1 trillion a year, or about $10,000 per household annually. President Obama’s Council of Economic Advisers found those benefits accrue primarily to the poorest 10 percent.
And what about global poverty? Interestingly, countries who are more capitalist, who embrace more the “bourgeois virtues” are considerably wealthier than those who do not. An NBER working paper found the same thing. Over the past 25 years, we have seen a monumental drop in global poverty rates, primarily where market liberalization has occurred. Even Paul Krugman, a well-known left-wing economist, agrees.
Think I’m cherry-picking? Do a Google Scholar search. I’m even willing to make a bet. If anyone can find a minimum of 50 papers published in reputable academic journals within 30 days of taking my bet, I will pay them $100. If you fail to do so, you will owe me $100. If you want different terms, contact me.
Capitalism has eradicated poverty in most of the Western world. it is doing so in the rest of the world now. Poverty isn’t engineered by capitalism; poverty is engineered by lack thereof.