.
Free-market capitalism does allow some people to get much richer than others, but that’s okay. The inequality may seem unfair, but all that the alternative systems accomplish is to ensure that everyone is poor. China, North Korea, and Cuba have worked that out pretty well.
Isn’t there a middle ground?
President Clinton used to talk about a “third way–something in between socialism and capitalism.” I once asked Czech Republic president Vaclav Klaus what he thought about that. Klaus had helped move the Czech Republic from communism to capitalism, and his country was the most prosperous of the former Soviet states. Klaus answered, “The ‘third way’ is the fastest route to the Third World.”
That might have been hyperbole, but he had a point. You are either free or not free. Either you choose what you do with your money or government does.
America and Europe are now experimenting with a middle ground, increasingly regulated capitalism. But every regulation throws sand in the gears of the economic engine. You see the harm more clearly in Europe because it regulates more. France requires that most employees be given six weeks’ vacation and paid parental leave, and makes it very hard to fire anyone. The regulations were intended to make life better for workers, but the unintended consequence is that employers fear hiring anyone, because every employee is more expensive–and nearly impossible to fire.
The result? Employers don’t hire many people, and the unemployed stay unemployed. The Bureau of Labor Statistics says that from 1982 to 2002, businesses in the United States created 37 million new jobs. The six leading European countries–France, Italy, Germany, Sweden, Netherlands, and the UK–with almost an identical population, created only half as many jobs. Europe’s high taxes and strict regulations are driving out entrepreneurs. In the past 10 years, 300,000 people, many of France’s best and brightest, have left–often moving to countries with more limited government.
Free-market capitalism is why, even though goverment poverty programs fail, poor people in America don’t suffer the way the poor have suffered in most of the world. A thriving economy means even the people at the bottom of the ladder do pretty well. One of the biggest health problems facing America’s poor is obesity. You know you live in a good place when overeating is a problem.
Most of the 6 billion people in the world live short, brutal, miserable lives; 1 billion people try to survive on just a dollar a day. They would love to have the lifestyle of America’s poor. Ninety-seven percent of American families our government classifies as “poor” have color televisions and half own two. Seventy-five percent of poor people have cars and nearly half own their own homes.
John Stossel
Chapter 12, “But What About the Poor?”
Give Me a Break
