This thread is intended as a response to comments like this one, in which a poster simply knows that some conservatives hate and fear poor people and are determined to oppress them. Of course that comment is far from unique. It’s quite predictable on this board and elsewhere that when anyone posts a defense of free markets and capitalism, certain posters will pile on and insist that it’s merely a defense of the rich–see the first few responses in this thread, for instance. One of the names that comes up most frequently in articles attacking conservative economic freedom is Milton Friedman, who supposedly provided the intellectual basis for the rich to become entirely selfish and greedy while ignoring any concerns of the poor.
In reality, anyone who’s read Milton Friedman’s books knows that he was passionately concerned about the poor, and most of his time was dedicated to activism for the poor. There is a common belief–and it was much more common a few decades ago–that more government redistribution and regulation of economic activity will help the poor, while unfettered free markets would hurt them. Friedman believed the exact opposite; he thought that government redistribution and regulation hurt the poor as well as the middle class, and benefited primarily the upper tiers of society.
Friedman wrote Free to Choose in 1979, when a few hard-core folks still insisted that communism was the path to help to poor escape the horrors of capitalism. Friedman pointed out the obvious: compare the plight of the poor in the Soviet Union vs. western Europe, or in China vs. Hong Kong, or in North Korea vs. South Korea, or in any communist country vs. any capitalist country. It was plain which system was better for the poor and for everyone else. OF course some will reply by acknowledging that command economies have failed but that a free market economy governed by a high level of regulation is the key to helping the poor. In response, Friedman offered the test case of India, which had an enormous government bureaucracy, heavy regulation of every imaginable industry and business, and a sky-high corporate tax rate. Needless to say, India was synonymous with grinding, third-world poverty. By contrast Japan, which had been burned to the ground in WWII, gave its citizens more economic freedom than almost any other country and became quite wealthy, with no one living in extreme poverty.
The reason why so many Indians lived in grinding poverty then was not hard to find, nor is the reason why, despite some economic progress, most of them still do. (Over half live on less than $2 per day.) As explained in this article by Shikha Dalmia, doing anything in India means overcoming an army of bureaucrats. Starting a business, creating a new product, or even leaving and re-entering the country can mean getting permits from dozens of agencies and offices and boards. In practice this means that starting a business requires paying dozens of bribes, which poor people can’t afford to do. Hence poor people can’t start businesses and they remain poor. On the other hand, the system is quite good for the bureaucrats, who are much richer than the average Indian. It’s also good for any wealthy corporation that wants to exploit the poor for cheap labor. India’s government is a giant machine that transfers wealth upwards to those who are already wealthy while ensuring that the poor remain poor.
And today, more than three decades after Friedman wrote that book, how are the heavily regulated countries doing against the free ones? The Heritage Foundation’s Index of Economic Freedom ranks nations by the freedom from regulation, corruption, and government spending that their people enjoy. This page provides data on poverty levels worldwide. Even a cursory analysis shows that the nations ranked highest for economic freedom all have very low poverty rates, while those with the lowest economic freedom rankings tend to have high poverty rates. (For some there’s no data available.) Comparisons within regions point the same way. Chile and Uruguay have the most economic freedom of any countries in South America, and the smallest percentage of the population living beneath $1 or $2 per day. I doubt it’s a coincidence that the countries in Europe with the best economies, such as Germany, Denmark, Finland, and Sweden, have high rankings on economic freedom, while Greece, Spain, Portugal, and Italy are further down the chart.
Everywhere we look these days we see an article about rising economic inequality in the United States, and often the author simply assumes that deregulation and shrinking government must be at fault. In fact, government regulation has increased quite a bit over the past few decades (cite, cite). Given the steady, upward march of federal and state spending over the past few decades, it hardly seems reasonable to blame the small size of government either. There is simply is not any evidence to back up the assumption that more regulation and bigger government will benefit the poor, either at home or abroad. The evidence points the other way.