Leftists love to complain about and blame capitalism for trapping individuals in poverty. But scream and whine as they may, the truth of the matter is free markets have done more to grow the middle class than any other factor throughout history.
A new study by the Brookings Institute found what many of us already know: capitalism makes everyone wealthier. And this is not exclusive to the “one percent.” In fact, the study found that under free market economies, both the rich and the poor get wealthier, which completely contradicts the rhetoric we are constantly hearing from the left.
Recently, progressives lost their minds when they discovered the net worth of Amazon CEO Jeff Bezos. Bezos, who as it turns out is worth an estimated $140 billion, then became the target of those trying to push the idea that extreme income inequality is keeping the poor poor and the rich rich. “No one personal should be allowed to have this much money” angry tweets read. Others lambasted Bezos for earning so much when some of his employees were earning so little.
But as the new Brookings Institute Study concludes, it is precisely this type of capitalism that results in job creation, which is helping to bring more formerly impoverished people into the middle class than ever before. And this is something to celebrate.
Income Inequality
Income inequality seems to be the hot-button issue of our times. Whether it is being used to justify higher minimum wages or to argue in favor of a universal basic income, the topic has become a favorite scapegoat for those who want the government to make everything “fair.” Of course, as is demonstrated by countries like Venezuela, when governments are in charge of making things fair, everybody loses.
Typically, capitalism is blamed for this gap between the very poor and the very rich. In fact, adjectives like “exploitative” and “greedy” usually come into play during these discussions, as those complaining call for the very rich to share more of their money with the very poor. But through capitalism, this is already basically happening but through voluntary means, not force.
Those who are very rich and choose to invest that wealth in commerce, they are creating opportunities for those in lower economic stations than themselves. With every new business venture is the opportunity for job creation. And with job creation comes a truly prosperous economy. But this is not just true in our own U.S. economy. As the new Brookings Institute study asserts, capitalism is helping to grow the global middle class as well.
Global Growth
According to the study’s author, Homi Kharas, the majority of the world’s estimated 7.5 billion population will be considered “middle-class” by 2020. Throughout the entire course of human history, there have never been so many people identifying as “middle-class” around the globe.
Kharas commented, “There was almost no middle class before the Industrial Revolution began in the 1830s. It was just royalty and peasants. Now we are about to have a majority middle-class world.” And just to be certain, according to the new study, “middle class” means someone who is able to afford all their basic necessities—clothing, food, shelter— while still having money left over to afford luxuries like technology or even higher education.
Currently, there are around 3.7 billion people in the world considered to be part of the middle-class. And that is up considerably from the past two years, as Kharas found. He said:
“There were about 3.2 billion people in the middle class at the end of 2016, 500 million more than I had previously estimated.This implies that in two to three years there might be a tipping point where a majority of the world’s population, for the first time ever, will live in middle-class or rich households.”
And this growing global middle-class is responsible for over $3.5 trillion in spending, which is around ⅓ of the total GDP for the entire world. But the most rapid growth is not happening in the wealthiest countries. In fact, it is the developing countries that where the middle-class has experienced runaway growth.
And this is largely due to capitalist influences. In recent decades, China has adopted more free market policies and the communist threat from the former Soviet Union is no longer what it used to be. Free markets have by and large been triumphant as extreme poverty is actually decreasing across the globe as a direct result of capitalism spreading.
In fact, between the years of 1976 and 1998, the number of people living in poverty dropped by 235 million people. There is almost no way to look at this data and not be excited by what it means for human civilization.
The doom and gloom being shoved in our faces does not reflect the reality of our present day. There will always be grievances to air, but capitalism is not among them. In fact, most of the problems that we associate with income inequality would be lessened if our market were less regulated than it is today.
Capitalism allows everyone to rise above the status they were born into and it is being felt around the entire globe.
