My last post, “The Moral Case for Free Enterprise,” was motivated in part by a recent speech of Pope Francis comparing the excesses of global capitalism to the “dung of the devil.”
The scholar Mark Perry of the American Enterprise Institute has just published an interesting chart (just below) demonstrating an 80% reduction in world poverty in the 36 year period from 1970 to 2006. He quotes AEI President Arthur Brooks that “if you love the poor, if you are a good Samaritan, you must stand for the free enterprise system, and you must defend it, not just for ourselves but for people around the world. It is the best anti-poverty measure ever invented.”
In a previous post, a year and a half ago, “A Global Perspective on Income Inequality,” I referred to another chart (just below) to demonstrate the massive growth of income in the developing world. To a large extent this is the result of economic globalization shifting low-skill employment from the developed world to the developing world where the cost of labor is less expensive. As Arthur Brooks says, “It was globalization, free trade, the boom in international entrepreneurship. In short, it was the free enterprise system, American style, which is our gift to the world.”
So, yes, the world as a whole is now much better off but American workers have paid a price for the global shift in low-skill work. The answer is not to impede globalization but rather to:
- Speed up the growth of our own economy in order to raise wages and provide more jobs for the unemployed and underemployed.
- Improve K-12 educational effectiveness and expand career educational opportunities to better prepare present and future workers for the many new high-skill jobs being created all the time.
The world is changing rapidly but there are effective ways for the U.S. to adapt if only we have the good sense to move forward!