Compassionate Capitalism or Socialist Servitude?

The occupy Wall Street crowd would have us believe that capitalism is the root of all our social ills. Now a report by James R. Otis, "An Audacious Promise: The Moral Case for Capitalism," Manhattan Institute, May 2012, attempts to quantify this claim.

A comparison of modern economic indicators since 1800 validates Milton Friedman’s conclusion (http://bit.ly/J0fhdX) that no other economic system has done more to eradicate poverty and improve the human condition than capitalism:

·         Since 1800, the world's population has increased six fold, yet despite this enormous increase, real income per person has increased approximately 16-fold.

·         In America, the increase is even more dramatic. In 1800 the country's total population was 5.3 million, life expectancy was 39 years, and the real Gross domestic product per capita was $1343 (in 2010 dollars).By 2011, the population is growing to 308 million, life expectancy doubled to 78 years, and GDP per capita increased 36 fold to $48,800.

Other factors being equal, capitalism has done more than anything else in the last 10,000 years of human history to alleviate social evil and poverty. As opposed to socialism, capitalism meets an individual's wants and needs by assisting them to obtain them. It recognizes that people are competent enough to take care of themselves and are the best providers of their own wants and needs.

And before one objects that the above metric is measured in pure dollars, a similar comparison can be made by looking at improvement in the quality of life. According to a Dallas Federal Reserve study based on U.S. Census Bureau data, the following table illustrates ownership of material goods in American society between 1970 and 2005. The table compares property ownership by all households in 1970 to “poor” households in 2005, as a percentage of population:

Households that Own	% All Households 1970	% Poor Households 2005
Washing machine	71	72
Close dryer	44	57
Dishwasher	19	37
Refrigerator	83	99
Stove	87	99
Microwave	1	73
Color TV	40	97
Videocassette/DVD	1	78
Personal computer	3	25
Telephone	93	96
Cell/mobile phone	1	60
Air conditioner	34	82

 Beyond these gains, Americans are the most generous citizens on the planet, giving more than $306 billion in 2007 to charity to help others while 60 million Americans volunteer time for nonprofits, hospitals, churches, and other causes.

So what is the socialist left’s alternative? Their answer is for the “1%" to give their wealth to the “99%." So who, exactly, are these top 1%? A study by Alan Meltzer, of the Wall Street Journal, in his article "A Look At The Global 1%", March 9, 2012 studied the income earned by the top 1% of earners in the United States, Canada, Australia, Netherlands, United Kingdom, France, and Sweden between 1903 in 2004. The percentage of total income earned by the top 1% has follows remarkably similar curves in all seven of these nations, even though their social policies are quite different. The median of the seven was approximately 18% in 1925, decreased to approximately 5% in 1980, and rose to approximately 9% in 2000. The United States, United Kingdom, and Canada departed from the group – on the upside – from about 1985 on, and averaged approximately 15% in the year 2000. Using the15% value, if the wealth of the 1% were taken away and given to the 99%, their incomes would rise by an average of 18%. However, this is not the only effect. Because the 1% invest much more of their income to provide jobs for the 99%, these jobs would be lost. In addition, once the wealth of the 1% is redistributed, everyone will realize that no one's property is safe, and the incentive to create business and industries would be sharply reduced. The economic circumstance of the entire nation will fall. Once private property is lost, liberty is lost. All that is left is tyranny, and wealth and power will be concentrated in those who control government. In effect, if the 99% are allowed to destroy the 1%, all of us will be ruled by the 0.000001%, a wealthy and corrupt few.

For those who currently believe themselves to be the “99%” – that is the Occupy Wall Street crowd, who apparently cannot do math, read history, or follow a rational argument –  the word picture is this: if Bill Gates’s $20 billion net worth were liquidated and divided among the people of the world, they would each receive about three dollars. Bill would be out of business and could not produce the software that provides the 99% with the capability to create information technology based jobs or to access online education that will lead to them creating their own wealth. Instead, all control would be transferred to a centralized government, like the Soviet Union, which collapsed under its own weight – unable to efficiently nor effectively meet the needs and wants of its people.

 History teaches us that it is better to be unequally wealthy rather that to be equally poor.