Why Did America Prosper While The Rest Of The World Remains Poor?

Free To Choose

article by John Stossel

America's current struggles notwithstanding, life here is pretty good. We have a standard of living that's the envy of most of the world.

Why did that happen? Prosperity isn't the norm. Throughout history and throughout the world, poverty has been the norm. Most of the world still lives in dire poverty. Of the 6 billion people on earth, perhaps 1 billion have something close to our standard of living. Why did America prosper when most of the people of the world are still poor?

Milton Friedman taught me the answer. More than any other American, Friedman, who won the Nobel Prize in economics in 1976, clearly warned the world about the unintended consequences of big government.

"We've become increasingly dependent on government," said Friedman. "We've surrendered power to government; nobody has taken it from us. It's our doing. The results—monumental government spending, much of it wasted, little of it going to the people whom we would like to see helped."

That's from Friedman's PBS TV series Free to Choose, which aired 30 years ago and became the basis of his No. 1 bestseller by the same name.

The title says a lot. If we are free to make our own choices, we prosper. That was a new idea to many back then. At the time—when inflation and interest rates were in double digits and unemployment approached 10 percent—people thought a wise government could ensure economic growth, guarantee full employment, and eliminate poverty. Friedman explained that the opposite was true, that bigger government had brought us "burdensome taxes, high inflation, a welfare system under which neither those who receive help nor those who pay for it are satisfied. Trying to do good with other people's money simply has not worked."

No, it hasn't. So why, 30 years later, is America doing so much more of it?

Because people still have not learned Friedman's lesson.

Because of that, I give money to a charity that offers teachers free copies of some of my TV news videos that explain the benefits of free markets. The video most popular in high schools is one in which I ask students, "When so many nations remain poor, why did America become prosperous?" Many answer, "Because we have democracy." Yet India has democracy, and India has been poor for years. "India is overpopulated," they say. They don't know that India has the same population density as New Jersey.

Other students suggest that America prospered because of our natural resources. But Hong Kong has no natural resources. It's basically a rock. It is also more densely populated than India. Yet, in just 50 years, Hong Kong went from poverty to American levels of wealth.

How? In Free to Choose, Friedman explained that it was the free market. Overlooking the amazing Hong Kong skyline, he said: "This miracle hasn't been achieved by government action—by someone sitting in one of those tall buildings and telling people what to do. It's been achieved by allowing the market to work."

Walking down a crowded street, he added, "They are free to buy from whom they want, to sell to whom they want, to work for whom they want. Sometimes it looks like chaos, and so it is, but underneath it's highly organized by the impersonal forces of a free marketplace."

At the time of his series, India was a symbol of enlightened central planning.

"India has tremendous economic and human potential," Friedman commented. "The human tragedy is that in India that potential has been stifled by the straightjacket imposed by an all-wise and paternalistic government. Central planning has condemned India's masses to poverty and misery." What counted most for Friedman was that people should be free to try innovative ideas and succeed ... or fail.

"The free market enables people ... to trade with whomever they want; to buy in the cheapest market around the world; to sell in the dearest. ... (B)ut most important of all: If they fail, they bear the cost."

I agree with both Stossel and Friedman here. The benefits of free markets (and I use the term loosely) far outweigh the negatives, and free markets are far superior to centrally planned government economies. Such a centrally planned economy appears to be what Obama is pushing for and I have serious fears that this will drive our once great nation into the dirt.

Thoughts, praise, rebukes, verbal abuse welcome.

didnt your daddy make you play sports as a child? in anything there are winners and losers.


and yes I know winning comes with a price you end-of-times prophets

and Gene Krupa just called. he said to sack up boyo

I disagree.

Sorry but I'm struggling to see the benefits.

The free market encourages greed and selfishness, the whole concept of "success" in the west is faulty in my opinion. It's all about the stuff and we are so short sighted we have failed to see wider implications ( You know the 5 billion who aren't benefitting).

I don't have a better alternative though, clearly communism, though a good idea, fails on implementation. Socialism, again a good idea, but it doesn't seem to be working either.

I think the guy was wrong. American prosperity is neither unique, unusual or new.

The overall proportion of poor-vs-rich has remained essentially stable throughout history. The location of the centres of wealth have moved around, a lot, dependent mostly on ease of access, but the basic structure has remained intact since the rise of culture in Mesopotamia.

The number and size of viable centers depends on the speed at which produce can be gathered to the central point. The furthest point from which goods can be reasonably cheaply transported to the central point in a usable condition determines the furthest reach of the catchment area.

The US has been the prosperous centre in the Americas in the 20th century but we are currently undergoing the upheaval and centre shift that has been bought about by the rise cheap transport and fast communication.

At this point, anything can be moved anywhere cheaply so the centres will probably become disperse. It's hard to know what happens next, we're undergoing the biggest shift since the discovery of agriculture.

The free market is the way things were best run with 3 or 4 centres but now.......

[edit on 11/6/10 by pieman]

Originally posted by Merigold
Sorry but I'm struggling to see the benefits.

Are you even looking for them?

Have you been to other countries where people live in squalor?

Actually, centralising buying power to create economic strength might be the best way to go, unless you want corporations to have more power than government. That's the Chinese strategy and they're kicking ass in the new climate.

[edit on 11/6/10 by pieman]

Originally posted by pieman
I
The US has been the prosperous centre in the Americas in the 20th century but we are currently undergoing the upheaval and centre shift that has been bought about by the rise cheap transport and fast communication.

At this point, anything can be moved anywhere cheaply so the centres will probably become disperse. It's hard to know what happens next, we're undergoing the biggest shift since the discovery of agriculture.

The free market is the way things were best run with 3 or 4 centres but now.......

But now.... what?

Free markets were great, enriched a nation, brought technology and innovation to the world, America became the most charitable nation on earth.... but because of cheap transport and fast communication the free markets are no good anymore?

I'm not seeing your argument

Originally posted by pieman
Actually, centralising buying power and to create economic strength might be the best way to go unless you want corporations to have more power than government. That's the Chinese strategy and they're kicking ass in the new climate.

I do want corporations, and more importantly, the PEOPLE to have more power than governments. Economic freedom is power to the people.

The free market can't work in the present climate as there are too few centres to create any reasonable competition. With 5 or 10 markets available to the investor, competition keeps the markets honest because the smart investor will not invest in a dishonest market, meaning they wither and fail, but now there is only one or two left and so there is no choice for the investor and dishonesty won't be punished.


(just an aside)The free market hasn't bought about any technological advancement, new technology is too expensive and the demand is so small that it can't come out of a market. It comes from government sponsored programs. (just an aside)

[edit on 11/6/10 by pieman]

Originally posted by pieman
The free market can't work in the present climate as there are too few centres to create any reasonable competition. With 5 or 10 markets available to the investor, competition keeps the markets honest because the smart investor will not invest in a dishonest market, meaning they wither and fail, but now there is only one or two left and so there is no choice for the investor and dishonesty won't be punished.

So what you're saying is that competition is beneficial

(just an aside)The free market hasn't bought about any technological advancement, new technology is too expensive and the demand is so small that it can't come out of a market. It comes from government sponsored programs. (just an aside)

And where do you get this notion? Most of our technological advancements come from the free market. Feel free to put down your free-market created MP3 player and text your message in from your free-market created Iphone.

Actually, America's economic prosperity from the 50s onward was directly tied to World War 2.

www.associatedcontent.com...

Not the best article, but it gives you a general idea of why our post-war economy flourished.

reply to post by traditionaldrummer

I won't go into too much depth because this could take a book. I just want to point out a couple things.

For one, and this is directed at the guy who talked about how there are always winners and losers, economics is not a zero-sum game. Stealing is. The difference is that in economics, goods are produced and traded, thus increasing the total wealth of civilization. There is more "stuff" in existence after this process.

If you look at any of the more wealthy civilizations that bubbled up throughout history, including ancient Greece, Rome, the Phoenicians (Carthage), the British and USA, you will see a major common current among these: individuals were allowed, for the most part, to keep the fruits of their labor.

Unfortunately, in all these cases, the general prosperity produced a parasitic elite that wanted to feed off the system without contributing to it. And all of these civilizations started to crumble when this happened. And this is why our civilization is crumbling.

I don't know if there's a way out of this cycle. It may just be how human nature works. Under conditions of freedom and private property, a civilization grows rich. Once grown rich, the new generations are complacent and selfish and greedy, and more and more you see people acting as parasites rather than producers, because they can. And they make the dwindling population of producers look like suckers, causing them to defect even more to the dark side. Thus the civilization declines.

Marx was right when he said capitalism "evolves" into socialism. But he was wrong in seeing this as a forward march of progress rather than a cycle. Actually socialism is when the parasitic elite have absolute power, and keep the masses down through the dogma of "equality". But without incentives to produce, socialist civilizations rapidly self-cannibalize and become poor.

Later on, perhaps a long time later, people once again throw off their chains, demand that they be free to give or withhold their labor and belongings as they see fit, and civilization begins to grow again.

That is the cycle.

(I should add that, confounding the issue, the parasitic elite is almost always composed of wildly successful capitalists and especially their descendants and friends.)


[edit on 11-6-2010 by NewlyAwakened]

I agree. S&F.

Free-markets lead to innovation, prosperity, and all those good things.

America is the promised land. Land of our inheritance.
It will prosper as long as it follows God.
The problems facing us today are the result of America slowly drifting away from God and good morals.

Originally posted by IcarusDeepSea
America is the promised land. Land of our inheritance.
It will prosper as long as it follows God.
The problems facing us today are the result of America slowly drifting away from God and good morals.

You don't think that maybe a teesny-tiny bit our America's success has to do with the different way it approached government and economics?

Originally posted by NewlyAwakened
reply to post by traditionaldrummer

 

I won't go into too much depth because this could take a book. I just want to point out a couple things.

For one, and this is directed at the guy who talked about how there are always winners and losers, economics is not a zero-sum game. Stealing is. The difference is that in economics, goods are produced and traded, thus increasing the total wealth of civilization. There is more "stuff" in existence after this process.

If you look at any of the more wealthy civilizations that bubbled up throughout history, including ancient Greece, Rome, the Phoenicians (Carthage), the British and USA, you will see a major common current among these: individuals were allowed, for the most part, to keep the fruits of their labor.

Unfortunately, in all these cases, the general prosperity produced a parasitic elite that wanted to feed off the system without contributing to it. And all of these civilizations started to crumble when this happened. And this is why our civilization is crumbling.

I don't know if there's a way out of this cycle. It may just be how human nature works. Under conditions of freedom and private property, a civilization grows rich. Once grown rich, the new generations are complacent and selfish and greedy, and more and more you see people acting as parasites rather than producers, because they can. And they make the dwindling population of producers look like suckers, causing them to defect even more to the dark side. Thus the civilization declines.

Marx was right when he said capitalism "evolves" into socialism. But he was wrong in seeing this as a forward march of progress rather than a cycle. Actually socialism is when the parasitic elite have absolute power, and keep the masses down through the dogma of "equality". But without incentives to produce, socialist civilizations rapidly self-cannibalize and become poor.

Later on, perhaps a long time later, people once again throw off their chains, demand that they be free to give or withhold their labor and belongings as they see fit, and civilization begins to grow again.

That is the cycle.

(I should add that, confounding the issue, the parasitic elite is almost always composed of wildly successful capitalists and especially their descendants and friends.)


[edit on 11-6-2010 by NewlyAwakened]

This is a great post and sums it up fairly nicely. Of course it offers no solutions.

A perfect lasting system has not yet been developed. A perfect system is a system that progresses society to the highest level possible. What is hard, is that the ideal of a perfect system is different for everyone. Until we can come to a conscesus of exactly what is best for society now and in the future, we will always face these issues. What is our purpose?, is the million dollar question.

reply to post by traditionaldrummer

I agree with both Stossel and Friedman here. The benefits of free markets (and I use the term loosely) far outweigh the negatives, and free markets are far superior to centrally planned government economies. Such a centrally planned economy appears to be what Obama is pushing for and I have serious fears that this will drive our once great nation into the dirt.

Thoughts, praise, rebukes, verbal abuse welcome

-----------------------------------------------------------------------------

What makes you think that only the US prosper? Except for the under developed countries, there is lots of prosperity in many parts of the world.

If you put the US wealth per capita and compare it with Europe. Middle East, Japan, Taiwan, Australia, New Zealand, with China rooky-ing, than you will be surprised.

The system in the US however is one of selfish greed, without an heart for the less fortunate neighbours in your country. Example is the health care bill (how it was received and condemned)

So, believe what you want to believe, but it would be better to form your opinion after you have travelled the world and experienced it all by yourself.

Originally posted by sligtlyskeptical
This is a great post and sums it up fairly nicely. Of course it offers no solutions.

A perfect lasting system has not yet been developed. A perfect system is a system that progresses society to the highest level possible.

I don't believe there is such a thing as a "perfect system". Utopian ideas only seem to exist in fantasies. Some systems are definitely and measurably better than others.

It could be argued that in capitalism and free markets, the highest possible level to date may have been achieved. It certainly seems evident in the overall prosperity of the countries that adopt it.

Originally posted by GeosAlien
The system in the US however is one of selfish greed, without an heart for the less fortunate neighbours in your country. Example is the health care bill (how it was received and condemned)

I disagree that the system of America is "selfish greed". America is the most charitable nation on earth.

The health care bill had nothing to do with "selfish greed" or no heart for the "less fortunate" (situations largely aren't based on fortune, though that's a different thread). The health care bill removes all the competition from the health care market. And everybody in America can get health care right now even without having to pay for it.

Those who use the term "greed" to denigrate free markets and capitalism usually can't even define what greed is. Their arguments are usually predicated on wealth envy.