Is Capitalism Good for the Poor Gary Wolfram William Simon Professor of Economics and Public Policy Hillsdale College Copyright @ 2017 Gary Wolfram

What is Capitalism? System based on: Private Property Rights Voluntary Exchange Limited Government Rule of Law

Key Characteristics of Capitalism 1. Voluntary Exchange 2. All Parties Benefit 3. Must Please Others To Get Wealthy 4. Incentive to Innovate

Most Efficient System Voluntary Exchange Pay Opportunity Cost for Resources Value of Next Best Alternative Produce Something Consumers Value More Profit or Out of Business Profit Measure of Efficiency

Central Planning Not Good for Poor Incentive Problem Profit Information Problem Prices

Why Poor Benefit Incentive to Make Things for Poor Industrial Revolution Cell Phone Incentive to Make Them More Productive Add Physical Capital Add Education Outsourcing is really moving capital to poor

Does It Work? 766 million people world-wide live on less than $1.90 per day in 2013 (10.7% of population) Sub-Saharan Africa 41% live on less than $1.90 per day, 388.7 million Number has increased from 276 million in 1990 to 389 million in 2013 (percentage fallen 54 to 41) 49% of children in Sub-Sahran Africa extreme poverty Gross National Income per capita Sub-Saharan Africa $1505 in 2016 (US $56180) Life expectancy in Sub-Saharan Africa is 59 (2015) US 78.7 (2016) Sources: First 3 bullets from http://datatopics.worldbank.org/sdgatlas/SDG-01-no-poverty.html Bullet 4 ishttps://www.unicef.org/publications/files/Ending_Extreme_Poverty_A_Focus_on_Children_Oct_2016.pdf Bullet 5 and 6 is https://data.worldbank.org/country 27% of all children in developing countries underweight or stunted, less than 3% of U.S. poor children: Poverty ijn a Rising Africa World Bank http://www.povertyprogram.com/hunger.php Poverty Program- Poverty Statistics The World Bank- Poverty and Equity http://tradeaid.internationalservice.org/2015/07/africa-and-poverty.html TradeAID Integrated: Africa and Poverty Life expectancy is 57 (2013): http://data.worldbank.org/region/SSA World Bank Data- Sub-Saharan Africa (Developing Only) 239 million undernourished: http://www.fao.org/news/story/en/item/161819/icode/ Food and Agriculture Organization of the United Nations- globally almost 870 million chronically undernourished - new hunger report Good Source of Poverty Data http://povertydata.worldbank.org/poverty/home/ http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

Poverty in Capitalism 40% own home—3 bedroom with one and one-half baths, garage, porch or patio 80% have air conditioning Two-thirds have more than 2 rooms per person More living space than average individual in Paris, London, Vienna, Athens 78% VCR or DVD Player 97% Color Television 89% Microwave Oven From Robert Rector Heritage Foundation Paper

China and East Asia 1978 China Started Special Economic Zones 835 million, 88% of population living on less than $1.90 per day 1981 20.2 million, 1.9% of population in 2013 GDP per capita increased from $195 in 1980 to $8123 in 2016 (World Bank) 1980 East Asia poorest region in world now leading in economic growth and poverty reduction China Growth Rate GDP 14.9% 2007, 9.6% 2008, 9.2% 2009, 10.4% 2010, 6.7% 2016 Is Capitalism Good for Poor Folder in my Files cabinet. Poverty Escape from Brookings Report and World Bank in Colorado Scott Hall 2013 Folder Wikipedia on Poverty in China then http://povertydata.worldbank.org/poverty/country/CHN Poverty and Equity country dashboard GDP and China Growth Rates: World Bank Data- http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG GDP per capita https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=CN

India India began market process early 1990s Extreme Poverty: 432.6 million, 45.9% Population 1993 268 million, 21.2% Population 2011 India GDP per capita increased from $300 in 1991 to $1709 in 2016 India Growth Rate GDP 9.8% 2007, 3.9% 2008, 8.5% 2009, 10.5% 2010, 7.1% 2016

History Lesson During 1000 years monarchy mankind average income rose about 50%. Since 1820 rose by more than 1000% In last 100 years created more wealth, increased life expectancy more, and reduced poverty more than in prior 100,000 years In the year 1000 the average infant life expectancy 24, by1820 was 36 in the West In 2015 was 70 in world and 79 in US (Monaco 89.5) Average US household expenditures in 2015 of the lowest 1/5 of income distribution was $24,470 Is Capitalism Good for Poor? paper folder my file cabinet and Cato Letter Entrepreneurs are Heroes of the World Winter 2007 #1 Annual expenditure http://www.bls.gov/cex/2015/combined/quintile.pdf

Cross Section Evidence

Fraser Institute Top 10 Economic Freedom Hong Kong Singapore New Zealand Switzerland Ireland UK Mauritius Georgia Australia Estonia (US 11th) For year 2014

Fraser Institute Bottom 10 Economic Freedom Venezuela Central African Republic Republic of Congo Algeria Argentina Libya Syria Myanmar Chad Iran