When I lecture to teenagers and twentysomethings here in the United States, I often ask members of the audience to “raise your hand if you’re wealthy.” Except for the young woman years ago who announced that her father owned a string of 7-11s, no one ever raises a hand.
“Oh but you are wealthy!” I insist. “Each of us is among the wealthiest people ever to breathe.”
My listeners think me mad. “I’m middle-class, not rich” surely is what most of think to themselves. And they’re right about being middle-class – but they don’t realize that to be middle-class in America today means to be superrich by historical standards.
Here’s a small sample of the many ways in which ordinary Americans today are Bill-Gates-like rich compared to almost all humans who’ve ever lived:
And while it’s possible to list some ways in which the average person today is worse off than were pre-industrial folk – for example, no one before the 20th century died in airplane crashes – only the most doctrinaire ascetic would deny that almost everyone today in the Western World is vastly better off than were the overwhelming bulk of the human population before the industrial revolution.
But what caused this great wealth explosion?
The standard answer is technology. The standard answer is wrong.
Technology clearly has advanced over the years, and happily it continues to do so. And these advances are indeed indispensable to our modern way of life. But the deeper cause of our widespread wealth isn’t technology; rather, it’s the force that unleashes and directs the human energy necessary to produce technological advances and its fruits: free markets.
Markets are more fundamental than is technology to prosperity. For evidence, look no further than the fact that billions of people today remain desperately poor. People in Niger and North Korea are starving to death now, even though the technical knowledge for growing and distributing basic foodstuffs is readily available across the globe. Many Latin Americans and Eastern Europeans still carry their goods to and from market on wooden carts, despite the easy availability of automotive technology. Countless other people today dwell in earthen huts, have no indoor plumbing, die of malaria, and suffer all manner of other dangers and indignities that are easily avoided with commonplace technologies.
It is manifestly mistaken to suggest that technology is the reason for our prosperity. Clearly, our prosperity must rooted in something deeper than technology – something that both promotes technological advance and, even more importantly, encourages the use of technological knowledge to make widely available the goods and services that we Americans today take for granted.
That something else is economic freedom which spawns complex markets.
As shown again and again by researchers who study the relationship between prosperity and economic freedom, the greater is economic freedom, the greater and more widespread is prosperity.
Among the best of these studies is one produced annually by economists James Gwartney and Robert Lawson, and published jointly by the Cato Institute and Canada’s Fraser Institute. The 2006 study will be released this week. Among the most important findings of Economic Freedom of the World: 2006 Annual Report are these:
As this careful new study makes clear, there is no denying that more freedom means more prosperity for more people – and that lack of freedom ensures poverty for the masses, regardless of the degree of technological sophistication.
Donald J. Boudreaux is Chair of the Economics Department at George Mason University.