Bill Carmichael: Why more capitalism will mean less poverty in 2016

We should be grateful for the free market, says Bill Carmichael.
We should be grateful for the free market, says Bill Carmichael.
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SO farewell 2015 – the best year in recorded human history – and welcome to 2016, which on current trends is likely to be even better!

Why such crazy optimism? Well, it’s not because I have a sunny disposition – I can be a miserable sod at the best of times. And Lord knows there is plenty in the modern world to make us thoroughly depressed – from Islamist terrorism, to frightening levels of national debt, to the sheer misery caused by the recent floods in the north of England.

But cold, hard facts do not lie, and a wealth of data demonstrate conclusively that in the words of the former Prime Minister Harold Macmillan “we’ve never had it so good”.

Whether you look at levels of poverty, the prevalence of famine, infant mortality or longevity, the statistics tell the same story – things are better now than they ever have been.

Take just one example; in 1820 it is estimated that 84 per cent of the world’s population lived in extreme poverty (on less than $1.90 or about £1.28 a day in today’s figures).

By 1990 this figure had been reduced to 43 per cent and such extreme poverty had been entirely eradicated in the West. In the UK today even the less well off enjoy a standard of living that only a tiny minority could hope to achieve when my grandparents were born.

Recently the World Bank announced that by the end of 2015 less than 10 per cent of the world’s population would live in extreme poverty – the lowest figure since records began.

It is an astonishing fact little remarked upon but fully a billion people have been lifted out of extreme poverty in about 20 years.

Things have got better in the UK and the rest of the West, but the most remarkable advances have been made in the developing world. More than 90 per cent of girls in the world are now in full-time education, 80 per cent of people have access to electricity and there have been dramatic improvements in infant mortality, average life spans and the general health of the population.

How to explain this amazing story? Well, it hasn’t come about through windy speeches at the UN, or state aid, or through the actions of charities such as Oxfam and Save the Children.

Using the foreign aid budget to buy yet more Lear Jets for African dictators doesn’t help the world’s poorest one bit.

What does help can be summed up in a single phrase – free market capitalism.

Whenever markets are liberalised, tariffs and taxes reduced, barriers to starting a business removed, property rights strengthened, something quite extraordinary happens – the poor through their own hard work and ingenuity make themselves less poor.

This isn’t a political opinion, but a statement of fact. It happens every single time. Yet governments, the churches, the big charities and crony capitalists all conspire against free markets – the one thing with a proven track record of helping the poor.

Take one example – the EU’s Common Agricultural Policy, which is designed to impoverish people in the Third World by denying them access to rich European markets through the imposition of punitive tariffs.

The one simple thing that Europe could do that would utterly transform the lives of millions of the world’s poor without costing taxpayers a penny, would be to abolish the CAP – but you’ll never hear Oxfam campaigning for that.

Instead, we are offered the same old big state, socialist dogma – higher taxes, more regulation and rigid central control.

But in contrast to the stunning successes of free markets, socialism has proved to be a dismal failure wherever it has been tried.

From the Soviet Union to Eastern Europe, by way of Cuba, Zimbabwe and North Korea the result is invariably the same – grinding poverty and political repression. Take for example Venezuela, a country with oil reserves second only to Saudi Arabia.

With such natural resources Venezuela should be fabulously wealthy, but in less than two decades the socialists have managed to turn it into an economic basket case where people can’t feed their families and foreign visitors have to bring their own toilet paper and soap because you can’t buy them in the state-run shops.

So my New Year toast is to give thanks to the blessings bestowed on us by free markets in 2015 and to hope for more of the same in 2016 – simply because more capitalism means less poverty.