The Greatest Anti-poverty Program In The History Of Man

             "Man born of woman is short-lived, and glutted with agitation."  --  Job 14: 1

During the heated federal budget battles of 2011, one liberal Christian group took out a full page ad in a national newspaper with the provocative question, "What Would Jesus Cut?"  The ad asked readers to sign a petition asking Congress to oppose any policies that involve cutting domestic programs that help the poor.

The first anti-poverty program in the US extends as far back as the 1930's with Roosevelt's New Deal.  This has been followed by many other "programs"....The Fair Deal, The Great Society, The New Frontier, etc, etc.  Has the poverty rate dropped?  Sadly it hasn't.  There always seems to be a hard core that will never disappear...hovering above 10% of our population.

But for most of us, the free enterprise system has lifted more people out of poverty than all the government anti-poverty programs combined.  In 1800, the average person had a standard of living no better than people living in the Stone Age.  Even in advanced cities like London, only one quarter of the population could expect to live beyond five years of age.  For the lucky few who survived childhood in the eighteenth century, the life that awaited them was difficult and short.  So for all of history until about 200 years ago, the world was desperately poor.

Then, with the industrial revolution something changed.  We had economic growth fueled by the free market system, incentivized by the profit motive.  Jump now to the 21st century.  The average American in 2007  enjoyed 35% more real income than 30 years ago, and every income bracket has benefited.  In 1850 the average life expectancy was 38 years.  Today it is 78.  The first public school opened in Boston in 1817.  Today we have 13 years of mandatory taxpayer funded education in all 50 states.  All of this is funded by the greatest antipoverty program ever known.....the free enterprise system.  As professor of economics (NYU) William Easterly stated, "profit-motivated capitalism is still the best case for the poor."

Of course, we will always need the safety net for the hard core poor mentioned above.  But in looking at poverty here and around the world, social welfare programs are the band-aid.  Free enterprise is the cure.

The "Evils" Of Outsourcing

Outsourcing is the contracting out of an internal business process to a 3rd party.  In short, it often manifests itself in a company hiring cheap overseas labor which replaces domestic jobs.  On the surface, this seems disturbing.  But there is more than initially meets the eye.  First, we are talking about a global economy, and if a domestic company is producing a labor-intensive product, they had best produce that product in a low cost labor market, or they could be out of business.  Their international competition most certainly will have low unit labor costs, and their final prices will reflect that.  A politician may wring his/her hands about it, but short of throwing up tariffs, there is nothing that can be done.  And you won't find a legit economist on the planet that would agree to the old days of high tariffs.

By the same token, those that complain the loudest about outsourcing never even mention "insourcing".   That is, international companies like BMW and Michelin locating plants in South Carolina, and Honda, Nissan, Mercedes, and Hyundai having manufacturing in Alabama.  It is Europe, with its liberal labor practices, high tax rates, and restrictive tariffs that has been outsourcing millions of jobs. 

The upshot is that globalization has resulted in a loss of some jobs.....unionized factory jobs in autos, steel, and textiles.  But manufacturing insourcing has more than offset this in right-to-work states.  By the same token, there have been significant increases in the services industries, technology, and knowledge based industries.  Nonetheless, some would balk at the service industry...they would argue that it doesn't pay well.  But many service based jobs (trade, finance, insurance, banking, retail, travel, delivery, education, healthcare, entertainment, government, etc) have very competitive wages.  And here is the salient point:  A booming service economy is a symptom of economic sophistication.