No contest: Capitalism vs socialism

We should celebrate how capitalism has made the poor substantially richer. And we must hope that it is not a lesson our political class forgets entirely

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A clear divide
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David Atherton
On 19 March 2013 12:52

The United Nations has just published a reportThe Rise of the South: Human Progress in a Diverse World, which says that “Never in history have the living conditions and prospects of so many people changed so dramatically and so fast.”

The numbers look impressive. Absolute poverty, defined as "a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information" (currently those who live on $1.50 a day or less as of 2011), has fallen in the East Asia and Pacific region from 77.2 percent to 14.3 percent between 1981 and 2008. In South Asia the figures also fell an impressive 61.1 percent to 36 percent. 

It is estimated that an astounding 500 million Chinese people have be brought out of poverty and some 250 million in India. Global poverty has halved from about 40 percent to 20 percent in the same timeframe.

Be in no doubt that this is a mainly down to free enterprise and free trade, not Stalinist Five Year Plans, controlling the means of production, and massaging the tractor production statistics. This is pure, canine-brandishing, red-meat wealth creation.

Paradoxically China’s so called Five Year Plan is nothing more challenging than a desire for sustainable growth, industrial upgrading and promoting domestic consumption.

Of course, history being what it is, it’ll come as no surprise that economic freedom leads to a greater standard of living. It was obvious when the Berlin Wall came down in 1989, for example, that West Germany had a far higher standard of living than East Germany; the Trabant didn’t quite stand up to the Mercedes.  89,000 East German workers migrated to the West as the hugely inefficient East German industry created an economic climate comparable to worst plight of southern Italy or Southern States of America.

The Korean divide is similarly instructive. Under the control of Japan since 1910, Korea was invaded by the USSR in August 1945 and, like Germany, was divided into two: Communist North Korea and capitalist South Korea.

Half a century later, many of you will have seen satellite photographs of the two Korean states at night; if the South is festooned with lights, it’s fair to say the North looks pretty sorry for itself. And so it should: South Korea’s Samsung’s Galaxy S4 Smartphone is this year’s must have while, nuclear weapons aside, the North’s tech industry is hardly renowned.

China is of course slightly unique; its commitment to democracy and human rights is comparable to Eric Joyce MP’s commitment to peaceful resolution. Only this week Sky reporter Mark Stone was detained for three hours for daring to utter ‘Tiananmen Square’ and ‘1989’ in the same sentence.

But worse still would have been the dual yokes of oppression and poverty. Under Mao, estimates of deaths seem to vary widely but usually measure in the tens of millions; total state control of the economy yet again ensured starvation was coupled with political oppression.

But China began its metamorphosis from Maoism to capitalism in 1978. Leaving private enterprise to deliver the goods, like India, the increase in GDP has been phenomenal, averaging 9.4 percent per year ever since.  By 2016 China’s GDP is set to overtake America’s.

It is no stretch to conclude that there is a clear correlation between higher wealth and lower state activity.  

Meanwhile, on Wednesday March 13th, the EU Parliament was getting to grips with these life changing decisions: “Definition, description, presentation, labeling and protection of geographical indications of spirit drinks”. We can all sleep soundly at night.

Our Asian counterparts, unlike the European Union and to a lesser extent America, do not have the tick box culture of health and safety, 48 hour directives, jobsworth civil servants or local government officers. They are freer economically.

And that is particularly galling for us in Britain, given our history of classical liberal free trade - something America picked up and continued in the 20th century. But we in the West, and particularly Europe, are regressing as a geo-political entity. The EU is shriveling into an entity of virtually no influence in large part due to economic centralisation, lack of tax competition, and needless red tape.

Alas in the Westminster and Brussels bubbles there are still some well-thumbed copies of Das Kapital. 

The party political bunfight over what to do with the economy has party leaders tripping over themselves to give us their version of what interference may nudge GDP up an extra 0.1 percent. I suppose after George Osborne has got to Plan Z he could always launch plan A1 and add a few more grains of sand to the crankshaft bearing. 

Currently it seems it is a self-flagellating exercise on how much government spends and who can best spend it.

It’s fair to say that the Chinese equivalent of Michel Buerk is not quite reporting on harrowing pictures of staving Londoners; but we may yet need some kind of begging bowl. We are already all too aware that China holds much of America’s debt.

For now let us celebrate how capitalism has made the poor substantially richer while socialism condemns a society to penury. And let us hope that it is not a lesson our political class forgets entirely.

David Atherton is Chairman of Freedom2Choose, which seeks to protect the informed choices of consenting adults on the issues of smoking. Follow him on Twitter: @DaveAtherton20

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