Prosperity just part of a flourishing society

One of the most interesting parts of economics are natural experiments. There is no need to philosophize. You can actually see how things work.

For instance, if we were talking about what’s a better way to rank society — socialism or capitalism — we could theorize about it. Or we could look at actual real- world examples. We could see how West Germany stacked up against East Germany. Or we could look at how North Korea stacked up against South Korea. Or even how Cuba stacked up against Puerto Rico. And then we could look at these cases and see which are the more prosperous societies. If we did that, I think we would find that the capitalist societies are far more successful, that people are dying to get into those countries, whereas people are literally dying to get out of the other places, the ones with socialist systems.

We can do a real- world experiment on the motion, are billionaires moral? Should they exist? We have countries in the world which have a lot of billionaires. And we have countries which have no billionaires. And the countries which have a lot of billionaires score very highly on every index that you would want to score highly on: happiness, well- being, income. And we’re not just talking about the United States. We’re talking about Canada, we’re talking about all the Scandinavian countries whom we marvel at their egalitarianism. All those Scandinavian countries have lots of billionaires, even more than the United States on a per-capita basis. And the places where they don’t have lot of billionaires are the kind of places where you would probably not want to live. They have dysfunctional societies and dysfunctional economies. What this tells me then is that if you have a functional society and a thriving economy, it will naturally create lots of rich people.

There’s a belief today that people are unhappy because they see wealth inequality around them and they hear these factoids that Bernie Sanders unveils debate after debate after debate. But are people really that unhappy? Recent studies show 70 per cent of Americans think the U. S. economy is doing great, and 90 per cent are very happy with their lives. Isn’t it more likely that we had a big economic shock a decade ago followed by a slow recovery? And now as that recovery is going on, people actually aren’t quite as unhappy as they used to be? It’s not really a crisis of capitalism, it was just a slow recovery. As the recovery goes on people become a lot more satisfied with capitalism. We need to focus our policy on making sure that this continues so that we have a highly productive economy.

If you want tomorrow to be better than today, if you want to have

CAPITALIST SOCIETIES ARE FAR MORE S SUCCESSFUL.

more opportunity for your children, if you want higher standards of living, if you want the kind of innovative economy that can actually solve the climate- change problem while also raising living standards, it is going come from a dynamic, capitalist economy where people innovate, partially, because they could become rich. And then taxes from that could help finance and expand on basic science research. If that’s the world we want, that’s going be coming from the current capitalist system. Not a fantasy system that only exists in a misremembered past about Scandinavia and in a magazine.