Since 1970, the percentage of the world’s population living on the equivalent of less than a dollar a day has fallen by more than 80 percent. Hundreds of millions of people have been pulled out of grinding deprivation.
This miracle was not the result of U.N. development projects or U.S. foreign aid. It was free trade, rule of law, property rights and entrepreneurship that achieved this miracle. In China alone, free trade and foreign investment lifted 400 million Chinese out of absolute poverty between 1981 and 2001.
Whatever the Occupy movement claims, every American earning more than $34,000 a year is in the world’s top 1 percent, as World Bank economist Branko Milanovic calculates in his book “The Haves and the Have-Nots.” Americans make up less than 5 percent of the planet’s population, but we’re about half the members of the world’s 1 percent. And we’ve accomplished that through our commitment to free enterprise.
2. Free markets are driven by greed.
I once asked Charles Schwab how he built the $16 billion investment company bearing his name. He never said a word about money. He spoke instead about accomplishing personal goals, creating good jobs for employees and the sacrifices along the way — including when he took a second mortgage on his home so he could make payroll.
Entrepreneurs are rarely driven by greed. According to Careerbuilder.com, in 2011, small-business owners made 19 percent less money per year than government managers. And as Northwestern University business professor Steven Rogers has shown, the average entrepreneur fails about four times before succeeding.
Free markets and entrepreneurship are driven not by greed but by earned success. For some people, earned success means business success, while for others, it means helping the poor, raising good kids, building a nonprofit, or making beautiful art — whatever allows people to create value in their lives and in the lives of others.
Earned success gets at the heart of “the pursuit of happiness.” The General Social Survey from the University of Chicago reveals that people who say they feel “very successful” or “completely successful” in their work lives are twice as likely to say they are very happy about their overall lives than people who feel “somewhat successful.” And it doesn’t matter if they earn more or less; the differences persist.
3. Free enterprise breeds envy.
Americans don’t resent the wealthy. In a poll in April, the Pew Research Center found that 88 percent said they admired people who get rich by working hard.
This is one way the United States is exceptional. In the World Values Survey conducted between 2005 and 2007, researchers asked people in 54 nations whether success flows from hard work or from luck and connections. Americans were more likely than people in other developed countries — twice as likely as the French, for example — to say success comes from hard work.