Enjoy capitalism’s blessings
Published in The National Business Review (Auckland), 6 December 2019
Over the past few months, you could not drive through any of our big cities without seeing some strange advertising messages. They were strange because, in our world of doom and gloom, they were spreading good news.
So in large letters, the campaign told us that:
- polio has been 99% eradicated across the globe.
- life expectancy in New Zealand has increased by 12 years since 1950.
- takahē numbers have tripled since 1981.
- 80% of New Zealand’s electricity is from renewable sources.
- globally, extreme poverty has halved since 2002.
For the advertiser, a fund management company, these facts establish “a future worth saving for.” To me, they also demonstrate a present worth celebrating.
We are not doing that enough. Sometimes we denigrate our successes. And we do not even realise it.
Last month, I spoke at a conference of investment professionals in Australia. Also presenting at the conference was a professor of corporate sustainability and environmental finance. It was all under Chatham House rules, so I can reveal no details.
The professor painted a gloomy picture of our planet and concluded her slideshow with a satellite image of the earth at night. It showed bright spots, especially in those countries and cities with high levels of economic development, while the poorer parts of the world were literally in the dark.
Still in the dark
Whenever I see such satellite pictures, I feel sorry for those people who do not have access to electricity yet. According to the International Energy Agency, there are still 860 million people without electricity – roughly 11% of the global population. Fortunately, that figure is down by 120 million compared to the previous year.
For the professor meanwhile, the satellite image showed something different. She explained to her audience that all these lights at night represented an “unproductive” use of energy. Worse, 80% of this energy would be derived from fossil fuels – and all this only to turn the night into day for no good reason.
I was gobsmacked when I heard that. And I wondered whether the professor would prefer to walk in the dark from her office to her (presumably) electric car at night. I hope she switches on the headlights as she drives home. And I am sure she does not use candles to illuminate her home office.
What blatant hypocrisy for anyone living in Australia to decry that Australia’s eastern seaboard look like a chain of bright pearls on night-time satellite images. I am sure at least 860 million people on this planet would love to swap their lives for the luxury of electricity. Just as over 2.6 billion people would appreciate access to clean cooking instead of relying on solid biomass, kerosene or coal as their primary cooking fuels.
Fortunately, if we only let economic freedom and capitalism run their ways, we will spread prosperity to every corner of the globe. And if that strikes you as hyperbole, then I invite you to ponder the list compiled by our Swedish friend and think tank colleague Johan Norberg. It is the perfect response to people like that Australian sustainability professor, and it goes like this:
Norberg delivers a useful reminder that our broadly liberal economic order is delivering stunning improvements to human welfare. It is a necessary reminder, too, because too many politicians, business leaders and academics nowadays seem to believe that radical changes to our system are necessary to deal with social, economic and environmental challenges.
There is no silver bullet against such a gloomy, anti-capitalist mentality. But pointing out the facts helps.
In our moderately free-market New Zealand, we have seen stable or falling income and expenditure inequality over the past decades. We have a functioning, flexible, jobs and income creating labour market. And many countries would envy us for our clean, affordable, reliable and subsidy-free electricity market. These are just three examples that show how liberal, market-based solutions work.
In contrast, there are serious problems in those parts of our economy heavily regulated or run by government. Just think of housing and development, transport and education. In each of these sectors, government is the dominant factor, and I hardly need to point out these are not the best-functioning parts of our economy.
In a world in which it has become fashionable to blame markets and call for the government to fix problems, we should not let such empty rhetoric pass.
The liberal political and economic order which started with the Enlightenment and spread since has created prosperity on a hitherto unimaginable scale. Where we allow it, it will continue to do so. That is my reason to be optimistic at the end of this year.