“The question is which system has the greatest chance for
enabling poor people to improve their lives?” Milton Freedman
says, “And on that, the evidence of history speaks with a single voice. The
freer the system the better off the ordinary poor people have been.” Is that
really true, though? In many ways, yes. The economy grows and inflation
declines. Countries become richer, economic successes. From the outside
capitalistic societies look like miracles at work. Harmonious sequences of independent
free thinkers creating opportunities and profiting from them in a scalable
fashion. Yet, if you dive deeper, the reality is jarring. For the average person,
day to day harsh
realities of life are overshadowed by the economic progress seen in the
dollar signs. Much of the economic gains accrue to the rich and not the middle-
and lower-class participants. As a result, many were not seeing their lives
improve.
When you remove the
social safety nets, does that improve prosperity through free market?
The western world has touted
that Capitalism provides the best
opportunity for the poor to reach economic freedom. Many citizens are fed
the notion that by removing restraints on the free market, they will get the
full benefits of the free market. Less regulations means more money for the
people. The reality is that removing those restraints ends up making it harder
for people to improve their lives because it takes time for the free market to
give returns on investments. Many will go years before they can cash in on
their pensions and benefits of privatized infrastructure. Often many see in
America and Chile that those who pay into their retirement plans over decades
find themselves with returns
that are less than the threshold for living in poverty. This affects
everyone in the middle and lower class.
Who is affected because of this?
Well marginalized communities of course. These guard rails are in place to benefit
everyone and minimize the effects of greed and corruption. They act as an
accountability system to make sure that organizations don’t try to take
advantage of the system to cut expenses and line
their pockets with the savings. When that accountability is gone, what is
left to balance the power structure?
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