The United Nations reported on November 4, 2010 “There had been tremendous advances all over the world since 1970, as indicated by the Human Development Index… .” This Index measures health, education, and income levels across the globe. Some may assert it is not a comprehensive measure of the well being of the world’s inhabitants, as it downplays issues like the environment and human rights abuses. We take no issue there, however improvements in mortality and education should hopefully translate into improvements in other areas. Falling poverty rates are also a good measure of progress – and have declined dramatically on a global basis. Most noticeably, countries that practice some form of capitalism have benefited the most.
As the current economic crisis begins to ebb and signs of recovery materialize, it is useful to consider the positive role capitalism has played in fostering these advances throughout the globe. There is always a desire to create stifling legislation following financial crises in an attempt to alter behavior and prevent future crises. We agree there should be legislation to prevent the type of abuses observed in things like the residential mortgage markets (although we suspect laws already in place were broken and perpetrators need merely be prosecuted). However, while the motivation for increased legislation is good, the reality is further impediments to progress typically result from legislative overreach. In unforeseen ways, the legislation results in harming the constituents policy makers we’re seeking to protect. It would be appropriate to ponder the great strides made during the last 40 years before embarking on policies that would hinder further gains.