Capitalism and the poor
In her book Where We Stand: Class Matters, bell hooks claims to show how class intertwines with race and gender to exacerbate the economic and psychological plight of the poor. Yet, it’s riddled with worn-out clichés, myths, unsubstantiated claims, and downright falsehoods.
Before I launch into my criticisms, I want to point out that I know poverty from personal experience. I know what it feels like not to have the clothes, the amenities, the toys, the gadgets, the material symbols deemed important by others. I felt that way throughout most of middle- and high school. I have seen the suffering and inhumanity of true poverty, and it has always touched me deeply and personally. By no means do I take for granted what I have. A lot of hard work went into my being were I am today, work on the part of my parents, me and my husband.
Nevertheless, not only from the total sum of my own experience, but also as scholar of philosophy, politics and economics, I disagree with hooks on several grounds. In the following I will respond to three themes in hooks’ book: the state of poverty; wealth as a zero-sum game; and wasting resources.
With respect to the state of poverty in the U.S., hooks quotes Eisenstein: “‘More than 38 million people live in poverty in the United States’”(2000, p. 64). This figure is consonant with 2008 U.S. Census data on poverty. However, the way the Census Bureau defines poverty has been disputed, especially by the Left, because it classifies people as poor who really would not be considered truly poor. For instance, Bruce Bartlett notes the following facts about the people the Census Bureau defines as poor, based on various government reports: “91 percent of those in the lowest 10 percent of households — all officially poor — own color TVs, 74 percent own microwave ovens, 55 percent own VCRs, 47 percent own clothes dryers, 42 percent own stereos, 23 percent own dishwashers, 21 percent own computers and 19 percent own garbage disposals.”
Suppose that the Census Bureau’s data does also capture those people we would truly deem to be poor, those at the lowest rung of the economic ladder. Those people, according to hooks, are getting poorer and “suffer more intensely now than ever before in our nation’s history” (p. 121), while the “rich are getting richer” (2000, p. 64).
Yet, judging by historical Census data, this bleak picture does not fit with reality. In 1959 the poverty rate (people) in the United States was 22.4%. It has since steadily decreased, down to 12.3% in 2006. Moreover, as Johan Norberg notes in his excellent book In Defense of Global Capitalism, “[o]nly 5.1 percent of the Americans belonging to [the] poorest quintile in 1975 were still there in 1991. In the meantime nearly 30 percent of them had moved up into the wealthiest one-fifth, and 60 percent of them had arrived in the wealthiest two-fifth” (Norberg, 2003, pp. 82-83). Further, “on average, those who fall below the poverty line in the United States only stay there for 4.2 months. Only 4 percent of America’s population are long-term poor, that is remain poor for more than two years” (p. 83).
Economic freedom, meaning capitalism, does not just allow the rich to get richer. It increases prosperity, economic growth, life expectancy and living standards for all, and especially the poor. Consider the state of the world in terms of economic prosperity:
Since 1965, the income of the average world citizen has doubled. This is not because the rich countries have multiplied their incomes. During this period, the richest fifth of the world’s population increased its average income by 75 percent. For the poorest fifth of the world’s population, the increase has been faster still, with average incomes more than doubling during the same period. The wealth of the Western countries increased by 40 percent, Latin America by 60 percent, Africa’s by 80 percent, and on the most populous continent, Asia, average incomes increased by an astonishing 300 percent. (Norberg, 2003, p. 25).
Absolute poverty went from 85% in 1820 down to 50% in 1950, and to 33% in the 1980s (p. 26).
Statistics concerning declining poverty and increasing wealth are also crucial when judging another one of hook’s themes throughout the book: Wealth is a zero-sum game; to attain it means exploiting and doing injustice to others. Here are some representative quotes from hooks: “In the working-class and poor neighborhoods of my upbringing, most folks believed that one could not be rich without exploiting others” (2000, p. 71); “[M]ost rich folks protect their class interests by preying upon the poor and needy” (p. 75); “To be wealthy and remain committed to justice is no easy task” (p. 78); “[I]t is difficult to create and reproduce wealth without exploiting others” (p. 158).
The first lesson of economics is that wealth is not a fixed pie, where if the size of the piece you cut yourself necessarily affects the size of other people’s slices. In feudalist, slave-holding and war-making societies, it was true that a large amount of the wealth gained by some depended on the exploitation of others. By contrast, under capitalism, on balance people do not get wealthy by committing injustices.
Of course, we tend to pay more attention to the cases in which businesses cheat, run sweatshops in developing countries, or pay employees very small wages. Yet, cheating is not the norm in business. Think about it: If it were, the system would collapse; you would not be able to enter into trade with anybody. You could not go to the supermarket, the hair dresser or the doctor because you could not trust them. Nor do cheating, sweatshops and low wages persist for too long in the grand scheme of things. Cheaters get caught (remember Enron?), and working conditions and pay improve over time (e.g., American manufacturing now versus at the beginning of the Industrial Revolution).
Moreover, capitalism is a system based on individual rights — among others the right to property, free speech and the right to freely associate with people of your choosing. Capitalism, in order to function properly, relies on a legal system that protects people from force and fraud, and upholds contracts. That is why we can expose people who try to make profits by lying, stealing and cheating; and that is why we can choose not to trade with people who engage in unethical behavior, be it racism, sexism, exploitation etc.
With respect to alleviating poverty, not government with its welfare and wealth redistribution programs, but free enterprise and individual liberty are the real friends of the poor. America — the country with an economic system closest to genuine capitalism — is the most charitable out of all the developed countries, including larger welfare states, as data on charitable giving around the world shows: “[In 1995] Americans gave, per capita, three and a half times as much to causes and charities as the French, seven times as much as the Germans, and 14 times as much as the Italians.”
I know from personal experience how deeply Americans values generosity, kindness and charity. In college, for instance, I had no money to stay in the dorms during holidays; I was always invited to stay with friends. One time, during a semester break, I had to go to an immediate care clinic. The clinic refused to accept my international health insurance and wanted me to pay the bill upfront. A classmate, who I barely knew loaned me the money and let me stay at her house while I was recovering. Many of my friends donate their time and money to their favorite causes. The wealth and prosperity that capitalism has created allows us to support what we truly value, including finding cures for diseases, ending childhood hunger, animal rights, or providing education to those who cannot afford it. Hooks herself benefited from private charity receiving scholarships for her college education!
The last theme I want to examine is hooks’ claim that “the world’s resources are swiftly dwindling because of wastefulness of affluent cultures” (2000, p. 129). This is a popular and widely held belief, but there is good evidence against it:
Since antiquity, people have worried about running out of natural resources. Yet, amazingly, all the historical evidence shows that raw materials — all of them, even oil — have become more abundant rather than less. And there is no reason why that trend should not continue forever. The evidence is particularly strong that the trends in food production and nutrition are benign despite rising population. The long-run price of food is down sharply, even relative to consumer products, as a result of increased productivity. And per person food consumption has risen during the last 30 years. (Richman & Simon, 1996, November 11).
Simon’s edited book The State of Humanity provides more detail on this.
Julian Simon is most famous for his wager with Paul Ehrlich. Ehrlich had prognosticated in his book The Population Bomb that the world’s population growth is threatening to outstrip the growth of food supply and natural resources. Julian Simon challenged Ehrlich’s claim by proposing a wager on the price of five metals: copper, chromium, nickel, tin and tungsten. Simon bet the prices of those metals would go down over ten years, Ehrlich bet they would go up, because if a resource is becoming scarcer, it becomes more expensive. Each bought, on paper, $200 worth of each metal. The result of the bet was this:
Between 1980 and 1990, the world’s population grew by more than 800 million, the largest increase in one decade in all of history. But by September 1990, without a single exception, the price of each of Ehrlich’s selected metals had fallen, and in some cases had dropped through the floor. Chrome, which had sold for $3.90 a pound in 1980, was down to $3.70 in 1990. Tin, which was $8.72 a pound in 1980, was down to $3.88 a decade later. Which is how it came to pass that in October 1990, Paul Ehrlich mailed Julian Simon a check for $576.07. (Regis, 1997, August).
By the way, Simon never cashed that check; it’s hung on the wall in his office.
Hook’s rhetoric — ad hominem attacks, hasty generalizations, false or unsubstantiated claims — completely undermines her credibility. This book does a great disservice to the poor.
October 23rd, 2009Topic: Economics, Politics Tags: bell hooks, book review, Capitalism, Ehrlich Simon wager, globalization, Johan Norberg, Julian Simon, Paul Ehrlich, Where We Stand
