Source: NYTimes, Sep 2016
The Great Enrichment began in 17th-century Holland. By the 18th century, it had moved to England, Scotland and the American colonies, and now it has spread to much of the rest of the world.
Economists and historians agree on its startling magnitude: By 2010, the average daily income in a wide range of countries, including Japan, the United States, Botswana and Brazil, had soared 1,000 to 3,000 percent over the levels of 1800. People moved from tents and mud huts to split-levels and city condominiums, from waterborne diseases to 80-year life spans, from ignorance to literacy.
Inequality of financial wealth goes up and down, but over the long term it has been reduced. Financial inequality was greater in 1800 and 1900 than it is now, as even the French economist Thomas Piketty has acknowledged. By the more important standard of basic comfort in consumption, inequality within and between countries has fallen nearly continuously.
In any case, the problem is poverty, not inequality as such — not how many yachts the L’Oréal heiress Liliane Bettencourt has, but whether the average Frenchwoman has enough to eat.
We can improve the conditions of the working class.Raising low productivity by enabling human creativity is what has mainly worked.
By contrast, taking from the rich and giving to the poor helps only a little — and anyway expropriation is a one-time trick. Enrichment from market-tested betterment will go on and on and, over the next century or so, will bring comfort in essentials to virtually everyone on the planet, and more to an expanding middle class.
What, then, caused this Great Enrichment?
Not exploitation of the poor, not investment, not existing institutions, but a mere idea, which the philosopher and economist Adam Smith called “the liberal plan of equality, liberty and justice.” In a word, it was liberalism, in the free-market European sense. Give masses of ordinary people equality before the law and equality of social dignity, and leave them alone, and it turns out that they become extraordinarily creative and energetic.
… sweet practical ideas for profitable technologies and institutions, and the liberal idea that allowed ordinary people for the first time to have a go, caused the Great Enrichment. We need to inspirit masses of people, not the elite, who are plenty inspirited already. Equality before the law and equality of social dignity are still the root of economic, as well as spiritual, flourishing — whatever tyrants may think to the contrary.