While naysayers may say otherwise, free enterprise and free markets have improved economic mobility, equality, safety, production, life expectancy, and overall happiness across the globe for years.
The myths and facts on free markets explained below are highlights from Johan Norberg’s “The Capitalist Manifesto: Why the Global Free Market Will Save the World.” These statistics aren’t just numbers—they represent lives changed, opportunities created, and a world moving toward a more inclusive and sustainable future.
Myth: Those born into the lower income quintiles face a daunting challenge to move up the economic ladder.
Free Market Fact: The chance of upward mobility remains strong.
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Recent data shows that among Americans born in the lowest quintile, 37% rise to one of the three highest quintiles. Even in the second lowest quintile, nearly half successfully climbed the economic ladder.
Myth: The American middle class is shrinking due to a decline in prosperity.
Free Market Fact: The common narrative of a shrinking middle class is actually a result of upward mobility.
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Individuals once considered part of the middle class have moved into higher income brackets, challenging the traditional understanding of class dynamics.
Myth: Those in the top quintile earn 16.7 times more than those in the bottom quintile.
Free Markets Fact: When accounting for taxes and transfers, the income gap is reduced from 16.7 times to a more modest four times.
Free Markets Fact: Over the last twenty years, our world has witnessed a remarkable transformation—a reduction of 70% in extreme global poverty.
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Each day, a staggering 138,000 people have risen out of extreme poverty.
Free Markets Fact: There are many other numbers that tell a compelling story of progress and positive change on a global scale over the last 20 years.
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Global life expectancy increased from 64 years to almost 73 years.
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Illiteracy dropped from 25.7% to 13.5%.
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Child labor (5-17) decreased from 16% to just under 10%.
Myth: American manufacturing has been wiped out with companies moving jobs overseas.
Free Markets Fact: American industrial production has doubled since 1980.
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American manufacturing has produced more due to improved production processes, despite shedding jobs.
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Over the past few decades, wages at every income level have increased by 50%, American industry expanded its output by more than half, and unemployment fell to record lows.
Myth: Economic growth hurts the environment.
Free Markets Fact: In our interconnected world, it’s the faster-growing, wealthier nations that have spearheaded advancements in processes and technologies and transportation that reduce waste and environmental impact.
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Wealthier nations have a strong track record of minimizing plastic pollution. The rigorous waste management systems in place significantly limit the amount of plastic ending up in nature or oceans.
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If every citizen in Europe and America were to completely halt their use of plastic, the impact on plastic emissions into the oceans would be negligible—underscoring the need for a broader, global approach.
Myth: Free markets may be efficient and may create growth, but it is at the expense of the happiness and well-being of those at the bottom of the income ladder.
Free Markets Fact: Free markets become a beacon of autonomy and freedom of choice, particularly for low-income earners, offering them avenues to exercise choice and control in their lives.
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The significance of this effect diminishes for high-income earners, as their financial standing already affords them many choices.
Go deeper: Want to see more of the common myths versus facts relevant in a discussion about free enterprise? Check out the full article from the U.S. Chamber of Commerce.
