When businesses can respond to problems and needs, they can transform lives. Free enterprise can improve your economic mobility, safety, productivity, life expectancy—in your local community and across the globe.
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 problems solved for people all over the world.
Economic Mobility and Inequality
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.
- 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.
- 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.
Myth: Scandinavian countries like Sweden and Denmark have better economic mobility and equality.
Free Market Fact: The comparison often overlooks the fundamental differences in wage structures.
- In Scandinavian countries, where wages are more compressed, a modest increase in income can propel individuals to a higher quintile. In the U.S., the bar is set higher, requiring a more substantial income boost for upward mobility.
Myth: Dynastic wealth is perpetuated through generations.
Free Markets Fact: Looking at the Forbes 400 in 1982, only 69 individuals or their heirs retained their positions in 2014.