The Cato Institute’s Michael Tanner devotes his latest National Review Online column to the Pope’s recent comments regarding poverty.
Pope Francis has come to the United States, bringing with him more criticism of capitalism than a Bernie Sanders rally. He speaks with eloquence, fervor, and great moral standing. He is also wrong.
The pope’s emphasis on the needs of the poor is important, especially in today’s politics, where poverty is often a public-policy sideline. But in calling attention to the problem, he fails to understand that free-market capitalism is not a cause of poverty, but a solution.
To see an example, the pope need look no further than his native Argentina. In 1980, less than 1 percent of Argentinians lived in extreme poverty (that is, on less than $2 a day), while in neighboring Chile, the extreme-poverty rate exceeded 15 percent. Today, while the proportion of Argentinians living in extreme poverty has risen slightly, to nearly 3 percent, Chile has seen the most dramatic reduction in poverty in Latin America. Fewer than 2 percent of Chileans now live in extreme poverty.
Overall economic growth tells a similar tale. After accounting for purchasing-power parity, per capita GDP was 12 percent higher in Argentina than in Chile in 1980. Today, Chile’s per capita GDP is 16 percent higher than Argentina’s.
What accounts for the difference? Following the fall of Salvador Allende, Chile embraced free-market capitalism. And while the initial economic gains were tainted by the country’s brutal dictatorship under General Pinochet, they have largely continued through the democratic governments that replaced the military regime.
