Money from rich countries has trapped many African nations in a cycle of corruption, slower economic growth and poverty

See Why Foreign Aid Is Hurting Africa by Dambisa Moyo in the WSJ. Excerpts:

"Yet evidence overwhelmingly demonstrates that aid to Africa has made the poor poorer, and the growth slower. The insidious aid culture has left African countries more debt-laden, more inflation-prone, more vulnerable to the vagaries of the currency markets and more unattractive to higher-quality investment. It's increased the risk of civil conflict and unrest (the fact that over 60% of sub-Saharan Africa's population is under the age of 24 with few economic prospects is a cause for worry). Aid is an unmitigated political, economic and humanitarian disaster."

"it's worth reminding ourselves what emergency and charity-based aid can and cannot do. Aid-supported scholarships have certainly helped send African girls to school (never mind that they won't be able to find a job in their own countries once they have graduated). This kind of aid can provide band-aid solutions to alleviate immediate suffering, but by its very nature cannot be the platform for long-term sustainable growth."

Whatever its strengths and weaknesses, such charity-based aid is relatively small beer when compared to the sea of money that floods Africa each year in government-to-government aid or aid from large development institutions such as the World Bank.

Over the past 60 years at least $1 trillion of development-related aid has been transferred from rich countries to Africa. Yet real per-capita income today is lower than it was in the 1970s, and more than 50% of the population -- over 350 million people -- live on less than a dollar a day, a figure that has nearly doubled in two decades.

Even after the very aggressive debt-relief campaigns in the 1990s, African countries still pay close to $20 billion in debt repayments per annum, a stark reminder that aid is not free. In order to keep the system going, debt is repaid at the expense of African education and health care."

"In 2005, just weeks ahead of a G8 conference that had Africa at the top of its agenda, the International Monetary Fund published a report entitled "Aid Will Not Lift Growth in Africa." The report cautioned that governments, donors and campaigners should be more modest in their claims that increased aid will solve Africa's problems. Despite such comments, no serious efforts have been made to wean Africa off this debilitating drug. The most obvious criticism of aid is its links to rampant corruption. Aid flows destined to help the average African end up supporting bloated bureaucracies in the form of the poor-country governments and donor-funded non-governmental organizations. In a hearing before the U.S. Senate Committee on Foreign Relations in May 2004, Jeffrey Winters, a professor at Northwestern University, argued that the World Bank had participated in the corruption of roughly $100 billion of its loan funds intended for development.

As recently as 2002, the African Union, an organization of African nations, estimated that corruption was costing the continent $150 billion a year, as international donors were apparently turning a blind eye to the simple fact that aid money was inadvertently fueling graft. With few or no strings attached, it has been all too easy for the funds to be used for anything, save the developmental purpose for which they were intended.

"According to corruption watchdog agency Transparency International, Mobutu Sese Seko, Zaire's president from 1965 to 1997, is reputed to have stolen at least $5 billion from the country.

It's scarcely better today. A month ago, Malawi's former President Bakili Muluzi was charged with embezzling aid money worth $12 million. Zambia's former President Frederick Chiluba (a development darling during his 1991 to 2001 tenure) remains embroiled in a court case that has revealed millions of dollars frittered away from health, education and infrastructure toward his personal cash dispenser. Yet the aid keeps on coming.

"A constant stream of "free" money is a perfect way to keep an inefficient or simply bad government in power. As aid flows in, there is nothing more for the government to do -- it doesn't need to raise taxes, and as long as it pays the army, it doesn't have to take account of its disgruntled citizens. No matter that its citizens are disenfranchised (as with no taxation there can be no representation). All the government really needs to do is to court and cater to its foreign donors to stay in power. Stuck in an aid world of no incentives, there is no reason for governments to seek other, better, more transparent ways of raising development finance (such as accessing the bond market, despite how hard that might be). The aid system encourages poor-country governments to pick up the phone and ask the donor agencies for next capital infusion. It is no wonder that across Africa, over 70% of the public purse comes from foreign aid.

In Ethiopia, where aid constitutes more than 90% of the government budget, a mere 2% of the country's population has access to mobile phones. (The African country average is around 30%.) Might it not be preferable for the government to earn money by selling its mobile phone license, thereby generating much-needed development income and also providing its citizens with telephone service that could, in turn, spur economic activity?

Look what has happened in Ghana, a country where after decades of military rule brought about by a coup, a pro-market government has yielded encouraging developments. Farmers and fishermen now use mobile phones to communicate with their agents and customers across the country to find out where prices are most competitive. This translates into numerous opportunities for self-sustainability and income generation -- which, with encouragement, could be easily replicated across the continent."

"In Cameroon, it takes a potential investor around 426 days to perform 15 procedures to gain a business license. What entrepreneur wants to spend 119 days filling out forms to start a business in Angola? He's much more likely to consider the U.S. (40 days and 19 procedures) or South Korea (17 days and 10 procedures).

Even what may appear as a benign intervention on the surface can have damning consequences. Say there is a mosquito-net maker in small-town Africa. Say he employs 10 people who together manufacture 500 nets a week. Typically, these 10 employees support upward of 15 relatives each. A Western government-inspired program generously supplies the affected region with 100,000 free mosquito nets. This promptly puts the mosquito net manufacturer out of business, and now his 10 employees can no longer support their 150 dependents. In a couple of years, most of the donated nets will be torn and useless, but now there is no mosquito net maker to go to. They'll have to get more aid. And African governments once again get to abdicate their responsibilities."

"Under the auspices of the U.S. Food for Peace program, each year millions of dollars are used to buy American-grown food that has to then be shipped across oceans. One wonders how a system of flooding foreign markets with American food, which puts local farmers out of business, actually helps better Africa. A better strategy would be to use aid money to buy food from farmers within the country, and then distribute that food to the local citizens in need.

"Large dollar-denominated aid windfalls that envelop fragile developing economies cause the domestic currency to strengthen against foreign currencies. This is catastrophic for jobs in the poor country where people's livelihoods depend on being relatively competitive in the global market.

To fight aid-induced inflation, countries have to issue bonds to soak up the subsequent glut of money swamping the economy. In 2005, for example, Uganda was forced to issue such bonds to mop up excess liquidity to the tune of $700 million. The interest payments alone on this were a staggering $110 million, to be paid annually.

The stigma associated with countries relying on aid should also not be underestimated or ignored. It is the rare investor that wants to risk money in a country that is unable to stand on its own feet and manage its own affairs in a sustainable way."

"Africa remains the most unstable continent in the world, beset by civil strife and war."

"Since 1996 ... Africa had more wars than the rest of the world combined." 

"Civil clashes are often motivated by the knowledge that by seizing the seat of power, the victor gains virtually unfettered access to the package of aid that comes with it."

"Proponents of aid are quick to argue that the $13 billion ($100 billion in today's terms) aid of the post-World War II Marshall Plan helped pull back a broken Europe from the brink of an economic abyss, and that aid could work, and would work, if Africa had a good policy environment.
The aid advocates skirt over the point that the Marshall Plan interventions were short, sharp and finite, unlike the open-ended commitments which imbue governments with a sense of entitlement rather than encouraging innovation. And aid supporters spend little time addressing the mystery of why a country in good working order would seek aid rather than other, better forms of financing. No country has ever achieved economic success by depending on aid to the degree that many African countries do.

The good news is we know what works; what delivers growth and reduces poverty. We know that economies that rely on open-ended commitments of aid almost universally fail, and those that do not depend on aid succeed. The latter is true for economically successful countries such as China and India, and even closer to home, in South Africa and Botswana. Their strategy of development finance emphasizes the important role of entrepreneurship and markets over a staid aid-system of development that preaches hand-outs.

African countries could start by issuing bonds to raise cash. To be sure, the traditional capital markets of the U.S. and Europe remain challenging. However, African countries could explore opportunities to raise capital in more non-traditional markets such as the Middle East and China (whose foreign exchange reserves are more than $4 trillion). Moreover, the current market malaise provides an opening for African countries to focus on acquiring credit ratings (a prerequisite to accessing the bond markets), and preparing themselves for the time when the capital markets return to some semblance of normalcy.

Governments need to attract more foreign direct investment by creating attractive tax structures and reducing the red tape and complex regulations for businesses. African nations should also focus on increasing trade; China is one promising partner. And Western countries can help by cutting off the cycle of giving something for nothing. It's time for a change.

Dambisa Moyo, a former economist at Goldman Sachs, is the author of "Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa."

Corrections & Amplifications

In the African nations of Burkina Faso, Rwanda, Somalia, Mali, Chad, Mauritania and Sierra Leone from 1970 to 2002, over 70% of total government spending came from foreign aid, according to figures from the World Bank. This essay on foreign aid to Africa incorrectly said that 70% of government spending throughout Africa comes from foreign aid."

On the Bright Side: The Stability of Glaciers in the Astore Basin of Northwestern Himalaya

By Craig D. Idso of Cato.

"Glaciers have long been viewed as vulnerable to CO₂-induced global warming, as many have experienced declines in thickness and/or extent over the past century. However, there remains much to be learned about this topic and how glaciers may respond to climate change in the future, as evidenced by the recent work of Farhan et al. (2015).

Introducing the rationale for their study, the team of five researchers write that it is “difficult to develop a clear understanding of climate-change impacts in the Hindukush–Karakoram–Himalaya region” of the Tibetan Plateau because of “substantial variability of glacier changes within the region (Fujita and Nuimura 2011), uncertainties related to the contribution of glaciers to runoff (Immerzeel et al. 2011), variable retreat rates (Kumar et al. 2008) and strong spatial variations in glacier behavior related to topography and climate (Scherler et al. 2011).” They also note that “uncertainties in projections of glacier changes (Cogley 2011; Lutz et al. 2012), controversial and erroneous reports stated by IPCC (2007) and revealed by Cogley et al. (2010), lack of knowledge, paucity of long term records (Kaser et al. 2006), unsuitable or uncertain data and methods, failure to publish existing data (Barnett et al. 2005), very limited mass balance records particularly in the Upper Indus River Basin (UIB) (Bhutiyani 1999), and even excessive classification and secrecy regarding fundamental hydrological data collectively make these problems much worse.”

Against this backdrop, the five scientists engaged in a new effort to reduce these uncertainties by investigating the impacts of climate change on this glaciated region. In doing so, they focused on the Astore Basin, a high-altitude 4,000 km² sub-catchment of the Upper Indus River Basin located in the northwestern Himalayan region of Pakistan, analyzing the relationship between various meteorological, hydrological and satellite remote sensing data sets over the past four decades.

Among the many findings of their study, Farhan et al. report that trend analysis of the mean monthly snow cover area revealed “no significant depletion trends” over the period 2003–2010, which was “mainly because of the fact that there was also no trend in the summer mean temperature during that period.” In addition, they write that statistical analyses reveal the annual stream flow fluctuations in the Astore River over the period 1980–2010 were “predominantly influenced by variations in precipitation rather than the alteration in catchment temperatures; consequently, the stream flow fluctuations were not governed by enhanced glacier ablation and retreat.”

With respect to glacier change, Farhan et al. note that of the 98 glaciers in this region covering an area greater than one square kilometer, temporal image analysis for the period 1973-2013 showed that 28 glaciers experienced minor increases, 45 slightly decreased, and the remaining 25 appeared to be in a stable state. Not surprisingly, therefore, the overall total glacier area experienced a statistically insignificant decrease of 0.3 percent over the four-decade period, which the authors describe as a minor change, within the range of data accuracy and which suggests “quite stable conditions of Astore basin glaciers.” What is more, laser altimetry data of glacier thickness changes over the period 2003-2008 “also revealed stability or even a slightly growing trend.”

In summing up their findings, Farhan et al. state that the observed stability of Astore basin glaciers represents “a different response to global warming” in which “summer temperature reductions and positive trends in winter precipitation imply reduced ablation and increased accumulation … which may lead to balanced and/or positive glacier ice mass balance … and may explain one of the reasons for their relative insensitivity to warming.”

Whatever the case may be, one thing is certain—four decades of data reveal they are not doing what typical global warming theory would suggest!"

The ‘imaginary hobgoblin’ of rising income inequality

From Mark Perry.

"We hear all the time about “rising income inequality” in America (there are more than 200,000 Google search results for that term), about “the rich getting richer and the poor getting poorer,” the “stagnant or disappearing middle class,” all of recent income gains going to the rich,” the lack of income mobility and other narratives of pessimism. And yet, nobody seems to have shared those negative narratives with the Census Bureau, which released new data today on “Income and Poverty in the US: 2014,” because some of those data tell a much different story:

 

 


1. The top chart above shows the shares of total income earned by the top 20%, top 5% and bottom 20% of US households from 1993 to 2014 (from Table A-2). In 1993, 48.9% of total income went to the top quintile of US households, and 21 years later in 2014, the share of income going to the top 20% has increased to only 51.2%. Likewise, in 1993 the share of total income going to the top 5% of US households was 21.0%, and that share had increased to only 21.9% last year. Interestingly, the 21.9% share of income earned by the top 5% last year was lower than the share that group earned in 8 of the last 15 years. Over the last two decades, the income share of the top 20% (top 5%) has been remarkably stable at about 49-51% (21-22%) and there has been no statistical evidence of “rising income inequality” according to this measure.

2. The bottom chart above shows the annual Gini index of income inequality (a statistical measure of income dispersion that quantifies income inequality on a range from 0.0 for complete equality to 1.0 for complete inequality) for US households from 1993 to 2014 (also from Table A-2). Like the first two measures above, the Gini index measure of income dispersion reveals that there has been no significant trend of “rising income inequality” for US household incomes in recent decades. The Gini index in 1993 was 0.454 and last year it was 0.480, a slight decrease from 0.482 in 2013, and this statistical measure of income inequality has shown remarkable stability for the last several decades in a narrow range between 0.46 and 0.48.

MP: Whether we look at Census Bureau data on the share of total income going to the top fifth and top 5% of American households, or Census data on Gini coefficients for US household income, there is very little statistical support for the commonly held view by the public, academia, and the mainstream media that income inequality has been rising in recent years or decades. A more accurate description of income inequality over the last several decades in the US would be to say that it has been remarkably stable for more than two decades starting about 1993.

And yet, in a December 2013 speech, President Obama described rising income inequality as the “defining challenge of our time” and promised that for the rest of his presidency, he and his administration would focus all of their efforts to stop the increase in income inequality. But why are we even having a national debate about solutions to the “non-problem” of rising income inequality that doesn’t even exist according to several standard Census Bureau measures? Maybe it’s another example of what H.L. Mencken called an “imaginary hobgoblin”:

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary."

The San Antonio Express-News Printed My Article On The Pope, Economics And The Environment

I was surprised by how both an Express-News editorial and St. Mary's professor Vincent Johnson so uncritically praised the pope's views on economics and the environment ("Our hope: Give us hell, Pope Francis," and "Pope's brave embrace of environmentalism inspires," Sept. 20).

The editorial said the pope is worried about the poor and “idolatry of money” and that unfettered markets could lead to “a new tyranny.” It also mentioned that trickle-down theories have "never been confirmed by the facts."

Some facts run counter to the pope's narrative.

Capitalism may serve the poor well. The poorest 10% of the population in the most capitalist countries have incomes about nine times higher than in the least capitalist countries. Life expectancy is much higher while infant mortality is much lower. Child labor rates are much lower, too.

From 1949-1961, as Charles Murray has pointed out, the poverty rate in the U. S. was cut in half, a time when we had few government programs.

Robert Rector of the Heritage Foundation reported in 2011 that 75% of poor households had air conditioning while 92% had microwave ovens. Once even the rich could not buy them. Capitalism brought products like these, and many others, to the masses, with constantly increasing ownership rates.

Hundreds of millions of people have been lifted out of extreme poverty in the last few decades in China and India as they came to rely more on markets and less on government planning.

Economist Tyler Cowen observed in The New York Times that global inequality fell in the last 20 years, partly due to improvements in China and India. International trade played a big role, too.

The pope also "advocates a thoughtful and reasonably regulated capitalism." Our economy has hardly been unregulated.

In the U.S., for example, we have many environmental regulations and an Environmental Protection Agency. We have recycling programs.

There is also the Corporate Average Fuel Economy (CAFE) standards that mandate each car maker achieve so many miles per gallon.

Regulatory spending by federal agencies is about nine times higher today than it was in 1970, adjusted for inflation. We add thousands of pages of new regulations each year.

Yet many regulations are not thoughtful and reasonable.

Electric cars get subsidized. If you buy as a Chevy Volt, you can get about $7,500 in the form of tax credits. But, as Megan McCardle reported, even if we all drove the Volt, U. S. emissions would only go down 3.5%.

There may also be environmental consequences from mining lithium, which is a component of car batteries.

Environmentalist Bjørn Lomborg has pointed that "The toughest global warming policy today is the European Union's commitment to cutting 20% of greenhouse gas emissions by 2020. This will cost $235 billion and cut temperatures at the end of the century by a measly 0.1ºF."

Johnson mentions that the pope is worried about wasting resources. But in 2008 the National Academy of Sciences reported that "Americans use about half as much energy per dollar of Gross Domestic Product (GDP) as they did in 1970." We are less wasteful than we used to be.

Johnson stressed the importance of the environment more than the editorial. But the EPA has reported that between 1980-2013, emissions of six principal air pollutants dropped by 62%. So there has been some good environmental news.

The pope seems either unwilling to acknowledge the benefits of capitalism and some environmental improvements over the last few decades or he is unaware of them. Whatever the case, his views should be viewed more critically.

Liberal Economist Dean Baker Is Against The Import-Export Bank

See Ex-Im mainly benefits Boeing and other corporate giants. Let it die! Excerpt:

"The bank's supporters insist that it reduces our trade deficit, increases jobs and makes a profit. All of these claims are true in the same way that a tariff on imported steel would reduce our trade deficit, increase jobs and earn money for the federal government.

For some reason, the same people who would be appalled at the idea of a tariff to help the U.S. steel industry are huge cheerleaders when it comes to the subsidies to major corporations from the Ex-Im Bank. And they get really angry when opponents point out this contradiction.

The Export-Import Bank is about subsidizing the sales of some of the country's largest companies. Fifteen large companies typically account for more than 85 percent of the loans issued or guaranteed by the bank, with Boeing alone often counting for more than half of the loans.

When telling us of the many jobs created by the bank's loans, bank supporters effectively assume that Boeing would not sell any planes without subsidized loans.

That is not the world we live in. Boeing may sell somewhat fewer planes, just as General Electric and Caterpillar Tractor might also sell somewhat less abroad. And they would make somewhat smaller profits on each of their sales, but it is simply dishonest to imply that their exports would go to zero without subsidies from the bank.

The part about the government making a profit on these loans is also beside the point. The federal government is among the world's lowest cost borrowers.

This means that it can almost always make money by borrowing and then lending to other borrowers at an interest rate between what the government pays and what the other borrower pays.

This may make a profit for the government, but it also means favoring some businesses at the expense of others. Those with access to Ex-Im Bank loans get lower cost credit, but because credit has been diverted to these favored customers, other borrowers will pay more.

That would be fine if we felt the government was doing a better job allocating credit than the market, but when Boeing gets more than half of the loans, that claim seems dubious.

The comparison to a steel tariff is useful, since the standard arguments that economists typically make against a tariff would also apply to the Ex-Im Bank. After all, a steel tariff will create jobs in the United States and generate revenue for the government, just as the government profits on the loans from the Ex-Im Bank.

The economist's argument is that although a tariff would increase the number of jobs in the steel industry, it would reduce the number of jobs elsewhere by forcing people to pay higher prices for steel.

In the same vein, making subsidized loans available to favored companies through the Ex-Im Bank has the effect of raising the interest rate paid by other borrowers.

In addition, it's not even clear that the bank will increase total exports. Since it gets foreigners to spend their dollars on Boeing planes and Caterpillar's tractors, they have less money to buy the products produced by other companies."

Read more here: http://www.sacbee.com/news/news-services/article35555799.html#storylink=cpy

Anthropogenic global warming is not per se a crisis or planetary emergency.

See Free Market Perspective on Pope Francis's Forthcoming Speech to Congress by Mark Lewis of CEI. Excerpt:

"What matters is how much warming there will be and with what impacts. Big, scary warming predictions come from climate models that increasingly overshoot observed warming.

The most comprehensive and accurate global temperature data come from satellite observing systems. In both the Remote Sensing Systems (RSS) and University of Alabama in Huntsville (UAH) satellite records of the bulk atmosphere (troposphere), the warming trend over the 36 year, 7 month record is 0.11°C per decade, which translates into a 21^st century warming of 1.2°C.

That is well within the bounds (0.3°C-1.7°C) of the Intergovernmental Panel on Climate Change’s (IPCC’s) lowest warming projection (RCP2.6), which assumes a 70% reduction in cumulative greenhouse gas emissions from 2010 to 2100 compared to baseline projections. In short, the satellite records show about the same warming rate that climate campaigners urge policymakers to achieve via draconian restrictions on carbon-based energy. Is this a great atmosphere, or what!

As to impacts, climate campaigners blame global warming for extreme weather events but there has been no trend in the strength or frequency of land-falling hurricanes globally since 1970.

In addition, as the IPCC Fifth Assessment Report (AR5) acknowledges, “there continues to be a lack of evidence and thus low confidence regarding the sign of trend in the magnitude and/or frequency of floods on a global scale,” and “there is low confidence in detection and attribution of changes in drought over global land areas since the mid-20th century.”

More importantly, despite relying on climate models that run too hot, the IPCC tacitly rejects the climate trilogy of terror popularized by Al Gore and other climate activists. Specifically, AR5 concludes that in the 21st Century, Atlantic Ocean circulation collapse is “very unlikely,” ice sheet collapse is “exceptionally unlikely,” and catastrophic release of methane from melting permafrost is “very unlikely.”

Here’s the big picture that is so often ignored in the global warming debate. Affordable, plentiful, reliable fossil fuels make the climate safer and the environment more livable. For example, since the 1920s, roughly 90% of all industrial carbon dioxide (CO2) emissions entered the atmosphere and the world warmed by about 0.8°C. If fossil-fueled development were “unsustainable,” we would expect skyrocketing deaths and death rates related to drought, historically the most lethal form of extreme weather. Instead, drought-related deaths and death rates plummeted by a spectacular 99.8% and 99.9%, respectively. 

What made the decisive difference are technologies (mechanized agriculture, synthetic fertilizers, refrigeration, plastic packaging) and capabilities (motorized transport, modern communications, emergency relief programs) that depend on fossil fuels and the associated wealth-creating activities.

Francis exhorts governments to care for the planet as part of their duty to care for the poor. But the UN-sponsored climate treaty he supports poses an existential threat to the poor. In the COP 21 climate negotiations, the European Union and major environmental groups call for a 60% reduction in global greenhouse gas emissions below 2010 levels by 2050. What sacrifices would the 60-by-50 target impose on developing countries, where the vast majority of emissions growth is projected to occur?

Institute for 21^st Century Energy scholar Steve Eule finds that even if industrial countries like the United States magically reduce their emissions to zero by 2050, the 60-by-50 target is unattainable unless developing countries cut their current CO2 emissions by 35%. If, less unrealistically, industrial countries reduce their emissions by 80%, developing countries would have to cut their current CO2 emissions almost in half – by 48%.

Note, an estimated 1.2 billion people in developing countries have no access to electricity and 2.3 billion don’t have access to reliable power, which limits capital investment and economic growth.

Nobody knows how developing countries can simultaneously eradicate energy squalor while reducing their consumption of fossil fuels by 35%-48%. Contrary to Francis, a “bold agreement” at the Paris climate conference would most likely harm rather than help the poor."

Pope Francis Misses the Sizable Moral Dimensions to Capitalism

By Donald J. Boudreaux.

"Defending capitalism on practical grounds is easy: It is history's greatest force for raising the living standards of the masses. Prior to the Industrial Revolution, the average person lived on about $3 per day (reckoned in 2015 dollars), and each denizen of today's developing countries — those places touched least by capitalism — scrapes by on $7 per day.

In contrast, the average person in today's market-oriented industrialized world lives on $110 per day, and the average American lives on $150. Now, thanks to capitalism, billions of us — almost all descended from generations of peasants who were routinely disfigured and enervated by disease and malnutrition — live lives that not even the most powerful Byzantine or European potentate dared dream of just a few hundred years ago. These facts alone should suffice to give capitalism the benefit of the doubt whenever questions of its morality arise. Yet as Pope Francis' numerous broadsides against capitalism reveal, many thoughtful people believe capitalism to be morally deficient.

This hostility toward capitalism springs from ignorance of the facts and a deep misunderstanding of the logic of markets. Consider the Pope's accusation that capitalism is a "new tyranny." His implication is that humanity escaped the tyranny of communism only to fall victim to the tyranny of markets. But reality refutes his charge of moral equivalence between communism and capitalism. Communism not only impoverished the masses by subjecting everyone to a central economic plan, it also stripped people of political, civil and religious freedoms.

Capitalism's results are the opposite. Not only does capitalism enrich the masses by allowing individuals the freedom to blaze their own economic paths, it typically also strengthens institutions that promote political, civil and religious freedoms. More generally, studies repeatedly find that the more economically free the country, the more prosperous its people. The French, for example, are economically freer and hence richer than Ecuadorians, while Americans are even freer and hence even richer than the French.

If there's any moral value at all (as there surely is) to an economy's capacity to enrich the masses, capitalism's consistent history of creating widespread prosperity counts not only as a practical point in its favor but as a moral one as well. And the moral points earned by capitalism increase if there's at least some moral value (as there surely is) to individuals being free to choose how to spend their own money and structure their own business and employment arrangements absent government dictates.

Indeed, capitalism should earn yet additional moral points from the Pope, given his insistence that "all of us can cooperate as instruments of God for the care of creation, each according to his or her own culture, experience, involvements and talents." No institution in history comes close to capitalism's success at inspiring multitudes of strangers, from different countries and with different talents, to cooperate for the betterment of humanity and of the natural environment.

The production and distribution of the very encyclicals in which Francis criticizes capitalism are capitalist achievements. They require the efforts of tree farmers (perhaps in Germany), of paper-mill workers (perhaps in Slovenia), of ink producers (perhaps in Canada), and of printers (perhaps in Italy). And each of these suppliers relies upon countless delivery vehicles (perhaps made in Japan), investors (perhaps in New York), insurers (perhaps in London) and designers of computer hardware (perhaps in China) and software (perhaps in Seattle).

A true marvel of capitalism is its continual weaving together of the efforts of billions of individuals from around the world into a unified global economy, with each person — as producer and as consumer — more free than under any other economic system to choose just how to participate. This process is peaceful, stupendously productive and requires no commands issued by any overseeing strongman or politburo.

Capitalism also doesn't damage the environment in the way that the Pope assumes. As Fr. Robert Sirico correctly noted in these pages in response to Francis' encyclical "Laudato Si," environmental despoliation is mainly found in poor non-capitalist countries rather than in rich capitalist ones.

Not only does capitalism give ordinary people regular access to such personal "cleansing" amenities as indoor plumbing, soap, safe drinking water, refrigeration and antibiotics, it also prompts firms to conserve resources by using production methods that consume as few resources as possible in order to produce as much output as possible. And importantly, capitalism alone makes societies rich enough to pay for efforts to reduce air and water pollution.

Capitalism isn't flawless. But it far outperforms any known alternative at peacefully uniting the peoples of the world in the practical and moral enterprise of producing dignity and extraordinary wealth for the masses."