Economic Nonsense: 25. With free markets the poor are left behind


No. It is the poor who benefit most from free markets. The expensive new products that initially only the rich can afford become cheaper as time passes until they fall within what most people can afford. Colour televisions were initially a luxury product for rich people, but there was money to be made so more producers entered the market. The competition spurred firms to develop cheaper methods of production and improvements in quality. Colour TVs are now something that even poor people in rich countries are expected to own. Many consumer goods follow the same trajectory; most recently smartphones have done so. Far from being left behind, the poor are pulled along by the progress that initially caters for the rich.

Free markets offer a great variety, a variety that includes high fashion items for wealthy buyers, but also serviceable and affordable versions for those not so well off. A Bentley is a very fashionable, high quality car with four wheels that enables its owner to get around. A Vauxhall is less fashionable and less high quality, but it has four wheels and enables its owner to get around. The rich eat caviar, while the poor eat the equally nutritious but less fashionable cod roe. The princess and the movie star can wear the latest couturier designed Paris dress; others can await the High Street department store version inspired by it a few weeks later.

On a global scale, the world's poor have made huge gains because of free markets. Hundreds of millions have been lifted from subsistence and starvation because global free markets have enabled them to produce goods or services that sell to people in richer countries. They have not been left behind because globalization has admitted them into markets and allowed them to advance their living standards.