In our last post, we explored the distinction between economic inequality (differences in opportunity) and economic inequity (differences in outcomes). We also touched on how trying to force equal outcomes can actually increase inequality of opportunity. But critics might reasonably ask, “If capitalism is so great, why is there still so much poverty in the world?” It’s a fair question that deserves a thoughtful answer. Let’s start with some perspective. For most of human history, extreme poverty was the norm, not the exception. As recently as 1820, approximately 90% of the global population lived in extreme poverty. By 1990, that …

It’s common to want to divide the world into the “haves” and the “have-nots.” After all, it’s obvious that some people possess and earn more money than others. Some people live lives of luxurious indulgence while others have to choose between paying for rent or paying for medicine. It’s perfectly reasonable—and very human—to look at that dichotomy and wonder about the disparity. Is it something systemic that’s leading to these widely differing outcomes? If capitalism is supposed to reward hard work, why does a cushy desk job pay more than manual labor? Is capitalism itself to blame for what is …

In our last post, we explored how many frustrating market situations aren’t examples of capitalism failing, but rather of capitalism being prevented from working through cronyism and regulatory capture. This raises an important question: If excessive government regulation creates problems, does that mean we should have no rules at all? Not quite. The issue isn’t regulation itself. It’s who does the regulating and how it happens. Consider healthcare, which perfectly illustrates our point about heavily regulated industries. It’s plagued by sky-high prices, limited options, and often poor patient satisfaction. It’s also one of America’s most heavily regulated sectors. At the …

“The system is rigged.”  It’s a common complaint, and at first glance, it’s hard to argue with. We’ve all experienced it: the internet service provider with terrible service but no real competition. The airline that loses your luggage but faces no consequences. The big tech platform that seems immune to user complaints. If capitalism is supposed to be about competition and consumer choice, why do these situations persist? The answer is pretty simple: many of these frustrating scenarios aren’t actually examples of capitalism at work—they’re examples of capitalism being prevented from working. Remember what we established in our earlier discussions …

When we talk about economic “systems,” it’s easy to imagine them as grand designs, carefully plotted out and implemented from the top down. But capitalism isn’t like that at all. Remember what we established in our last post: capitalism is fundamentally about individuals owning and controlling their property. And if individuals truly own something, only they get to decide what to do with it. This raises an interesting question: If capitalism is based on individual decisions, how could it possibly be imposed by anyone, government or otherwise? The answer is simple—it isn’t. Long before anyone coined the term “capitalism,” people …

It might seem like a silly question, and the answer depends on who you ask. From an economic view, though, it doesn’t look terribly complicated.  Certainly, the dictionary definition is straightforward. Capitalism is an economic system defined by the private ownership of capital. But there’s a lot of assumed knowledge in a definition like that, so let’s define some terms. Private ownership simply means something is owned by individuals or companies rather than the government. While this concept seems straightforward, it can get a bit confusing when we talk about “public” versus “private” companies. In economics, “private” means exactly what …