Does Capitalism Work to Create Wealth? More Facts

Patrick Tomey of the Club of Rome puts the current downturn in the economy into perspective.

The fact of the matter is that we in the United States, and to a lesser degree the entire world, have just lived through—and continue to live in—the greatest period of prosperity in human history. Over the last 25 years, more wealth has been created, more people have been lifted out of poverty, standards of living have been elevated more dramatically, and the quality and length of life have improved, more than ever before in recorded history.”

• Average economic growth in the U.S. has not only been positive for almost the entire last quarter century, but for much of this period the rate of growth has accelerated. Our nation’s total economic output in 1982 was $5.1 trillion; last year it was $11.3 trillion (in real 2000 dollars).

• Per capita economic output in 1982 was $22,400; last year it was $37,807 (in real 2000 dollars).

• The average unemployment rate in the 1970s was nearly seven percent; it has been declining, on average, every decade since, and has remained below five percent since 2003. The average for 2007 was 4.6%. The current downturn in the economy raised unemployment to 6.7% in Nov 2008.

• The service sector of our economy has been on fire, growing from $1 trillion in 1982 to $5.5 trillion in 2006. America’s total manufacturing output reached its highest ever level in 2007. U.S. factories produced more last year than in any previous year in our history.

• The Dow Jones Industrial Average began the 1980s at 825; recently, despite its recent declines, it remained above 12,000, a 1,400 percent increase. Today during this economic downturn it stands at 8,630.

• Due to savings programs, like IRAs and 401(k)s, and investment vehicles, like mutual funds, the capital markets, have steadily increased family’s wealth. In 1983, 19 percent of American households owned stocks; in 2005, 50 percent were investors. In 1989, the median family net worth was $69,000; in 2004, it was $93,000.

• The income, wealth, and standard of living of the poor have steadily increased. Among families living below the official poverty line in the early 1970s, less than 40 percent had a car, almost none had color televisions, and air conditioning was virtually unheard of; in 2004, 46 percent owned their own homes, almost 75 percent owned a car (indeed, 30 percent owned two or more cars), 97 percent had color TVs, and 67 percent had air conditioning. The poor in the U.S. have an average of 721 square feet of living space per person, as compared with 430 in Sweden and 92 in Mexico.

• Technology has become accessible to all sectors of society. In 1975, there were 9.8 million cable TV subscribers; in 2006 there were 65 million; there were 2.1 million personal computers in 1985, and 243 million in 2007; there were 340 cell phone subscribers in 1985 and 243 million in 2007.

• As to health, infant mortality dropped from 20 deaths per 1,000 people in 1970 to seven deaths per 1,000 people in 2002. In 1980, American life expectancy was less than 74 years. Today it is 78.

• The world has improved. While the US leads the world in most measures of prosperity and growth, other countries have been enjoying the broadest expansion of wealth in history as well. Between 1999 and 2004, some 135 million people emerged from destitution, and there are now twice as many countries with fast-growing economies as there were in 1980.