Looking at: ‘The rich are getting richer, and the poor are… also getting richer’ by Daniel Hannan

Index

Introduction
Central statements made by Hannan
His twelve claims evaluated
Overall commentary on the sources Hannan uses
Conclusions about the sources
The examination, including sources

Introduction

The rich are getting richer, and the poor are… also getting richer. What’s driving this wealth creation process? In this video, Daniel Hannan explains why it is capitalism — and capitalism alone — that has led to the unprecedented enrichment that is the central fact of Western life.

On the  Eight of October 2018, PragerU published one of their 5-minute videos. The video was called As the Rich Get Richer, the Poor Get Richer and was presented by Daniel Hannan.

Attached is a document in which I go through the list of facts & sources and examine each of them and see if they support his claims. In this post I give a summary my findings. 

Central statements made by Hannan
– As the richer get richer, the poor get richer too.
– Capitalism has led to the unprecedented enrichment that is the central fact of Western life.
– Capitalism alone has done that.
– Why has Capitalism done that?
 These for claim are supported by twelve subordinate claims that each has several references to sources. Below you will find an evaluation of these claims in regards to the use of sources.
His twelve claims evaluated
As free market capitalism has grown, global inequality has fallen. Yes, the rich are getting richer, but the poor are getting richer faster.   
If capitalism grows and other things happen at the same time this does not mean that they are related.  Poor getting richer, infant mortality declines,  life gets extended and literacy is on the rise. It all needs to be linked. Hannan does not do that linking. He just says   things happen at the same time therefore they must be.  Just like a myriad other things. This claim is therefore not supported.
The most rapid declines in poverty are happening in countries that are adopting free trade policies.
Hannan makes a claim that puts a burden on him to poof that the declines in poverty happen in those countries that adopt free trade policies. Hannan doesn’t offer sources that do this. Hannan shows  figures regarding the growth of GDP or the grownt of the ‘economy’. Which might have a bearing on this claim, but by themselves they do not proof that poverty declined or grew in any of the examples. He has to show figures related to poverty and then show that they are related to GDP and  then show that the GDP growth or decline was  related to free trade policies. Even in the case of China Hannan does not show that China’s remarkable GDP growth had any bearing on the poverty figures.Because of this he did not proof his claim.
The expansion of the free market has helped slash the percentage of those living in extreme poverty from 35% to 10% in 25 years. 
This point has been brought up before and is thus repeating something that he has not proven. The rest is opinions or related sources.
Point has not been proven.
Since it adopted more capitalistic policies starting in 1979, China’s economy has enjoyed an average of 9.5% growth annually. 
This point is proven by one source. However, it doesn’t proof any of his central statements. For one, Hannan doesn’t show if this has led to the unprecedented enrichment that is the central fact of Western life, as he claims.
Capitalism is not about greed. It’s about incentivizing people to match their skills to their goals and create earned success.
This is unsourced opinions. It does not proof anything. It is also irrelevant to the central statements.
While free trade-embracing Colombia’s capitalistic economy has grown, protectionist Venezuela’s socialist economy has collapsed. 
This is a repeat of an earlier point and this part does not add anything new. This point has not been proven.
Capitalism caters more to the masses than the economic elite, making things increasingly more affordable for more people. 
While much can be said about the quote of Schumpeter, superficially it can be used to support the claim made. However, note that in this context we are speaking about the masses and not the poor. As Schumpeter elaborates (see point in detail above.) he notes two other things: that this is about goods and that economic development comes with up and downs.I grant the point as such. However, it doesn’t support any of the central claims.
As Vietnam has embraced free trade, its economy has pulled ahead of protectionist Laos.
This point has been discussed before. This part doesn’t add anything new. Not proven.
Opposing capitalism isn’t standing up for poor people, it’s standing in the way of the best way to attain a better lifestyle.
This is all opinion and does not have any bearing on the central claims. Unproven.
The expansion of free trade, property rights, and entrepreneurship around the world helped millions pull themselves out of poverty. 
This is all opinion. Unproven.
A desire for wealth is a part of the human condition. In capitalism, the way to succeed and grow wealth is to offer a service to others. 
More opinions. Unproven.
Myth: Capitalism is plundering developing countries. Reality: Countries that embrace capitalism see dramatic economic improvement. 
This is again a repeat of earlier claims. Again unproven.
Overall commentary on the sources Hannan uses
Hannan’s central claims are supported by twelve subordinate claims referencing forty-five sources. However, these forty-five references point often to the same source thus the total sources actually come down to twenty-two unique sources.
Of these twenty-two sources, ten are offered as related reading, meaning they are not directly used to support the claims. Seven of these are PragerU videos. Three are books on amazon.  This is 45.5% of his sources.
Five are unsourced opinion pieces. Two are by Hannan himself, one by Mark j. Perry and two by  Arthur C. Brooks
This is 22.7% of his sources.
Six offer hard figures. Four from the World Bank Group, one from the OECD  and one from Index Mundi.
This is 27.3% of his sources.
One is a news article with an accompanying video from CNN(Moneycnn).This is 4.5%.
Now this gives a 67 % for sources that can be considered as not direct relevant or unsourced opinions. However, if one considers the amount of references, then the picture is different.

Picture1

Conclusions about the sources
An impressive list of forty –five references are used for the video. Whether one looks at the unique sources used, twenty-two,  or the total amount of references, forty-five, at least two thirds of the sources are opinion pieces or related videos.  This leaves one third for other sources. This doesn’t mean that the sources are always of the best quality or used in a proper manner. Overall it is surprising that on examination two thirds of the sources do nothing to support his claims.

Sloppy writing reflects sloppy thinking

During my examination I ran into a post that Hannan indirectly refers to that that listed quotes by Milton Friedman. One of them heads this section.
Hannan’s comes over as sloppy. He makes various claims that by themselves are worthy of many many books and these cannot possibly be addressed in a five minute video. But even the marginal claims he tries to support, he supports with opinions, videos that are just related and statistical sources that have no relevance.

The sloppiness goes even deeper.  Hannan mixes terms that are unrelated. He swaps the free market for capitalism as if they are the same thing, while these are not nor are they unbreakable linked. Capitalism refers to an economic system based on private ownership. The free market refers to a system where supply and demand are determined by consumers and producers. One can exist without the other. And when both exist they can exists in many forms.

He is also sloppy in the sense that he assumes things. Like he assumes that “an improvement of the economy”  means it has a positive influence for everyone, including the poor. However, a country might experience an economic upturn , but this does not mean the poor benefit, let alone benefit more. In fact, we don’t know who benefits unless that is researched.

Hannan biggest claim, as taken from the title, is that  as the rich get richer, the poor get richer too. In all irony this not supported by the most important source he uses to proof this statement: the World Bank. In the 2018 report of the World Bank, which is freely available,  this subject is addressed. In the chapter Shared Prosperity: Mixed Progress. Shared prosperity examines if the bottom 40 percent share in prosperity. In the chapter is is mentioned that  “To conclude, although most countries have made progress in shared prosperity, the results are mixed.” On page 51 a table is given for 91 countries that shows how the bottom 40 percent of the populace does as compared to the whole populace.

Now we compare this with the Index of Economic Freedom that is maintained by the Heritage foundation. The index has five classifications: free, mostly free, moderately free, mostly unfree and repressed.

Of the nations Hannan mentions China and Vietnam are mostly unfree yet in those countries the bottom 40% have benefited more than the overall populace. Colombia is moderately free and also the bottom 40% benefited more. Venezuela and Laos are repressive states but not mentioned in the World Bank report.

Let us see what the World Bank report says about the top three and bottom three states we can find in the Index.

Top three:
Switzerland(free): No difference.
Ireland(free): Bottom benefited more than whole.
United Kingdom(mostly free): No difference.

Bottom three
Mozambique(mostly unfree):  Bottom benefited less than whole.
Bolivia(repressed): Bottom benefited more than whole.
Iran(repressed): Bottom benefited more than whole.

All of the above are just some figures which I show just to show that nothing much can be said about it without more information.  Capitalism might very much be more beneficial to the poor than the rich, but saying so doesn’t make it so. And it is this what Hannan does.
It reminds me of a discussion that was cut short with the words: but I think it is so. To use the words of Christopher Hitchens: what you assert without evidence can be dismissed without evidence.

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