It’s hardly to Teen Vogue’s credit that its dreadful story “What ‘Capitalism’ Is and How It Affects People” isn’t nearly as wrongheaded and offensive as the viral tweet promoting it: “Can’t #endpoverty without ending capitalism!” But let’s start with the grotesque, clickbaity tweet. End poverty where, exactly? Is Teen Vogue referring to the United States, which it identifies as an example of a “modern capitalist” country along with Britain and Germany?

First of all, the median income of the bottom 20 percent of households is up more than 70 percent since 1979 in real terms, according to the CBO. More to the point, poverty in America has declined considerably since LBJ declared a War on Poverty in 1964. Like other advanced capitalist economies, the United States redistributes some of its massive, market-generated wealth to improve living standards at the bottom. According to the Census Bureau’s Supplemental Poverty Measure — which unlike the official poverty measure takes into account key safety net programs such as the Earned Income Tax Credit and the Supplemental Nutrition Assistance Program — the poverty rate fell to 13.9 percent in 2017 from 26 percent in 1967. There’s even better news when one looks at “consumption-based” poverty measures, which calculates what a family consumes instead of how much income it earns. The work of visiting AEI scholar Bruce Meyer (along with his colleague James Sullivan) finds consumption-based poverty is more like 3 percent. Here is a relevant bit from a recent podcast chat we had:

Pethokoukis: Correct me if I have the numbers wrong, but if you look at just the official poverty rate measure you hear about in the news, since 1980 it seems kind of flat. But if you look at consumption, poverty has gone down fairly considerably. Is that right?

Meyer: Yes, so one of the statistics that I like least and I think is most misleading is the poverty rate. The official poverty rate says that we are at the same level of poverty now as we were in the 70s, which just does not fit.

Pethokoukis: So the Great Society failed, we spent all this money and poverty is no better.

Meyer: That’s essentially what the official statistics say, but you shouldn’t believe them for two main reasons. First, the official statistics don’t count much of what we’ve done to reduce poverty; so the official statistics look at pre-tax money income which omits the earned income tax credit, which omits food stamps, it omits housing benefits, it omits Medicaid. So, it gives you a very distorted picture of how those at the bottom are doing.

The second big reason that the official poverty statistic completely misleads the people taking them at face value is that the thresholds above which you have to be to not be poor go up too fast over time because they are indexed to inflation in a way that overstates the effects of inflation.

And you can see that again if you look at material circumstances in more objective ways of those at the bottom. If you look at the housing conditions of the bottom 20% of the income distribution, they look like the housing conditions of the middle class 30 years ago. So, the rates of air conditioning, central air conditioning, of washers and dryers in the apartment, have gone way up. The incidents of peeling paint, of water leaks in the ceiling or in the pipes, and the like have gone way down.

Pethokoukis: When I think about the house I grew up in, it was about half the size of my current house, it had no air conditioning, and I remember the leaks in the ceilings. I certainly am sure that my parents considered us a solidly middle-class household. But I guarantee if I drove by that house with my kids, they would say, “We didn’t know you were so poor.”

Meyer: I think that’s exactly right. I think that’s what a lot of us can see in how our lives have changed, but the official statistics don’t really reflect that, in significant part because of the overstatement of inflation and because of the omission of in-kind transfers and other government benefits.

And if Teen Vogue doesn’t understand what’s happening in the US, maybe it’s really too much to ask that it understand global trends, like the historic massive reduction in global poverty over recent decades. (Most Americans have no idea.) Over the past 30 years, the share of our fellow humans living in extreme poverty has decreased to 21 percent from 52 percent. That’s a billion fewer people in extreme poverty, largely in China and India. The Economist magazine — a publication quite willing to address flaws in the world’s capitalist economies — has put it this way:

The world’s achievement in the field of poverty reduction is, by almost any measure, impressive. . . . Most of the credit, however, must go to capitalism and free trade, for they enable economies to grow — and it was growth, principally, that has eased destitution. The world now knows how to reduce poverty. A lot of targeted policies — basic social safety nets and cash-transfer schemes help. So does binning policies like fuel subsidies to Indonesia’s middle class and China’s hukou household-registration system that boost inequality. 

But the biggest poverty-reduction measure of all is liberalizing markets to let poor people get richer. That means freeing trade between countries (Africa is still cruelly punished by tariffs) and within them (China’s real great leap forward occurred because it allowed private business to grow). Both India and Africa are crowded with monopolies and restrictive practices. Many Westerners have reacted to recession by seeking to constrain markets and roll globalization back in their own countries, and they want to export these ideas to the developing world, too. It does not need such advice. It is doing quite nicely, largely thanks to the same economic principles that helped the developed world grow rich and could pull the poorest of the poor out of destitution.

You’ll find none of the above in the Teen Vogue piece, which means they’ve missed the story. Totally. Modern advanced economies — whether America, Sweden, the UK, or Germany — combine market-driven economies with social safety nets of one flavor or another. The result is high living standards and a low poverty level. But you can’t redistribute wealth without creating it. And that is what innovation-driven capitalism has done really well for the past two centuries. I would urge Teen Vogue editors and reporters to read “Factfulness: Ten Reasons We’re Wrong About the World–and Why Things Are Better Than You Think” by the late Hans Rosling, a fantastic book which examines all the ways in which very smart people are getting so many important things so very wrong — including poverty. Hard to believe this story has been up since April without any apparent modification.