The engaging “Robin Hood” ideas of economic justice fit an agrarian situation where all the economic power is in the land, and all the land is held by the ‘lords of the manor.’ Those people are not only rich and corrupt, but they are usually oppressive. Robin Hood can help. Many people are convinced that the new world of economics with markets, private ownership, and creative initiative that can be patented is just the same old ‘fixed pie’ world. They believe that economic growth cannot lift people out of poverty without Robin Hood’s ‘steal-from-the-rich’ help of governmental intervention wresting the wealth from the new lords.
Are they correct? Consider India in the 1980s. India was one of the most immense and chaotic of the poorer nations on earth. According to Jagdish Bhagwati, India’s economic leaders at the time wanted to elevate the country’s very poor. Plenty of food was available on the world market, but elites controlled its distribution. In his book In Defense of Globalization, Bhagwati recounted that the 30 percent of Indians who were very poor could be helped either by reforms that would give the poor a larger slice of the economic pie or by reforms needed to grow the pie. (Oxford University Press, 2004, 52).
Because dividing the pie was politically and culturally impossible, India’s leaders chose to grow it by building more roads and schools and by freeing trade. By adapting Indian policies to often-maligned globalization, they helped reduce poverty in India. Then they had to decide what kind of growth they desired. They wanted jobs that could be done anywhere, like assembling toys, making Coke, manufacturing LG products, and hosting those famous call centers.
At first, over 22 million Indian jobs were lost in the cola and other local businesses, causing a lot of pain. Within a decade, however, global companies created ten times as many new jobs, and the economy continued to grow, partly because newly hired employees of international companies became consumers of many goods and services made in India. New Indian businesses entered the market, including the now-popular drink and billion-dollar brand Thums Up.
An initial increase in misery often comes from opening up a protected nation to free trade, as local businesses go broke and many rural people move to the city hoping to get a job with one of the new foreign companies. Anyone wanting to demonstrate that free trade makes people worse off can take ample photos of such misery. In the mid-1800s, Charles Dickens wrote movingly about such misery in London, and Marx wrote as if those Londoners would never improve. Life in London did improve…eventually…dramatically.
The J Curve: Both India and the Asian Tiger nations (Hong Kong, Singapore, South Korea, and Taiwan) proved that things get worse before they get better, and then they get lots better. This is called the J-curve of economic development, since charting a nation’s economic prosperity over time looks like a J. If an economic situation got worse and then merely returned to its previous level, it would be shaped like a U.
India, led by Singh, seems to have anticipated the J-curve, resulting in a historically unprecedented increase in prosperity in the 1990s. These gains came from free-trade policies that enabled ordinary Indians to have a role in their economic future. While many gains came purely from business ventures, compassion also played a role in the nonprofit and NGO sectors.
Even those who believe that free trade is inherently unjust can still be charitable. They simply have not grasped the main economic developments of the past two hundred years, nor let the dramatic reduction of poverty inform their charity. The lifting of the poor in Europe and the United States in the past, and in India, and many other nations, more recently, has come from Adam Smith’s basic insights: specialization (of jobs) and free trade protected by law. Is there a better, proven way to lift the poor?
What about Robin Hood in the form of governments? In Venezuela, the record has been horrific. In the 1900s, Argentina led the misery of economic decline due to Robin Hood thinking, but China, with a firm, even deadly hand, has seen its policies lift billions from poverty. Want to live there?
The better way is to combine ‘market capitalism’ with the private virtue of compassion, which some despise compared to government-led social justice. Compassion, as expressed by individuals who volunteer to help those at hand, can be inconsistent (some would say unfair), since people with equal needs do not always receive equal help. Today, we need Robin Hood types as local helpers, not activists.
Ready for more? On a different topic, this map tracks how unevenly U.S. electricity prices rose from 2020 to 2025: about 30% nationally, but 72% in Washington, D.C., and down 18% in North Dakota.
The Rising Cost of Electricity in the United States (visualcapitalist.com)